The treatment of VAT related to vehicles used for business activity remains a controversial issue.
A few months ago, the AEAT issued an informative note in relation to this issue in which it was established, based on previous resolutions of the TEAC and the National Court (“Audiencia Nacional”), that benefits in kind for the use of vehicles should be made based on the proportion of working hours. provided for in the Collective Agreement (“Convenios Colectivos”) with respect to the total hours of the year (so the hours of sleep, the hours on working days but outside working hours, weekends, holidays and vacations were counted as personal use of the vehicle), fact that led to percentages of 80% personal use. The same criterion according to the AEAT should be applied in the case of VAT. With this, the AEAT understood that the criterion of the presumption of 50% of business impact of the vehicle established by the VAT Law in these cases was exceeded and it was established that the burden of proof to prove a percentage different from the 80% mentioned fell on the taxpayer.
On the other hand, the recent Supreme Court ruling, dated 01-29-2024, clarifies the criteria that should be applicable:
- – The 50% presumption of article 95.Two.3º) of the VAT Law is returned: pointing out that to apply a deductibility proportion lower than said 50%, the Administration must refute this presumption and prove it. Here the doubt remains as to whether the Administration will continue to apply its “other” presumption (that all non-working hours count as personal use), although we understand that with the new Sentence it will be obliged to prove it and that the burden of proof. For this it will be up to the Administration. In the same sense, we understand that in the case of wanting to deduct a proportion greater than said 50%, the taxpayer must prove it. It remains to be seen if the courts will accept as accreditation (by the Administration) that 80% of the use of the vehicle is personal, based on the calculation of working hours according to the Collective Agreement, or if this will not be proof. enough.
- – The transfer of use of a vehicle by a company to an employee (for professional and personal use) cannot be considered an onerous transfer (therefore, the company must not charge VAT) unless there is a monetary consideration for part of the worker to the company (cash payment by the worker, less remuneration on the payroll, renunciation of other company benefits, etc.). The fact that the worker is charged with benefits in kind for the use of the vehicle does not mean that it is an onerous operation, so it does not imply that the worker necessarily must bear the VAT. This criterion was also established by the AEAT in its informative note, although the reality is that it had regularized VAT settlements, impacting the VAT on the worker’s remuneration in kind, and hence the importance of this ruling.
Although this statement clarifies the issue, there are still cases pending resolution that we will follow closely and on which we will make the appropriate update.
For questions related to this or other matters of tax, accounting or legal relevance, contact our tax advisors in Barcelona.
