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V1138-18 30 April 2018 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · deducibilidad

Travel and accommodation expenses may be deductible for CIT and tax-free for IRPF if the company provides the means directly

A company has enquired whether travel expenses incurred by its partners (who receive employment income) are deductible for Corporate Income Tax (CIT) and exempt from Personal Income Tax (IRPF). The Directorate General for Taxes (DGT) rules that they are deductible for CIT provided they meet accounting and substantiation requirements. Regarding IRPF, they are not taxable if the company provides the means directly; however, they are taxable if the company merely reimburses expenses without proving their strict necessity.

The question raised

Whether the aforementioned expenses are deductible in Corporate Income Tax and, in the event they are paid to the worker, whether they are exempt in their Personal Income Tax.

The DGT's ruling

In Corporate Income Tax, payments for services rendered are deductible if they comply with accounting registration, accrual, correlation of income and expenses, and documentary justification. In Personal Income Tax, if the partners do not have an employment relationship characterized by subordination, they cannot apply the regime of tax-exempt per diems. There shall be no income for the partner if the company directly provides means of transport or accommodation. If the company reimburses expenses or pays amounts so that the partner decides how to travel without proving strict compensation, it is considered monetary income subject to tax.

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