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V0722-14 17 March 2014 · SG de Impuestos sobre el Consumo Criterion in force
IVA · base imponible

Expenses paid on behalf of a client are excluded from the VAT taxable base if they meet the requirements for disbursements

An art transport company inquired whether flight, hotel, and meal expenses paid for its client could be treated as disbursements. The DGT ruled that, provided certain requirements are met, these amounts do not form part of the VAT taxable base.

The question raised

Question posed: Consideration of expenses described as disbursements that are not included in the Value Added Tax taxable base.

The DGT's ruling

For expenses to be considered disbursements and not be included in the taxable base, four conditions must be met: they must be paid on behalf of and for the account of the client (evidenced by invoices issued in the client's name), be carried out by express mandate, the exact amount must be justified without differences in reimbursement, and the intermediary must not deduct the tax that has levied said expenses. If these requirements are met, the amount of the expenses must not be included in the VAT taxable base of the principal supply.

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