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V3934-15 9 December 2015 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · deducción de gastos

Propane gas consumption is deductible for Corporation Tax if legal requirements are met

A company managing a solar thermal power plant has enquired whether propane gas consumption expenses are deductible even if they are offset against its own supply invoice. The Directorate General for Taxes (DGT) has ruled that the expense is deductible provided it complies with accounting regulations, accrual principles, the correlation principle between income and expenses, and documentary justification.

The question raised

Whether the propane gas consumption, which is currently included in its own invoice with the consumption amount deducted from the total invoice amount, would be tax-deductible for Corporate Income Tax purposes, or whether it would be necessary for the homeowners' association to issue an invoice for the propane gas consumption supplied to the thermal plant.

The DGT's ruling

Gas consumption expenses shall be tax-deductible provided they meet the requirements of accounting registration, accrual, correlation between income and expenses, and documentary justification. Furthermore, they must not be considered non-deductible expenses pursuant to Article 15 of the Corporate Income Tax Act (LIS). The allocation of such consumption must be carried out through a rule of proportionality.

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