Back to index
V3669-20 29 December 2020 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · actividad económica

Recharging of expenses by a professional association is subject to VAT and Corporation Tax

A street vendor association has requested a ruling on whether managing and recharging expenses (fees, insurance, gazebos) to its members is subject to VAT and whether these expenses are deductible for Corporation Tax purposes. The DGT has determined that this activity constitutes an economic activity subject to both taxes.

The question raised

Question raised: Whether the rebilling of the aforementioned expenses to the participants is subject to Value Added Tax and whether these expenses are considered tax-deductible for Corporate Income Tax purposes.

The DGT's ruling

The management of agreements and the rebilling of expenses constitutes an economic activity subject to Corporate Income Tax; therefore, the income obtained is not exempt. Regarding VAT, the rebilling of expenses is a provision of services subject to the general rate of 21%, unless the requirements for disbursements are met (payments made on behalf of and for the account of the client with express mandate). The expenses of the economic activity are deductible, applying the rule of proportionality if there is exempt income.

Apply this to a real case

What is published here, applied to a company or a specific case. The first meeting is free.

Book a meeting Write to the firm
Email
Contact