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V2776-14 15 October 2014 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · base imponible

Travel expenses recharged to clients are subject to VAT and Income Tax

A professional enquired whether travel costs passed on to clients should be included in the VAT taxable base and if they constitute business income for Income Tax purposes. The DGT ruled that they must be taxed as income, unless the requirements to be classified as disbursements are met.

The question raised

Whether the amounts recharged to clients for costs incurred in such travel will form part of the VAT taxable base and whether they must be declared as income from economic activity for Personal Income Tax purposes.

The DGT's ruling

Regarding VAT, travel expenses form part of the taxable base and must be subject to the tax, unless they are disbursements paid on behalf of and for the account of the client under express mandate and with an invoice issued in the client's name. Regarding Personal Income Tax (IRPF), travel and trip expenses recharged to the client are considered income from economic activity, as the professional is the party incurring the expense.

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