When a client is going to pay you for expenses (flights, accommodation, goods for carrying out the activity, etc.), there are two situations to consider:
- Reimbursable expenses:
They are always under the name of the freelancer and is included in the accounting as both an expense and an income so that the result is 0.
Example: A flight to provide a service to your customer. The flight is purchased (€50 + VAT) and the expense is recorded on the books when issuing the invoice to the client and the taxes are included (VAT and personal income tax, if applicable).
How should it be recorded in the books?
- If the purchase invoice is under your client’s name
- Include the necessary rows as expenses covered
- Don't upload the purchase invoice because it isn't under your name
- If the purchase invoice is under your name
- You need to include them in your invoice issued but the category has to be "Professional service"
- You have to upload the expenses in your accounting
Example:
- Expenses covered by customer:
It is essentially an "expense" that a freelancer pays beforehand, but when requesting the invoice, they do it under the client’s name. In order to get their money back, they include this expense in the invoice they’ll issue.
Therefore, it has no effect on the freelancer’s accounting, although there is an obligation to include that expense in the invoices issued without VAT or IRPF.
Example:
Therefore, you must always specify the name of the person to whom the invoice will be addressed, as this will determine how it will be included in your issued invoice.