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V1560-14 13 June 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · deducibilidad

Clothing and video accessories are deductible for Corporate Tax if used for business, but not for VAT if for everyday use

A video game advertising company has enquired whether clothing and accessories used in their videos are deductible for Corporate Tax and VAT. The DGT has ruled that they are deductible for Corporate Tax if used for the business activity, but are not deductible for VAT if they constitute normal everyday clothing.

The question raised

Whether the clothing, accessories, and complements required to appear in videos are deductible as an expense, both in Corporate Income Tax and in Value Added Tax.

The DGT's ruling

In Corporate Income Tax, expenses for clothing and accessories are deductible if they are used for the development of the activity, are recognized on an accrual basis, and comply with the requirements for accounting registration and substantiation. In VAT, the tax credit shall not be deductible if the clothing is common or normal, as it is not understood to be directly and exclusively related to the professional activity given that it may be used for private needs.

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