Disbursements – basic principles

Businesses can advance expenses on behalf of their customers and subsequently receive reimbursement. When these expenses are rebilled to the customer at the exact price paid, this is known as a disbursement.

Rebilling of disbursements is a solution to avoid expenses being subjected to VAT, but only if all of the following conditions apply:

• You have received a mandate from your customer to incur these expenses in your customer’s name and on its behalf. In other words, this must be set out in the contract that you have signed;
• You must rebill these expenses, charging the exact amount of the expense incurred down to the last cent;
• You must individually identify expenditure that you rebill to each customer, in dedicated third-party “pass-through” accounts for this specific purpose;
• Set out your VAT exemption on your invoices by virtue of the applicable legislation;  
• Account to your customer for any expenses incurred by including details of the expenses as an annex to your invoice.