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V2926-23 31 October 2023 · SG de Impuestos sobre el Consumo Criterion in force
IVA · pago anticipado

Provision of funds may be an advance payment subject to VAT or a disbursement not subject to tax

The inquirer asks whether the transfer of funds to a registrar triggers VAT accrual and the obligation to issue an invoice. The DGT rules that it depends on whether the funds are intended to remunerate services (an advance payment subject to VAT) or to reimburse expenses incurred on behalf of the client (a disbursement not subject to VAT).

The question raised

Whether the delivery of the funds consulted determines the accrual of Value Added Tax and the obligation to issue an invoice, or a document referred to as an invoice.

The DGT's ruling

If the provision of funds seeks to remunerate the services of the registrar, it is considered an advance payment and VAT accrues, necessitating the issuance of an invoice. If the funds are intended to reimburse sums that the professional pays on behalf of and for the account of the client by virtue of a mandate, they are disbursements and do not form part of the taxable base. For a payment to be considered a disbursement, there must be an express mandate, the amount must coincide exactly with the expense, and the third-party invoice must be issued in the name of the client.

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