# Meaning of "IVA deducible" when buying car?



## anderso (Jan 5, 2012)

We are relocating to Valencia April 1st and wish to buy a Spanish car. Our NIE application will be processed at the local Spanish embassy so we should be able to buy a car on the day we arrive.

Now, I have been searching for used cars on autoscout24.es and see that some of them adds a little "IVA deducible" next to the price.

I know this means that VAT is deductible but how exactly does that work? What is the criteria for being able to deduct IVA? What do you do?

We own and run our own (Danish) business that we will continue to run from Spain. Just in case this has any relevance - Spain and Denmark obviously both being part of the EU.

Thanks!
Anders


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## anles (Feb 11, 2009)

anderso said:


> We are relocating to Valencia April 1st and wish to buy a Spanish car. Our NIE application will be processed at the local Spanish embassy so we should be able to buy a car on the day we arrive.
> 
> Now, I have been searching for used cars on autoscout24.es and see that some of them adds a little "IVA deducible" next to the price.
> 
> ...


If you buy a second hand car, you only pay IVA on it if you buy it from a business. If you buy it privately you pay ITP. You can only deduct the IVA on the car if you own a business or are self employed and in this case you must be able to prove the car is used only for business purposes. If you use the car for business purposes and for private purposes, only the part corresponding to business use is deductible.


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## xicoalc (Apr 20, 2010)

anles said:


> If you buy a second hand car, you only pay IVA on it if you buy it from a business. If you buy it privately you pay ITP. You can only deduct the IVA on the car if you own a business or are self employed and in this case you must be able to prove the car is used only for business purposes. If you use the car for business purposes and for private purposes, only the part corresponding to business use is deductible.


Anles seems to have summed that up pretty much as I would!


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## anderso (Jan 5, 2012)

anles said:


> If you buy a second hand car, you only pay IVA on it if you buy it from a business. If you buy it privately you pay ITP. You can only deduct the IVA on the car if you own a business or are self employed and in this case you must be able to prove the car is used only for business purposes. If you use the car for business purposes and for private purposes, only the part corresponding to business use is deductible.


Thanks a lot. Do you know if this business (that the buyer owns) must be Spanish or will a Danish one do? Most of the car use will be for business purposes, but it could be difficult to prove.

When a business registered in one EU country buys something from a business in another EU country, VAT should normally not be added. I guess this would apply in this case? And if I see "IVA deducible" next to an add from a car dealer, does that then mean that the dealer is selling the car on behalf of a business?

I know this is a bit technical, but maybe you know ... thanks again.

Thanks again.


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## xicoalc (Apr 20, 2010)

anderso said:


> Thanks a lot. Do you know if this business (that the buyer owns) must be Spanish or will a Danish one do? Most of the car use will be for business purposes, but it could be difficult to prove.
> 
> When a business registered in one EU country buys something from a business in another EU country, VAT should normally not be added. I guess this would apply in this case? And if I see "IVA deducible" next to an add from a car dealer, does that then mean that the dealer is selling the car on behalf of a business?
> 
> ...


This is a bit specialist! You are absolutely right that EU-EU business deals can be performed free of VAT providing the company is registered to trade in the rest or Europe and on the European register of VAT traders. My experience of selling to the UK was relatively straightforward because i was supplying services to a company based in the UK and those services would be consumed outside of Spain. If you are buying the car and it will remain in Spain and be used in Spain I would imagine you would have to be able to justify that it is for the business in the event of an enquiry (although I am not entirely sure).

I do know that VAT in general when it comes to cars is a little more complicated than other goods unless the car is 100% for business... For example, I used to own a driving school in the UK and we leaves cars but also bought about 20 or 30 a year when the deals were right. We were able to reclaim the VAT on those entirely because they were driving school cars which would be dual controlled, branded and completely used for commercial purposes. I bought myself a new car and the accountant would not let me reclaim the VAT desire me putting the invoice in the company name because he said there was not strong enough evidence to suggest I would be using it for the business.

VAT rules are extremely complicated... I remember once paying a VAT expert a fortune to fathom out rather complicated VAT rules when it came to my last UK business and some very specific clauses in VAT rates. 

Ultimately, I would do the following:

1) Check with your own accountant that he is happy for you to buy a car VAT free, he will know much more about your business model and the rules that apply in your country.
2) Check with the business selling the car if they can sell it to you VAT free with your foreign VAT number. 

Ultimately the VAT people are not stupid and they know that many self employed or company directors buy a car and ask for the bill in the business name as a way to get back 18 or 20% of the purchase cost (which on a car can run into thousands). Obviously if the car is legitimately for business then I am sure i can be done, but it really is best to get specific advice from a professional on this!

Sorry I can't be more helpful!


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## anderso (Jan 5, 2012)

steve_in_spain said:


> This is a bit specialist! You are absolutely right that EU-EU business deals can be performed free of VAT providing the company is registered to trade in the rest or Europe and on the European register of VAT traders. My experience of selling to the UK was relatively straightforward because i was supplying services to a company based in the UK and those services would be consumed outside of Spain. If you are buying the car and it will remain in Spain and be used in Spain I would imagine you would have to be able to justify that it is for the business in the event of an enquiry (although I am not entirely sure).
> 
> I do know that VAT in general when it comes to cars is a little more complicated than other goods unless the car is 100% for business... For example, I used to own a driving school in the UK and we leaves cars but also bought about 20 or 30 a year when the deals were right. We were able to reclaim the VAT on those entirely because they were driving school cars which would be dual controlled, branded and completely used for commercial purposes. I bought myself a new car and the accountant would not let me reclaim the VAT desire me putting the invoice in the company name because he said there was not strong enough evidence to suggest I would be using it for the business.
> 
> ...


Thanks a lot Steve, you have been most helpful. This is certainly a bit complicated and I think even my accountant will be on this ice here. EU is supposed to make it easy to run businesses across borders, but some things are still very tricky. 

Would Spanish tax/vat officers even care about this if the car was in fact bought buy a Danish, not a Spanish, company? Hard to say. I don't think the Danish tax authorities will send down officers to check up on how we use our car. 

But I will try to make it as easy for myself as possible and will probably not attempt to reclaim VAT. Spanish bureaucracy seems daunting enough, and I don't want to add more grief than absolutely necessary.

Thanks again,
Anders


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## VFR (Dec 23, 2009)

Hello Anders.
As you will be based in Valencia it may pay to ask your question with this Gestor ...... Asesoría SALVADOR SANCHIS.
They may know the answer ?, or be able to assist ?


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## anderso (Jan 5, 2012)

Thanks Brian. I am sure we will need a Gestor at some point or another and you just saved me some work looking for one. I may also take this one up with him ...

Anders


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## crookesey (May 22, 2008)

I've bumped this up for the current car enquiry.


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