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V0227-14 30 January 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · coste de producción

Purchasing raw materials from non-business entities must be substantiated by legally admissible evidence

A company inquired whether it could deduct the purchase of grapes from private individuals who are not business owners using only an expense note. The DGT indicates that raw materials must be integrated into production costs and the transaction must be substantiated through legally admissible evidence.

The question raised

Whether an entrepreneur may deduct from the income obtained from the sale of grape juice the expense incurred by the purchase of its raw material from Spanish or foreign individuals who do not carry out any economic activity, using as the sole supporting document the expense note signed by the individual and their identification data.

The DGT's ruling

The raw material acquired must form part of the production cost of inventories, affecting the tax base through the variation of inventories and not as a direct expense. To justify purchases from non-entrepreneur third parties, the taxpayer must prove the reality of the transaction by any means of evidence generally admitted in law, pursuant to Article 106 of the General Tax Law. The Administration is responsible for the assessment of such evidence.

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