Deduct fuel expenses without owning the vehicle? Treasury leaves the door open

Some freelancers who start their activity within this regime need a vehicle to carry out their work and start by using the vehicle of their father or their partner. In these cases, the General Directorate of Taxes (DGT), through a binding consultation dated October 21, 2021, has clarified how to proceed to deduct fuel and vehicle maintenance costs.

For Declarando, the online platform for tax advice to the self-employed, this clarification leaves open the possibility that self-employed professionals can be deducted the expenses of vehicles that are not owned by you.

The query made is whether a natural person who exercises self-employed economic activity and you use a vehicle that you do not own for this purpose, the Value Added Tax installments that you bear derived from fuel costs and other expenses associated with the vehicle are deductible. The DGT clarifies that the exercise of the right to deduct the fees borne for the acquisition of fuel or for the repairs or revisions to which a vehicle is subjected must be separated from the one applicable to its own acquisition.

In particular, taking into consideration the provisions of article 95 of Law 37/1992 on Value Added Tax, and especially its sections one and three, the DGT concludes that “the quotas supported by the acquisition of fuel will be deductible provided that their consumption affects the development of the business or professional activity of the taxpayer and to the extent that it is going to be used foreseeably in the development of said economic activity, like the rest of the quotas supported by the acquisition of goods and services related to said activity”.

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However, remember that “The affectation of the fuel and the rest of the goods and services used in the vehicle to the business or professional activity must be proven by the taxpayer by any means of proof admitted by law”.

Open doors to flexibility

In connection with this binding consultation, martha zaragoza, CEO of Declarando and a lawyer specializing in Tax Law, comments: “The General Directorate of Taxes resolution clarifies that the deduction of the fees paid for the acquisition of fuel or for the repairs or revisions to which a vehicle is subjected must be separated from that applicable to the acquisition of the same, so it leaves the door open to that the expenses of vehicles that are not owned by the self-employed can be deducted.

In relation to the always controversial topic of the deduction of expenses related to the vehicle by self-employed professionals, Marta Zaragozá comments: “In certain activities, such as commercial agent or trade intermediary, the self-employed person needs to use a vehicle to work, and this is normally their own, which does not entail any problem at the time of deducting the expenses».

“However, the problem arises when the self-employed person is engaged in other types of activities in which there are vehicle expenses to allocate, but due to the nature of the activity it is not possible to do so. In these cases, the 50% VAT and 0% personal income tax rule comes into play, or the possibility of deducting a specific percentage of expenses, demonstrating that the vehicle is for exclusive professional use.”

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