B Law & Tax
21 April 2023

Tax advisor: When is a marketing expense on promotion considered not to be a liberality in terms of Corporate Tax?

The Supreme Court Ruling, of March 30th, 2021, appeal no. 3454/2019, determined that booked expenses are not deductible if they constitute donations or liberalities. However, accounted expenses incurred for public relations with customers or suppliers, those incurred to promote the sale of goods or services, those that respond to the same business structure and are related to the business activity aimed at increase profits, and those that are not intended for partners or participants are considered deductible.

The question of interest, according to the recent Order of the Supreme Court, of March 22nd, 2023, is whether expenses related to the direct or indirect promotion of the sale of goods and provision of services are only considered not free of charge if there is a contract between the purchaser and the service provider, or whether they are also considered not free of charge when the provision of the service directly benefits the payer. It is also necessary to clarify whether it is possible to assess the existence of a reasonable interpretation of the rule when a corporate income taxpayer records as a deductible expense an invoice issued by a third party company that has contracted marketing services. It is necessary to know if it is possible to penalize the taxpayer for the lack of payment derived from the latter.

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