Can electricity be deducted on your tax return?

Yes, it is possible to deduct electricity on your tax return, but this option is not universal for all citizens. For the Tax Agency to accept the electricity deduction for personal income tax (IRPF), the expense must be directly related to carrying out an economic activity. Therefore, while a private consumer cannot deduct their usual domestic bill, those profiles that use their home or a premises to generate income do have this tax benefit.

Yes, but only in certain cases

Spanish legislation establishes some limitations to prevent fraud. For example, utility expenses such as electricity can only be deducted when the taxpayer is self-employed and uses a part of their home for their professional activity. There are also tax benefits if energy efficiency improvement works have been carried out, such as the installation of solar panels, which allow deductions to be applied directly to the IRPF tax liability.

 It is not deductible for private individuals without economic activity

If you are an employee who simply consumes electricity at home without any declared economic activity, it is not possible to deduct the cost of electricity on your tax return. For the Tax Office (Hacienda), these types of expenses are personal or private consumption, which do not reduce the tax base. The fundamental point is 'allocation' (afectación), meaning it must be necessary to generate the income.

What the IRPF regulations say about utility costs

The legal basis is found in Article 30.2.5ª.b) of the IRPF Law. According to this rule, utilities that do not have the quality of being 'storable' (water, gas, electricity, telephony, and internet) are considered tax-deductible expenses for determining net profit under the direct estimation method. Following the 2018 reform, a more precise criterion was also established for situations in which the primary residence is partially used for economic activity, which helped to eliminate the lack of clarity that existed previously.

In which cases can you deduct electricity on your tax return? 

To know how to deduct utility expenses, we must first identify which group of taxpayers you belong to, as the requirements vary considerably.

Self-employed people who work from home

If you are an independent professional and have notified the Tax Office that you use a part of your primary residence for your workshop or office, you can apply the primary residence utilities deduction. As this is the most common scenario, it is essential that this allocation is real and has been previously communicated using the relevant tax registration forms. 

Employed remote workers

The situation is different for employees who work from home for a company. As a general rule, utility expenses are not deductible on their personal IRPF return, as it is assumed that the company should ideally cover the expenses or provide the means. However, if the worker decides to register as self-employed to carry out complementary activities from home, they could access the deduction through that professional route. 

Renting or subletting rooms

If you are a homeowner, rent out rooms, and the contract states that the owner is responsible for the utilities, the electricity expense can be deducted as a necessary expense to obtain the property income. In this case, the expense is deducted to calculate the net rental profit, which will subsequently be declared on the tax return. 

What percentage of the electricity bill can you deduct? 

Calculating what percentage of electricity can be deducted for home working or for exercising a professional activity is the part where the most mistakes are made, which usually leads to inspections by the Tax Office. 

General rule for the self-employed since 2018 

The Tax Agency establishes a very specific calculation method. Apply 30% to the proportion of the home's total square metres that are used for professional activity. 

A practical example to understand it better: if your house is 100 m² and a 20 m² room is used for work – that is, 20% of the surface area – you cannot deduct 20% of the bill. You must calculate 30% of that 20%. Thus, the final result would be a 6% deduction on each electricity bill. 

Cases in which a different percentage can be applied

The regulations allow for the possibility of applying a percentage higher than 30% if the taxpayer can reliably prove that professional consumption is higher. However, this is usually difficult to prove if there is no separate meter for the workspace. On the other hand, if the activity is carried out in commercial premises dedicated exclusively to the business, the electricity expense for the self-employed is fully deductible.  

What CANNOT be deducted

Only those expenses that are properly documented and whose invoice is issued in the name of the person carrying out the activity are admissible. Furthermore, energy efficiency deductions, such as the installation of solar panels, cannot be applied to the part of the home already allocated to professional activity. This is done in this way to prevent the same element from receiving a tax benefit twice. 

How to calculate exactly how much you can deduct

Follow these three steps based on the Tax Agency's example to avoid penalties and carry out the calculation professionally: 

Step 1: Determine the floor space allocated to the business activity 

Measure the square metres of the space you use solely for your work. Divide that figure by the total square metres of the home to obtain the percentage. Example: 20 m² (office) / 100 m² (total) = 20% allocation. 

Step 2: Apply the 30% factor 

Multiply the allocation percentage obtained by a 0.30 factor (which represents the 30% set by law). Example: 20% x 0.3 = 6% final deductible percentage. 

