The 4 requirements for submitting a company's deductible expenses

The deductible expenses of a company they represent an economic injection for your company. We tell you what requirements you must meet to present them to the Administration.

According to the Corporate Income Tax Act Deductible expenses are all expenses that are understood to be necessary to carry out the business activity. Therefore, they are those expenses that have to do with the daily activity of your company or with what it does.

In order to deduct expenses, it is very important to always comply with the criteria and requirements set out in the regulations. Here we explain what the essential ones are:

Don't forget the invoice

Any expenditure must be justified with the corresponding documentary evidence: full invoice, payslips, receipts, public deed, etc. Therefore, it is extremely important to always have an original, complete invoice as supporting documentation.

Without it, the deduction of input VAT will not be possible, even if the expense is considered deductible for Corporation Tax. For more information on this tax, this is a VAT guide.

They should appear in the profit and loss account

They must be reflected in the profit and loss account for the financial year. The Act permits certain explicitly provided cases, such as that of equity items, to appear in a reserve account or be exempt from accounting.

To be charged in the relevant financial year

There are exceptions to this rule, as it is possible to include expenses accounted for on a date after they were incurred and previous income, provided that the result does not lead to lower taxation than would have corresponded in the regular period.

What happens if we deduct expenses that do not meet legal requirements?

If these requirements are not met or the expenses are expressly classified as non-deductible, there is a risk of penalties from the Administration, with fines that can be very substantial.

Examples of deductible business expenses

Now, get to know these examples of deductible business expenses that you should not forget:

The travel costs, provided that an expense sheet is provided specifying the reason for travel and that the expenses are broken down into different invoices.
The hospitality and catering expenses when they are meals related to and necessary for professional activity, in a location different from where the business is conducted and for an appropriate amount. In this regard, it is aware of what the Ticket Restaurant and all its benefits.
Vehicles and related expenses, only if they are totally related to the activity, without being able to be used for private purposes.
The renting premises to develop the company's activity, it is also deductible, or the clothing, as long as it has the business's logo or emblem.

In summary, all deductible expenses of a company that qualify as such because they meet the accounting, justification, and fiscal year allocation requirements may be deducted from the taxable base for the tax. However, this is with the exception of those explicitly listed by the regulations.