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Deduction of Input VAT on Vehicles Used for Business or Professional Activity

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Deduction of Input VAT on Vehicles Used for Business or Professional Activity
Articles in English
abril 27, 2018

 

On February 5, 2018, the Supreme Court ruled on one of the issues that has raised the most questions and on which the Spanish Tax Administration has focused the most on inspections in the area of Value Added Tax, the deduction of tax on vehicles used for business activities.

 

This Court considers that Article 95. Tres LIVA does not determine or prioritize the deduction corresponding to the VAT paid in relation to the vehicles concerned, but conditions that deduction to the complete accreditation of the effective use of the vehicle in the activity of the professional or entrepreneur.

Likewise, the Court incorporates a clear, evident rule: a rebuttable presumption of impairment of the vehicle by 50 per cent, a presumption that can be destroyed not only by the taxpayer (establishing – by any means of proof admitted in law – a degree of use of the good greater than that percentage), but also by the Treasury (which must prove in full, in order to impose a lower deduction, that the degree of impairment is lower than that presumed by law).

Having said that, the Court claims that there is no contradiction between the provisions of the LIVA with regard to the limitation on the deduction of VAT from those vehicles and the provisions of Article 17 of the Sixth Directive (77/388/EEC) equivalent to Articles 167, 168 and 173(1) of the current Directive 2006/112/EC and the case-law of the ECJ interpreting it.

Paula Valdecantos de Echave-Sustaeta

Senior Consultant

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