Step 3: Apply the percentage to each electricity bill 

Calculate that percentage on the sum of all electricity bills for the year, including taxes. Example: If the annual electricity expense is €1,200, you will be able to deduct €72 (i.e., 6% of €1,200). 

What documentation do you need to justify the deduction? 

The Tax Office can request proof up to four years after submitting the return. It is essential to have the appropriate documents.  

Supply contract.

It must be active and ideally in the name of the self-employed person.  

Full invoices (not receipts). 

They must include the VAT breakdown, all the tax details of the issuer and the recipient, and the consumption period. 

Proof of primary residence.  

A document proving that the property is the primary residence. 

Floor plan or sketch showing metres dedicated to the activity. 

A technical drawing or cadastral plan identifying the workspace to help justify the applied percentage. 

Form 036/037 with declared activity.  

This is the form used to notify the Tax Agency of your incorporation into the registry of business owners, as well as the percentage of the home's surface area you will allocate to carrying out the professional activity.

Common mistakes that can cause problems with the Tax Office

The most serious mistake is trying to deduct 100% of the electricity bill by arguing that electricity is essential for work. The Tax Agency will systematically reject any deduction that does not follow the rule of 30% of the allocated space, unless there are separate meters that allow a different consumption to be justified. 

Another frequent error is not having updated Form 036 or 037. If your census registration does not state that you work from home, the Tax Office will consider 100% of the electricity expense to be private and will deny the deduction, potentially imposing penalties for declaring ineligible expenses. It is also often overlooked that the VAT on these invoices must be deducted proportionally, following a recent change in criteria by the Directorate General of Taxes, which aligns with the position of the Central Economic-Administrative Tribunal (TEAC). 

Electricity deduction if you are an Endesa customer

If Endesa is your energy company, the process of gathering the necessary information for your tax return is very easy thanks to our digital platforms. 

How to download your electricity bills 

From the Customer Area or the Endesa Clientes App, you can access all your bills. It is essential to download the bills in PDF format, as they contain all the necessary tax data that does not appear on a bank statement. 

How to view monthly consumption 

Endesa's platform offers the ability to view graphs showing your monthly consumption. This is useful not only for expense control but also for checking that there are no unusual peaks that could be questioned by a tax advisor before incorporating them into the tax return. 

How to anticipate expenses to calculate the annual deduction 

Tools like Endesa's tariff comparison tool and capacity calculators will allow you to better understand your consumption. Furthermore, if you are considering making energy efficiency improvements, such as installing solar panels, you can use our tools to estimate the necessary investment and the potential additional 60% deduction in IRPF that these types of renovations currently offer. 

Would you like us to analyse whether your current Endesa tariff is the one that best suits your profile as a self-employed person in order to optimise and increase your real savings? 

What expenses are deductible?

Electricity expenses can be deducted if they are related to an economic activity or to energy efficiency improvements in the property. In general terms, the following are included:

• Electricity consumption for self-employed individuals: if you work from home or a commercial space, you can deduct a percentage of your electricity bill.
• Investments in energy efficiency: such as installing solar panels, improving thermal insulation, and implementing systems that optimise energy consumption.
• Electric expenses in rental properties: if the contract specifies that the landlord is responsible for covering utilities, these may be included as deductible expenses.

There are specific requirements in each case, so it’s important to check how to correctly apply each deduction.

Electricity deductions for self-employed individuals

If you’re self-employed and your professional activity requires electricity consumption, you can deduct part of your bill on your income tax return, as long as certain criteria are met:

Requirements for deduction

• An invoice in the name of the self-employed individual: the invoice must be issued in the professional's name and be related to their economic activity. If the home or commercial space is not registered as part of the business, the deduction may be declined.
• Professional use: you must prove that the electricity consumption is essential to your professional activity. Before registering as a self-employed individual, you must inform the Tax Agency of the percentage of your home dedicated to your professional activity by submitting form 036 or 037.

Deductible expenses

As we mentioned earlier, the Tax Agency allows a portion of electricity supply expenses to be deducted if they are related to a professional activity:

• Deduction percentage: self-employed individuals working from home may deduct 30% of electricity expenses corresponding to the portion of the home used for work. For example, if your office takes up 20% of the total surface area, the deduction would apply to that percentage.
• Workspaces: you may deduct the full expense for a commercial space if your business activity is entirely carried out on-site and the utility contracts are in your name as a self-employed individual.

