If you are self-employed, this becomes even more relevant, as it is time to review the deductible expenses that can help you optimise your tax situation.

In this regard, one of the least explored, but very important, aspects is the possibility of deducting insurance on your income tax.

In this article, we explain in detail which insurances you can deduct as a self-employed person and how this will impact your finances.

Fully tax-deductible insurance policies.

When it comes to taxes, tax-deductible insurance can be a key way to optimise your income.

These policies not only offer you protection, but also significant tax benefits.

Liability insurance.

Liability insurance stands out as one of the most important insurance policies for the self-employed, as it covers compensation for damages to third parties.

In other words, it protects your assets if you find yourself in a situation where you receive a legal claim from a client.

For example, if you are a self-employed electrician and a fire breaks out after installing wiring, the consequences will be covered by this policy.

Professional liability insurance.

Professional liability insurance is an important tool for those in the self-employed profession, as it is designed to protect you against claims arising from errors and omissions in the performance of your professional activity.

Unlike civil liability insurance, which covers property damage or bodily injury to third parties, professional liability insurance protects you against claims for malpractice or negligence.

This coverage is especially relevant in fields such as medicine, law, accounting or architecture, among others, where a mistake can have significant consequences, both for you and your clients.

Criminal liability insurance

Some liability insurance policies include coverage for legal defence in cases of criminal investigations.

These policies provide comprehensive legal protection for the self-employed against potential legal problems.

The good news is that it is also 100% tax deductible.

Insurance for business assets.

Self-employed people who own assets used for their activity – such as machinery, vehicles or inventory – can deduct the insurance coverage associated with these resources.

Whether it is transport, damage, theft or fire insurance, the entire premium can be deducted in the income tax return, providing additional financial support.
Insurance deductible in proportion to professional use
These insurances represent more complex cases because their partial deductibility may depend on several factors, such as the nature of the insured activity and the tax regulations in force.

Understanding how they relate to the activity and what their deduction rate is is essential for proper financial planning.

Healthcare insurance.

Health care is essential for any self-employed person.

For this reason, health insurance also comes into play in the income tax return.

The premiums paid, both for the self-employed and for their families, can be deducted, but up to a certain limit established by the Tax Agency.

In any case, this deduction represents a significant saving for the taxpayer.

Home insurance.

For those self-employed people who use part of their home for their professional activity, the associated expenses, including home insurance, can be partially deducted in the Income Tax Return.

However, if an office is rented, the deduction can be 100%, which represents a considerable benefit.

Taking advantage of the tax deductibility of insurance can thus represent a significant saving on your annual tax return.

But, as understanding what is tax deductible and what is not can be complicated, it is best to talk to tax advisors to maximise these opportunities and take advantage of the deductions available on your tax return.

Thank you  for reading this post, if you think we have been able to help you or if you still have any questions, you can always contact me via WhattsApp (+49 1520 8381499) or e-mail (erica@taxandlawspain.com).

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