The deduction of VAT in the purchase and use of vehicles continues to be one of the most frequent inquiries among entrepreneurs and self-employed individuals in Spain, due to the potential cost reduction that this represents. However, this deduction is subject to specific rules outlined by Spanish legislation.
The main criterion for deducting 100% of the VAT paid on the acquisition or leasing of commercial vehicles is their exclusive use for business activities. This requirement is stipulated in the Value Added Tax (VAT) Law, which sets the basis for these types of deductions. However, if exclusive use cannot be proven, a mixed use (both business and personal) is assumed, limiting the deduction to 50%.
There are exceptions to this rule when exclusive use can be presumed due to the nature of the vehicle and the activity it performs. For example, vehicles used in the transportation of goods, passenger transport, driver training, testing or promotion by manufacturers, commercial representatives, and surveillance vehicles, can deduct the entire VAT paid. In these cases, keeping a record of exclusive business use is crucial and must be meticulously documented.
To validate the VAT deduction, it is essential to provide documentation that supports the business use of the vehicle. Required documentation includes fuel invoices, mileage records, maintenance proof, use of GPS tracking systems, and any other legally admissible proof methods.
When a vehicle is used for both business and personal activities, the proportion of use must be reflected in the VAT deduction, as illustrated by the example of a vehicle purchased for 30,000 euros plus VAT. If it is shown that its business use is 70%, only 70% of the VAT can be deducted, which is 4,410 euros, instead of the total allowed if the use were exclusively business-related.
For entrepreneurs and self-employed individuals, the correct application of VAT deduction regulations is vital to maximize tax savings. However, this depends on strict compliance with legal requirements and maintaining detailed records of vehicle use. Therefore, understanding legal and tax guidelines is essential to properly take advantage of this economic benefit.
Referrer: MiMub in Spanish
