How to invoice a referral system

Dear Jane,

In the Spanish law there isn't a solution to your problem. This is the law:

Accounting and expense deductibility

In order for an expense to be deductible it must be taken into account (except where otherwise stipulated under the law), but it must also meet other requirements. These basically boil down to the fact that the expense must represent a real financial event, i.e. the accounting entry must correspond to a transaction that was actually carried out, rather than a simulated transaction.

In order for expenses to be deductible against taxable income for the purposes of Corporation Tax, they must meet the following requirements:

Entry into the accounts: expenses must be recorded for accounting purposes in the profit and loss account, or charged to a reserve account where legislation or regulations so require, with the exception of the provisions set forth with respect to assets that can be freely depreciated, and other cases in which regulations expressly state that expenses need not be charged.

Justification: they should be justified, preferably by an invoice received from the business owner or professional that executed the relevant transaction, or otherwise by a replacement document issued
when the transaction was executed, both of which must comply with the requirements laid down by tax legislation. The invoice must meet the requirements set forth in Royal Decree 1619/2012 of 30th November, which approves the Regulation governing invoicing requirements ("Invoicing Regulation")

Recognition: as a general rule expenses should be recognised in the tax period in which they are incurred. The Rewritten Text of the Corporation Tax Act sets forth, among others, two exceptions allowing revenue and costs to be recognised in a different tax period, in which they have been entered into the books, provided that this does not result in a requirement to pay less taxes than would have been paid had they been recognised in the tax period when they were earned or incurred. The exceptions are as follows:
Expenses recorded in the profit and loss statement in a tax period after that in which they were incurred.
Revenues recorded in the profit and loss statement in a tax period before that in which they are earned.

Matching of expenses and revenue: expenses should be recognised in the same fiscal year in which the relevant business activity aimed at earning revenue is carried out, providing that they are not considered donations, in which case they would not be deductible.

Serapeum Team