Self-employed people in Spain can use different deductions in the 2023 Income to try to achieve greater savings, among which are those that are related to car expenses. However, in order to use them it is necessary to comply with a series of requirements established by the Tax Agency and which, in some cases, can be somewhat complex.
First of all, we must talk about the possibility of deducting VAT from the purchase of a vehicle, although not everyone can apply the deduction in an identical way. In this sense, the Tax Agency establishes a series of differences that are based on the type of vehicle, its use and the self-employed person’s own activity.
As a general rule, any self-employed professional can deduct VAT when purchasing a vehicle, but the percentage to be deducted depends on the degree of connection of the automobile with the worker’s professional or business activity. In this way, if it is used exclusively with labor fines, this must be demonstrated, and may consider a degree of impact of 100%, which will mean a VAT deduction of up to 100%. If it is also used with personal fines, the deduction is limited to 50%.
The key to being able to deduct 100% VAT does not apply to all self-employed workers, since this requires that the self-employed person’s activity completely justifies the exclusive use of the vehicle for professional purposes. This is the case of self-employed people who use the car to transport people or goods, security guards, commercial representatives and even insurance agents.
In order to justify the exclusive use of the vehicle for a work purpose, vehicle geolocation systems, work reports, business visit agendas, mileage records or the possession of another automobile for personal use can be presented. It is essential to have detailed and accurate documentation to avoid penalties in the event of tax inspections.
Deduction of expenses related to the use of the vehicle
On the other hand, the operating expenses of the vehicle can also be deducted, although, again, this expense must be directly related to the economic activity of the professional, prior to the existence of an invoice that justifies that expense and that it is duly recorded in the accounting. . ity of the self-employed. As a general rule, 50% of VAT can be deducted from these expenses.
However, in the event that a vehicle is 100% deductible and it can be justified that it be used exclusively with professional fines, 100% of the related expenses may be deductible. Likewise, 50% of these expenses can be deducted in the Income Tax return, except in some cases such as parking payments, vehicle insurance or road tax, where the deduction is limited to 5%.
