The question "Can I deduct this?" sounds binary, but it contains three separate questions: how the purchase is recorded, how it affects direct tax, and whether input IGI is recoverable. Mixing these layers is a common cause of difficult closes.
The three layers of the same expense
| Layer | Question | Main evidence |
|---|---|---|
| Accounting | What was purchased, and which period does it belong to? | Invoice, accrual date, and ledger account |
| Direct tax | Is the expense linked to the activity? | Business purpose and the judgement applied |
| Input IGI | Does the tax meet the requirements for deduction? | Valid invoice, business use, and period register |
Official information about IGI Govern d'Andorra — Impost General Indirecte
The minimum evidence file
The goal is not to accumulate documents. It is to reconstruct the decision months later. For every material expense, the evidence file should answer these questions:
- Who sells: company name, tax ID and country.
- What was purchased: a sufficiently specific description, not just "services".
- Why it is a business expense: the related project, client, team, or internal need.
- When it belongs: the invoice date and accrual period where they differ.
- How it was paid: the bank transaction or cash record, without confusing payment with accrual.
- Who approved it: especially for sensitive, mixed-use, or out-of-policy expenses.
If the invoice is missing, do not invent details or turn a receipt into a full invoice. Mark the document as pending, request the invoice from the supplier, and record the follow-up.
A five-minute review before every close
- 01Find duplicatesCompare supplier, invoice number, date, and amount. Uploading the same file twice must not create two expenses.
- 02Separate pending itemsDon't mix incomplete documents with approved expenses. A visible review queue is better than seemingly clean data.
- 03Review the tax amountsCheck the taxable amount, IGI rate, and tax amount, and confirm that the treatment matches the nature and use of the purchase.
- 04Reconcile paymentLink the expense to the bank transaction without erasing differences caused by dates, fees, or partial payments.
- 05Close with evidenceRecord who approved the treatment, when, and on what basis. If the judgement changes, post an adjustment rather than rewriting the past.
Department of Taxes and Borders Govern d'Andorra — Departament de Tributs i de Fronteres
What the software should do
- Capture data without treating it as approved.
- Detect possible duplicates before posting.
- Separate proposal, approval and final journal entry.
- Keep the original document and the change log.
- Let the accounting firm review exceptions without exchanging folders by email.