Provisión de fondos: it depends what the money is for
The same receipt can carry VAT or not depending on what the money is going to be used for. And that decides whether you have to invoice now or not yet.
Money the client hands over in advance, which triggers VAT if it is on account of your work and does not if it is to pay costs in their name.
«Provisión de fondos» is not a tax category: it is an expression from professional practice covering two very different things.
Case 1: an advance on account of your work
It is an advance payment. Article 75.Two of the VAT Act settles it: the tax becomes chargeable when the money is received, in whole or in part, for the amounts actually received. You have to issue an invoice for that advance and declare it in the quarter it was received, even if the work has not started.
Case 2: money to pay the client's costs
If the client hands you money so that you can pay fees, duties or expert reports in their name, that amount is not consideration for anything you do and does not trigger VAT. When you pass it on in the final invoice it will be a suplido, with the four requirements that carries.
An example with numbers
A law firm receives €1,500 as a provision for a set of proceedings. The agreement shows that €900 is fees on account and €600 is court fees in the client's name:
- The €900 has to be invoiced now: €900 of base and €189 of VAT, in the quarter it was received.
- The €600 triggers nothing until it is spent; it will go on the final invoice as a suplido.
If the agreement says nothing, the administration tends to treat the whole receipt as an advance. That is: €1,500 with €260.33 of VAT inside it. Writing it into the engagement takes one line.
The mistake that comes up most
Keeping the whole provision without invoicing until the matter is over. If part of that money is an advance on fees, the VAT already became chargeable on the day it was received: delaying the invoice does not delay the tax, it just leaves the quarter short.
Where this carries on in Cairos: Provisiones and suplidos in a law firm.
Terms that go with this one
Almost no tax concept makes sense on its own. These three are the ones that most often turn up beside it.
Suplido
An amount paid in the client's name and on their behalf, under express instructions, which is passed on to them without VAT and does not form part of your taxable base.
VATDevengo (the chargeable event)
The moment a transaction is treated as having taken place and the tax obligation arises, regardless of when it is paid for.
InvoicingPro forma invoice
An informative document that looks like an invoice but has no tax effect: it does not trigger the chargeable event, it is not entered in the books and it does not allow a deduction.
This, handled without thinking about it
Cairos keeps the invoices, the record books and Hacienda's forms from the same data, so the theory on this page turns into boxes that are already filled in.
No card and no minimum term.