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Income Tax in Spain

Tax Deductible Expenses for Professionals: Car

As far as car expenses are concerned the law is quite contradictory. For the urpoes of income tax (IRPF), the right to deduct any car expenses is expressly forbidden. Likewise, the purchase or maintenance of a vehicle may not be deducted unless they are for the carrying out of the following activities and professions: driving instructors, taxis, industrial transport vehicles, car hire or commercial agents.

With regard to VAT (IVA), the law is based on the presumption that the vehicle is used in the same proportion for both professional and personal needs. In practice therefore, Hacienda will allow you to deduct 50% of the VAT based on the above-mentioned presumption but will allow for no such deduction when it comes to income tax.

For a more complete discussion on this topic please go to the main page on Income Tax Spain..