22 Oct 2018

Can I Deduct My Vehicle Expenses?

If you want to claim for a vehicle through your business, then be aware that the Tax Authorities are very stringent when it comes to claiming the expenses (depreciation, repairs, fuel, insurance, parking etc.).  Exclusive use is compulsory with no allowance for personal use, which is very difficult to prove.  The only exceptions to this are for the following vehicles, where if there is also personal use of the vehicle a proportional amount of the associated expenses are tax deductible:

  • “Mixed vehicles” like a van, which is used for the transport of merchandise
  • Transport vehicles like taxis or rent a car businesses
  • Driving School Vehicles and Vehicles used by commercial agents

If you use your vehicle exclusively for the business activity then it is necessary that you have sufficient proof, for example:

  • Have the business logo on the vehicle
  • Ensure that the vehicle is adapted to the business activity being carried out and that it is not a vehicle that is more often used for personal/family use.
  • Have another vehicle for personal use.

The “Tribunals” have considered that in such cases where it is difficult to prove that the vehicle has not been used for personal matters, it is in fact up to the Tax Authorities to prove that the expenses are not deductible.  For example, if a painter owns a vehicle for personal use and uses another vehicle such as a van, with the business logo on it, to transport materials (not considered as merchandise by the Tax Authorities), then it would be difficult for the Tax Authorities to reject the expenses as tax deductible.

 

Information by E.B.F Consulting S.L.  E.B.F Consulting has been providing tax and accounting services to expatriates in Europe since 1999. Office is based in Lanzarote, Spain.  Visit www.ebfconsulting.com for more details. Copyright © E.B.F Consulting 2018

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