Deduction in economic and financial terms is the action of deducting in whole or in part an economic amount that weighs on a certain act or good. The term deduct also applies to a thing, object or economic quantity, when it is deductible.
The relief is therefore a reduction on a certain economic burden. When something is tax deductible, the tax base of a tribute or tax, or the fee resulting from it. When there is a tax relief or a certain amount is deducted, it is because there is a regulation in which this act is regulated.
Usually the term deduct or deduction is used for all those deductions that are applied to certain taxes, especially in the value added tax or VAT in the case of legal persons and companies, as well as in the income tax of persons physical or IRPF in the case of physical or private subjects.
Ways to cancel
These are the most common ways to deduct personal income tax and value added tax:
Deduct on value added tax
The deductions on the IVA They are carried out by companies and legal persons. Companies are obliged to record the VAT accrued or collected. The resulting amount is deducted the VAT paid also called deductible VAT, thus deducting that amount from the payment of your VAT settlement.
Deduct from personal income tax
Income tax allowances for individuals affect all individuals above a certain income limit. These allowances are of various types, such as pension plans, certain mortgages or contributions with social works. Your payment deducts the total amount to be paid for the tax.