These are some of the types of expenses that fall in the grey area because they present an considerable amount of doubtful expenses. So, what does the law say and what are some measures that will ensure that your legitimate expenses are not contested?
Spanish Corporation Tax, allows the deduction of expenses such as the “acquisitions of gifts to clients or suppliers with a limit of 1% the turn-over”. This means that if
you have a turn-over of 50,000€ in 2017, your deductible expense as gifts and special attention to clients is 500€. The challenge, however, is proving that the invoice of that sizable dinner is actually related to one of those concepts.
It is the responsibility of the company or business to prove that these expenses fall under the above mentioned categories. It is not sufficient simply to present the invoice of the restaurant in order to have the expense offset. Of course, at the time of accounting for the invoices and submitting your results hardly anybody is going to object to that (possibly your accountant will advise you not to do it without proper justification).
However, if you ever have to face a tax inspection these will be the first invoices to be disallowed from your books! Remember, that when an expense is removed from
your calculation, you do not only have to pay back the difference in the resulting tax liability, but you also are going to be fined for There is no particular strategy to follow.
However, the idea is to provide as much information as possible along with the invoice to help justify the expense with the resulting sale or service.
These measures do not guarantee that the tax inspector will not have any doubt but they will increase your likelihood of success in proving your case.