The Spanish General Directorate of Taxes (GDT) has rectified its criterion, by establishing which must be the treatment of input VAT in the acquisition or lease of business vehicles that are transferred to employees for their private use.

The transfer of vehicles constitutes, for the part destined to private purposes, a fringe benefit of compulsory compliance for enterprises, in so far as it is established in the labor contract and forms part of the total employee’s retribution for the services rendered.

The GDT understands, based on the EU Superior Court of Justice criterion, that the fringe benefit implies its qualification as a rendering of services made for consideration. In such a case, it is a VAT subject transaction, which permits the full deduction of input VAT quotes paid for the acquisition or lease of the vehicle.

input VAT quotes paid for the acquisition or lease of the vehicle

✔ In order to deduct input VAT, of acquired or leased vehicles that are further put at the employee’s disposal, it is necessary that such vehicles are used for the company’s activities and that these are subject to and not exempt from VAT.

✔ Once it is proven that the vehicles which are ceded are, at least partially, used for the business activities, it is presumed that such degree of use is of 50%, except for sales agents vehicles which are deemed to be 100% used for the company’s activities.

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Based on this criterion, the GDT resolved, in its consultation CV2450 – 18, of 12 September, that the tax deduction of input VAT should follow this presumption of 50 or 100%, depending on whether the employee using the vehicle is a sales agent or not.

Notwithstanding this presumption, the GDT reminds of the taxpayer’s possibility of undertaking the difficult task of proving a degree of use higher than 50%.

✔ In its resolution CV3216 – 18, of 18 December, the GDT brings in the criterion established by the EU Superior Court of Justice, on whether we are in front of a transaction in exchange for a consideration or made for free, when there is a fringe benefit deriving from the vehicle’s assignment to the employee.

The GDT considers that the vehicle’s assignment is a fringe benefit of mandatory compliance for the employer, if it is so established in the labour contract, so that part of the labour rendering is the counterpart of such an assignment. In such a case, the fringe benefit constitutes a rendering of services made for valuable consideration, for VAT purposes, and it is subject to VAT.

As it is not put at the employee’s disposal for free, it cannot be considered as a courtesy in favor of the employee.

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Consequently, the employer company shall be fully entitled to the deduction of input VAT in the acquisition or lease of the vehicle, as it is used in a 100% subject to VAT activity, not VAT exempt. If the company acquires the vehicle, it shall be entitled, in such circumstances, to the VAT deduction, even if the output VAT on the fringe benefit is paid as it is further on charged to the employee.


Publicado el 04-2019 por PBS