Can you deduct VAT (IVA) from the cost of acquisition or maintenance of a private vehicle when it´s used in your professional activity as self-employed or in your business activity?
A common question asked by self-employed workers is if they can deduct VAT from the cost of acquisition or maintenance of their private vehicle. According to some enquiries carried out to the Tax Agency it will depend on the case.
There are some answers to enquiries made to the Tax Office in which is said that you can deduct the 50% of the VAT payed in the acquisition and maintenance of your vehicle as long as you can prove that you use it in your business activity. For example, you can prove it presenting emails with agreed visits with customers, agenda of visits along with a list of customers and areas in which they reside, documents or accepted budgets containing the location where the service is provided or goods delivered etc… So everything possible to demostrate that you use your vehicle to earn income for your economic activity.
In some cases a 100% of the VAT could be deducted, but should be demostrated that the vehicle is linked 100% to activity and comply with some features as being a mixed vehicle for the transport of goods, used in providing services for passengers transport or drivers teaching, used in professional trips of representatives or sales agents, used in surveillance services etc. Among other things, it could serve to demonstrate this 100% linkage activity if the vehicle is labeled with the name of the company, if it´s not a high end car, if you have another vehicle for private use or if the vehicle is classified as industrial alternative.
In any case, unless you adjust 100% to the standards, each situation is unique and will depend on what you allegue in case of inspection for the Tax Office to consider correct the deductibility of VAT.
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