Deductions for energy efficiency improvements

If you’ve carried out improvements to reduce your home’s energy consumption, you may also be eligible for certain income tax deductions:

Types of deductible construction works

Installation of solar panels

Investment in photovoltaic energy is deductible, as we explain in the following content: IRPF tax deductions for installing solar panels in 2025.

Improvements in insulation

Replacing windows with high-efficiency models, installing insulating doors, and applying thermal cladding—such as ventilated façades, interior insulation, or thermal paints, among other solutions—to reduce energy demand and improve the efficiency of the home or workspace.

Eligibility requirements for the deductions

Energy certification

One of the key requirements is to have an energy efficiency certificate, both before and after the construction work. This document certifies the improvement in the home's energy consumption following the intervention. It also proves that the renovation has had a positive impact on reducing energy consumption.

The certificate must be issued by an authorised technician before 31 December 2025, and it must reflect the savings achieved. Moreover, the improvement must meet the minimum thresholds required for the deduction to apply.

The deduction amounts to 60%, with a maximum annual deduction base of €5,000. Any amounts paid that exceed this annual limit may be deducted, under the same limit, over the following four years. However, the total deduction base may not exceed €15,000.

Please note that any construction work carried out in the part of the home used for business purposes does not qualify for this deduction.

Regulatory compliance

In order for the construction work to be considered deductible, it must comply with current energy efficiency regulations and fall within the legal framework established by the Spanish Government and the European Union.

This means that the materials and techniques used must adhere to sustainability and energy-saving standards. Moreover, the intervention must be properly registered.

Other deductions related to electricity

In addition to income tax deductions, there are other grants and benefits available for energy efficiency improvements, both for individuals and businesses:

Grants and subsidies

Grants for the installation of energy efficiency systems can be combined with tax deductions; however, it is important to note that any aid received must be subtracted from the total amount when calculating the deduction in the income tax.

Some of the main grants available include:

• Next Generation EU funds: aimed at energy rehabilitation of buildings and homes, with incentives for installing thermal renewable energy systems.
• PREE 5000 programme: grants for improving energy efficiency in municipalities with fewer than 5,000 inhabitants.
• Regional aid: each autonomous community may offer specific incentives for the installation of solar panels, thermal insulation, and energy management systems.

Energy efficiency deductions for businesses

Businesses can deduct investments aimed at reducing electricity consumption, provided they meet the requirements set out in current regulations.

Deductible investments include:

• LED lightning: replacing traditional systems with LED technology to reduce energy use.
• Automation and energy management: implementing smart systems to optimise electricity use in offices, factories, and retail spaces.
• Installation of renewable energy systems: businesses that install solar panels or thermal systems can benefit from specific deductions and subsidies.

To access these benefits, we recommend checking the available aid programmes through the Tax Agency and the Spanish Government's Institute for the Diversification and Saving of Energy (IDAE), as the conditions may vary depending on the region and the type of investment.

Process for claiming deductions

To claim the electricity expense deduction on your income tax return, you must follow a series of steps to ensure that the Tax Agency accepts the tax benefit without any issues:

1. Gather documentation: keep all electricity bills, supply contracts, and energy efficiency certificates if you have made energy improvements to your home or workplace. This documentation will be essential to justify the deduction.
2. Complete the tax return form: enter any deductible expenses in the relevant section of the Spanish income tax return (IRPF), ensuring they meet the legal requirements. If you are self-employed, apply the relevant deduction percentage for the space allocated to your professional activity.
3. Submit the return: complete the filing within the deadline established by the Tax Agency (before 30 June) to avoid potential penalties or the loss of the right to claim the deduction. If you have any questions, you can seek advice from a tax consultant or use the assistance available on the Tax Agency’s online platform.

Tips to maximise your tax benefits

To optimise your deductions and avoid errors, it’s important to follow certain best practices.

• Keep a record of expenses: maintain a detailed log of any consumption related to your professional activity, including utility bills, energy efficiency investments, and any other potentially deductible expenses.
• Seek advice from a tax consultant: a specialist can help you identify all available deductions, ensuring that you make the most of your tax benefits without making mistakes that could lead to a review or adjustment by the Tax Agency.

Sources

• Manual práctico de la renta
• Ley 6/2017, de 24 de octubre, de Reformas Urgentes del Trabajo Autónomo
• La deducibilidad del IVA de los suministros de la vivienda habitual