Are business meals deductible in 2022 – Article 92 One of the VAT Law on deductible tax quotas establishes that “Taxpayers may deduct from the Value Added Tax quotas accrued for taxable operations carried out in the interior of the country those that, accrued in the same territory, have supported by direct repercussion or correspond to the following functions: 1. The deliveries of goods and services carried out by another taxpayer of the Tax.
As a conclusion to all these considerations, we must extract the following:
- The employer must prove the affectation of the vehicle on the company’s activity.
- The employer must determine the adequate degree of affectation the acquired vehicle will have on the company’s activity.
- You can deduct the VAT paid on the vehicle’s acquisition and use in the determined proportion.
- Suppose the degree of affectation determined is 50%. In that case, you should not prove anything about the degree of affectation since it within the assumption collected by law and deduct 50% of the VAT paid.
- If the determined degree of affectation is higher than 50%, you must prove a higher degree of affectation. To justify this higher degree of affectation, the company may provide parts of visits to customers, suppliers, administrations, etc., which can demonstrate that vehicle used for business purposes. It is advisable to keep an agenda of visits and proof of their practical completion with the signature or seal of the clients, suppliers or administrations of the visit actually carried out. You may also justify a higher degree of affectation for constituting part of the use of the vehicle as remuneration in kind of an employee or manager.
- The vehicles used in the professional displacements of the representatives or commercial agents may
deducted at 100% without further proof that they were assigned to people with these functions.
- Corporate tax. Any amount of VAT intended to deducted must supported by an invoice issued in a legally established manner. Let us note, for example, that most of the VAT paid for toll charges are not deductible since usually, the receipts delivered when passing through the toll station are tickets with incomplete information and are not deductible for VAT or tax purposes. For this, it is advisable to use the Vía-T electronic toll system to request complete invoices a posteriori. The parking fees are very similar to toll fees since blue zone parking tickets in many cities are of little use. If it is a public or private car park for help, requesting a complete invoice from the concession company is essential. Therefore, the car park visited relatively frequently, it recommended to use the option provided by recapitulative invoices; this would allow all visits to the car park to be grouped into a single invoice. Likewise, and for the same reasons, it is advisable either to use a fuel card or to request a valid invoice for the supply made each time at the service station since the tickets that are generally issued do not meet the formal requirements.
DEDUCTION OF VEHICLE EXPENSES FOR CORPORATE TAX PURPOSES
Tax regulations require that expenses, to be deductible from corporate Tax, must be directly related to income; they have incurred the exercise of the activity and are necessary to obtain payment, corresponding to the taxpayer demonstrating that such circumstances exist.
Suppose the vehicle is exclusively for the company’s activity (it means that the corresponding purchase invoice available, it accounted for, and the exclusivity of use can proven). In that case, all the expenses derived from its purchase can deducted, as well as consumer derivatives and their maintenance. Otherwise, you will not be able to remove any expenses
on the vehicle for corporate tax purposes.
But the usual is usually private sharing and business purposes. Within this section, and for the part of the use of the vehicle that does not correspond to the exercise of the activity, we will find that there will be remuneration in kind for the benefit of the worker (or partner or administrator) who uses the vehicle for private purposes.
In this case, the company may also deduct all the expenses related to the vehicle. Still, the company must allocate a remuneration in kind in favour of the person who is using it. For this, the employer must determine the adequate degree of affectation that the acquired vehicle will have on the company’s activity and which part s envisioned for the private use of the partner, administrator or employee. In this case, the expenses that are proportional to the use of the vehicle for personal purposes will have the character of personnel expenses as remuneration and will also be deductible for the company.
As a conclusion to all these considerations, we must extract the following:
- The employer must prove the affectation of the vehicle on the company’s activity.
- The employer must determine the adequate degree of affectation the acquired vehicle will have on the company’s activity.
- You can deduct the expense incurred for amortization and other costs for vehicle use in the determined proportion.
- The employer must be able to prove before the administration the degree of affectation of the vehicle to the activity, whatever it may be, by generally accepted means of proof. To justify this degree of affectation, apart from the invoices of all the expenses, the company may provide parts of visits to clients, suppliers, administrations, etc… and everything that demonstrates the vehicle used for business purposes. It is advisable to keep a schedule of visits and proof of their practical completion with the signature or seal of the clients, suppliers or administrations of the visit actually carried out.
- The expenses incurred by vehicvehicles used onesentrepresentatives orl agents may agents professional trips may deducted without further proof that they assigned to people with these functions.
- For the expenses incurred in vehicles for private shared use and for company purposes, the company may also deduct 100% of the costs related to the car when the company allocates a remuneration in kind in favour of the employee who is using it an amount equivalent to the cost value of such use. This expense must accounted for as personnel expense the company’s accounting.
- any case, any expense that is intended to be deducted from corporation tax must be supported by invoices issued in a legally established manner.
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