Representation expenses are those arising from the professional activity of employees when they are required to to carry out the representation of the company, for example, to a customer or a supplier. These costs are often closely related to travel costs or travel expenses, although they are broadly different costs.
expenses incurred for the purpose of representing a company are those expenditure associated with the activity of employees and which derive from the Representing the company at a specific place or event. For example, entertainment expenses are considered to be those incurred when entertaining a client for a meal, expenses arising from a meeting, or those generated from a gift to clients or suppliers.
These are expenditures that are usually linked to travel or travel expenses, as they are, In many cases, these expenses are incurred during a journey. However, it is important to distinguish between them, as they are considered by the law as differentiated costs and with their own characteristics. In addition, it should be borne in mind that representation expenses are expenses that, in many cases, are deductible. Although it should be considered that deductible representation expenses cannot exceed 1% of the company's net revenue, which is why it is important to differentiate them correctly from travel or subsistence expenses.
La Corporate Income Tax Act establishes that representation expenses will be understood as those company expenses incurred to generate income for it. This generic definition does not specify too much which expenses can be considered as such, so there are six categories that are usually associated with representation expenses, which makes them easier to identify:
For an expense to be considered a representation expense, and consequently deductible, it is necessary that said expense is duly justified. That is to say, that the corresponding invoice or ticket so that it can be duly accounted for in the profit and loss account for the financial year in which it is to be deducted.
Since it is necessary to have the corresponding invoice or ticket for the expenditure, this implies having to keep a recording of all potentially deductible expenses, and that none of them goes astray and that none of them is missing the corresponding document which will be necessary to present to the Tax Agency for your subsequent deduction.
Due to this need to keep exhaustive track of all expenses incurred and their corresponding invoices, more and more companies are using tools that allow automate and digitise such tasks. An example of such a tool is Corporate, the tool for Edenred for the management and control of companies' professional expenses.
Corporate allows digitising expense notes and recovering VAT quickly and easily. Furthermore, by digitising tickets and invoices, avoid having to keep the original document in physical format, reducing the volume of documentation to be retained and preventing it from being lost. In fact, another advantage offered by Corporate is that integrates and unifies expense notes and reports directly into your company's system, streamlining the entire process considerably and making it easier to find any document or information related to company expenses.
