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V2147-14 5 August 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · imputación contable

Pilot supply costs are deductible for Corporate Tax if accrual and justification requirements are met

A company supplying pilots to airlines has requested a ruling on the deductibility of its expenses and the nature of its services. The DGT has determined that these expenses are deductible for Corporate Tax purposes provided they meet legal conditions, and that the supply of pilots constitutes a service lease rather than passenger transport.

The question raised

Whether the expenses incurred, both abroad and within Spanish territory, are tax-deductible for Corporate Income Tax purposes

The DGT's ruling

In Corporate Income Tax, expenses are deductible provided they have been accounted for, respect the accrual principle, maintain correlation with income, and are supported by documentary evidence, regardless of whether they originate in Spain or abroad. Regarding VAT, the supply of pilots does not constitute passenger transport, but rather a lease of technical personnel services. Therefore, the location of the service is governed by the general rule of Article 69 of the VAT Law, based on the recipient's registered office.

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