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V1338-20 11 May 2020 · SG de Impuestos sobre el Consumo Criterion in force
IVA · suplidos

Traffic fees paid by an agency on behalf of a client may be treated as disbursements not subject to VAT

An administrative agency enquired whether the transfer and registration fees it pays via the Traffic Department website can be treated as disbursements to avoid applying VAT. The DGT ruled that, provided the requirements of mandate and payment on behalf of the client are met, these fees do not form part of the tax base.

The question raised

Issue raised: Consideration of the fee invoiced to the client as a disbursement, for the purpose of not applying Value Added Tax.

The DGT's ruling

Fees paid on behalf of the client by virtue of an express mandate are considered disbursements. To this end, four conditions must be met: acting on behalf of the client (evidenced by an invoice charged to the client), the existence of an express mandate, the amount must exactly match the expense, and the intermediary may not deduct the tax that has levied said expense. Compliance with these requirements allows the fees to be excluded from the VAT taxable base of the management firm.

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