With the progress of technology and the abundant means against tax fraud, the Tax Agency is increasing inspections, in order to achieve greater collection. It is easy for the AEAT to cross databases and taxes to detect discrepancies. Once a difference is found, the first thing they will require will be the deducted expenses, to avoid VAT fraud. You must take into account a series of criteria when separating deductible expenses from those that are not and you have to know what requirements the deductible invoicesmust meet.
Deductible Invoice Requirements
The requirements to deduct an invoice in your quarterly or monthly settlement, in case of a large company, (you can also take advantage without being a large company for certain reasons, such as enjoying deferred VAT on imports) are clear in the VAT law.
It is advisable to comply with these parameters, since, before any inspection, you will be asked for the invoices of the input VAT to verify that they meet the requirements and have not included expenses that do not correspond.
The requirements of the invoices are:
- Invoice number and where appropriate the series, an invoice number can never be repeated within the same year and these must be issued in a correlative manner.
- The date of the invoice, in addition, this date has to be correlated with the number, there can be no later numbers with a date earlier than those issued.
- Name of the company or freelancer that issues the invoice, including the CIF or the NIF for people.
- Name of the company or person to whom the invoice is issued with its CIF or NIF.
- Concept of the operation with description of the good sold or the service provided.
- VAT rate to be applied to the transaction.
- Breakdown of the VAT base and the VAT quota. If you have several VAT rates applied, they will be broken down separately.
- Date of completion of the operation if it is different from the date of issuance of the invoice.
- Whether or not the invoice is exempt from VAT, it is important to indicate the article of the law by which it is affected.
The invoice must be issued at the time of the operation,except for professionals who can issue it within one month of it.
How do I know if VAT on an invoice is not deductible?
When you receive invoices, purchase tickets, food or gasoline, you try to deduct all possible expenses, to recover that VAT that has been paid, but you can not always include it in your return.
This reality must be taken into account and, before any inspection, the first thing they will require are the VAT books and the verification of the invoices supported.
What Are Deductible Expenses for Businesses?
- The expenses must be assigned to the company,you will have tocorrectly eparate the expenses of your activity from personal expenses.
In these expenses there are always doubts with the expenses of the vehicles, such as fuel, parking or toll.
For these expenses to be considered deductible, the vehicle must be part of the company’s assets and therefore must appear in the accounts. In addition, the good must be clearly related to your activity. If the vehicle is also used for personal purposes, it must be taken into account that the invoices deducted have not occurred on non-working dates of the activity, such as weekends or at times that are not typical of the working day.
- The VAT on travel expenses is another of those usually revised, those that have a clear relationship with the economic activity of the companymay be deducted, and also do not exceed what is considered normal. Personal travel expenses must be well separated to avoid possible discrepancies and penalties.
- It is an essential requirement to have the original invoice of the expense,document issued by the administration in the case of operations outside the national territory (customs SAD), or the original receipt in the case of payment of the surcharge in the special agricultural regime. In the case of simplified invoices, old tickets, the name and CIF of the recipient must appear, as well as the breakdown of the quota and the VAT base.
- The expense must be included in the accounting of the company and in the VAT record book,everything that does not appear can not be included in the VAT models.
- There are a number of expenses that cannot be deducted,since the Tax Agency will not consider them deductible, as they are not identified as affected by the activity. These are the
purchases of luxury goods,
jewelry or jewelry. Food, beverages or tobacco, the expenses of recreational services, shows or intended for the attention of third parties.
As you can see, the list of requirements and criteria to take into account is long, but it will avoid much more expensive sanctions and regularizations and, in this time of crisis, sanctions revenues have become a collection instrument.