Javier visits clients three days a week in the same car he uses to take his children to school. He can show business use, but not exclusive use. The answer depends on the tax: for VAT he can start from a presumption that the car is 50 % used for the business; for income tax (IRPF), the general criterion requires exclusive use, save for exceptions in the regulations. Deducting 50 % of the VAT does not, by itself, allow him to deduct 50 % of the expense for income tax.
VAT: the 50 % is not automatic without business use
The Spanish VAT Act presumes that passenger cars, motorcycles and similar vehicles shown to be used in the activity are 50 % assigned to it. This can apply to the purchase or lease and, consistently, to fuel, repairs, tolls and parking linked to the vehicle.
You must first prove that there is at least some business or professional use. An invoice in your name, recording it in the accounts or including the car in a book is not enough on its own. If you want to deduct more than 50 %, it is up to you to prove that higher percentage. The administration can also show that business use is lower.
| Situation | VAT (indicative) | Income tax |
|---|---|---|
| Car with business and private use | 50 % presumption once business use is shown | Generally not deductible |
| Car proven to be used only for the business | Up to the degree proven | Can be assigned to the activity |
| Mixed vehicle for carrying goods | Specific 100 % VAT presumption | Review requirements and actual use |
| Taxi, driving school, sales agent or security | Special VAT rules | Exceptions in the regulations, if it genuinely fits |
The 100 % presumptions are reserved for specific categories, such as carrying goods in mixed vehicles, passenger transport, driving instruction, sales representatives or agents, and security services. Putting your logo on a car or calling yourself a sales agent does not replace actually meeting the category.
Before including any VAT, describe the vehicle and its use in the self-employed form. The analysis should be done before the quarter is filed, because rebuilding destinations and mileage months later usually leaves much weaker evidence.
Income tax: a much stricter rule
To deduct depreciation, rental, fuel, insurance or repairs from the profit of the activity, the vehicle must be assigned to it. For passenger cars, incidental private use usually prevents assignment, because the rules exclude simultaneous use for private needs, except in the exceptional cases provided for.
That explains a common situation: someone deducts 50 % of the VAT on a car because they can show partial business use, but does not deduct the expense for income tax because they also use it at weekends. There is no contradiction; each tax has its own rules.
The journey from home to your usual place of work does not automatically make the trip a business one either. On the other hand, client visits, travel between sites or trips linked to assignments can help show business use for VAT purposes, always as part of the evidence as a whole.
Evidence that actually helps
No single document guarantees the deduction. Strength comes from several pieces of evidence that fit together:
- a diary of visits and job sheets with date and destination;
- contracts and emails that justify the travel;
- a mileage log with origin, destination and purpose;
- fuel invoices that match those journeys;
- another vehicle available for private use;
- where the car is usually parked and the nature of the work;
- consistency between mileage, clients and turnover.
Keeping loose fuel receipts does not show which car was filled up or what it was used for. To deduct VAT you need a valid invoice and a link to the activity. A fuel card and an identified number plate make the trail easier to follow, although they do not prove exclusive use for income tax on their own.
A 24,200 € car used for clients and the school run
You buy a car for 24,200 €: 20,000 € of base and 4,200 € of VAT. You can show weekly client visits, but you also use it privately. For VAT, the presumption may allow you to deduct 2,100 €. For income tax, that mixed use normally prevents the car being assigned to the activity and its depreciation and costs being deducted.
If you claim 80 % business use, multiplying 4,200 by 80 % is not enough. You have to back that degree with evidence. And if the use of a capital asset changes later, the deductions may have to be adjusted.
Fuel, repairs, tolls and parking
Running costs do not get a deduction separate from the use of the vehicle. A fuel invoice on a working day can be consistent with a business trip, but it does not prove the destination by itself. A toll or parking ticket near the client, together with the diary and the assignment, gives a fuller sequence.
For VAT, what is examined is the link to the activity and the degree of use. For income tax, if the car cannot be treated as assigned because of its private use, its costs do not all become deductible just because some visit was for work. The exceptional categories have to fit both the activity and the actual use.
Over a year: Javier pays a base of 2,000 € in fuel and maintenance, with 420 € of VAT. If he has shown partial business use of the car and relies on the 50 % presumption, the starting point for deductible VAT would be 210 €. That does not automatically make 1,000 € of base a deductible expense for income tax. The income tax return first requires deciding whether the vehicle is assigned under its own rules.
Selling the car later, and adjustments
The initial decision also matters when you sell the car. If it was treated as a capital asset and VAT was deducted, the sale may be subject to VAT and require an invoice. If the percentage of use changes during the adjustment period, there may be adjustments. For income tax, the gain or loss on an asset assigned to the activity has to be calculated using its tax value, not treated as a simple private sale without reviewing its history.
Keep the purchase invoice or leasing contract, the depreciation schedule, the records of deductions and the sale documents. If the vehicle goes from exclusive to mixed use, date and document the change rather than keeping the old percentage indefinitely.
Choices that do not count as proof
Buying the car in the name of the self-employed person, paying for it from the business account or recording it in the tax register are administrative indications, not sufficient proof of use. Nor is there a rule under which having two cars automatically makes one of them a business car; it helps, but Hacienda, the tax office, can look at who uses them, their availability and how that fits the activity.
The evidence has to be prepared for the period being checked. A diary created after the formal request, with no emails, invoices or locations to support it, carries less weight than a record kept at the time throughout the year.
If several employees or collaborators use the vehicle, record who receives it, on what dates and for which trip. That trail helps separate private availability from business use and explains mileage that one personal diary could not justify.
Buying, leasing or using your own car
Renting (long-term leasing) does not remove the assignment rules. It changes how the cost is spread over time, but the payments and services must still be linked to the activity. Nor can you deduct an arbitrary mileage figure for using your own car: the expense, its supporting evidence and the applicable treatment have to be identified.
Before including the vehicle in the books of the activity, decide VAT and income tax separately and keep the evidence from day one. The same separation between the two taxes is essential when deducting the part of your home where you work.
At Salama Tax we review the real use and the documentation before a percentage is applied that would later be hard to defend.