By Welex, Law Firm, Accountants, and Tax Advisors in Marbella.

In this article, we outline the necessary requirements for an invoice to be deductible for corporate tax purposes in Spain. It is essential that invoices meet certain formal and substantive criteria to be considered deductible.

 

Detail picture of an invoice or accounting paper document

 

Formal Requirements for Invoices

To ensure an invoice is deductible, it must adhere to the following formal requirements: 

  1. Proper Accounting: The invoice must be duly recorded in the company’s accounts. 
  2. Supporting Documentation: It should be supported by appropriate documentation, preferably an invoice that meets all legal requirements. 
  3. Correlation with Revenue: The invoice must be related to the company’s revenue and necessary for its generation. 
  4. Specific Content: The invoice must include: 
    • Number and series 
    • Date of issuance 
    • Identification of the issuer and recipient (name and tax identification number) 
    • Description of the transactions 
    • Taxable base 
    • Applied tax rate 
    • Tax amount charged

 

Jurisprudence in Spain

Spanish jurisprudence has been clear and consistent regarding the deductibility of expenses for corporate tax purposes. Expenses must not only be recorded in the accounts but also properly justified and correlated with the company’s income.

Examples of Jurisprudence:

  • Judgment of the High Court of Justice of Catalonia No. 3756/2022 (November 3, 2022): This judgment emphasizes that “expenses must be accounted for as a result of the general regime for determining the taxable base, which is usually done under direct estimation” and that “expenses must be sufficiently justified, typically through an invoice” (Judgment of the High Court of Justice of Catalonia, Administrative Litigation Chamber No. 3751/2022 of November 3, 2022). 
  • Judgment of the High Court of Justice of the Community of Madrid No. 85/2023 (February 1, 2023): This judgment highlights that an invoice must include elements such as the invoice number, the name and tax identification number of the issuer and recipient, a description of the transaction, and the date and place of issuance to be considered valid for deductibility purposes.

 

Implications and Limitations

It is important to note that the mere existence of an invoice does not guarantee the deductibility of the expense for corporate tax purposes. The invoice must be accompanied by evidence demonstrating the reality of the expense and its necessity in relation to the company’s activities. Additionally, invoices must comply with the formal requirements established by the applicable regulations, such as those detailed in Royal Decree 1496/2003 and its subsequent amendments. Failure to meet these requirements may result in the non-deductibility of the expense.

 

Conclusion

For an expense to be deductible for corporate tax purposes in Spain, it must be related to and necessary for generating the company’s income, be documented with the corresponding invoices, and be accounted for. Furthermore, the corresponding payment must be proven to ensure deductibility.

 

We have a wealth of information available on our blog regarding invoices and accounting services. Please do not hesitate to contact our team of economists and tax advisors in Marbella. At Welex, lawyers and economists in Spain, we will be pleased to assist you with any tax, labor, or accounting inquiries.