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V0549-15 11 February 2015 · SG de Impuestos sobre el Consumo Criterion in force
IVA · deducción de cuotas

VAT on gifts or hospitality for clients and third parties is not deductible

An IT company inquired whether it could deduct VAT on gifts and restaurant hospitality used to promote its business. The DGT ruled that these expenses are not deductible as they constitute hospitality provided to clients or third parties.

The question raised

Question raised: Deductibility of said amounts.

The DGT's ruling

The deduction of VAT paid on the acquisition of goods or services intended for entertainment of clients, employees, or third parties is not possible. This prohibition applies even if the goods are acquired for free distribution, as they do not constitute the object of the entity's habitual trade.

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