You may need to visit a client in other city and need to stay overnight. Or perhaps you need to attend a course, a seminar or a fair in another country. What expenses can you include in your books?
As commented in our article “What expenses can you offset against tax”, any expense needs to meet these two criteria to be included in the books.
1) Ordinary and necessary. It is related to your business activity and necessary to operate. ie a carpenter can put in the invoice for a hammer, an accountant…hardly.
2) There must be a proper invoice as a documental proof backing the expense, containing all the required information.
The reason for the expense.
However in cases like the ones that we are considering here, you will need prove point 1 solidly.
Before the Tax Office, in case of an inspection, the proofs that we refer here are the kind that would normally be accepted in a court. (well documented)
If your travel expenses can easily be misinterpreted as of personal nature, you will need to provided documents that prove the reason of your trip.
- A contract signed during the visit, or an order sent by the client shortly after can justify the need for a visit.
- An invoice for attending a seminar, with the dates in which it was held, can justify the travel and hotel fees of those days.
No need to mention that a 2 day-course cannot justify hotel fees for 7 days of stay.
- Emails exchanged with your client commenting the need of a visit, or setting the appointment can proof that your trip was done for business purposes.
In essence, for each expense of this nature, we will need to provide date, location and the need for the trip. The easiest way is to write this information on the expense document ( invoice, contract…) for future reference.
How much is the expense
There is a limit to the amount you can spend on dinners and accommodation per day.
|Meal & Accommodation||Only Meal|
|In Spain||53.34€ per day||26.63€ per day|
|Abroad||91.35€ per day||48.08€ per day|
If the expense exceeds the limit the invoice is still valid but can only only be deducted up to that amount.
Additionally,in order to be tax deductible, the expenses must be:
1.paid by electronic means ( credit card, transfer, )
2. consumed in a restaurant or hotel.
Remember, if we provide a weak reason, or in any other mean fail to be convincing, the inspector will take away the expense and apply a penalty for incorrect tax deduction, beside claiming the unpaid tax.