The Spanish Supreme Court considers that the presumption that the vehicles are 100% used in such professional travels applies irrespective of whether the commercial tasks are undertaken by self – employed personnel or employees. The presumption implies that 100% of the input VAT paid on acquisition can be deducted.
The Spanish Supreme Court, in its Sentence 1347 / 2018 of July 18, clarifies how the VAT deduction operates in the acquisition of vehicles used for the professional travels of commercial agents.
The Court considers that the presumption that the vehicles are 100% used in such professional travels applies irrespective of whether the commercial tasks are undertaken by self – employed personnel or employees. The presumption implies that 100% of the input VAT paid on acquisition can be deducted. It admits, however, proof to the contrary as to the percentage of use, placing the burden of proof entirely on the Tax Administration.
✔ Spanish domestic regulations, (article 95 of Spanish 37 / 1992 VAT Law) allow the deduction of input VAT related to vehicles in view of their effective use in the business activity. Vehicles that are used for the transportation of merchandises, travellers, educational services, sales promotion, commercial travels and surveillance services are deemed to be 100% used for the business activity.
✔ This presumption accepts, however, proof to the contrary if the Tax Administration proves that the degree of use in the business activity is lower than the one established by Law. In such a case, the Tax Administration is obliged to regularize the VAT deduction derived from the legal presumption, according to the new proven percentage.
✔ With respect to vehicles used by commercial agents, the Supreme Courts considers that the presumption applies irrespective of whether they are self – employed or employees of the company. The Court arguments are the following:
- The letter of the Law does not refer to self – employed.
- The purpose of the legislator is accepting a 100% presumption given that commercial activities require permanent travels.
- There is no reasonable evidence to distinguish between self – employed and employees given that they equally need to travel.
✔ It is worth mentioning that input VAT paid in the acquisition of fuel or in the car repairs or reviews is deductible in as much as their consumption is affected to the business activity. The exercise of the right to deduct input VAT must be dissociated from the car acquisition. Consequently, the use of fuel and the rest of car products and services in the business activity will need to be proven by the taxpayer with any mean of proof admitted by Law.