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V0439-26 27 February 2026 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · gasto deducible

Life insurance premium linked to a vehicle loan is not deductible if not a mandatory condition

A self-employed person renting caravans asks whether they can deduct the premium of a life insurance policy taken out to cover a vehicle purchase loan. The DGT responds that it is not deductible because the insurance was not a mandatory condition for obtaining the loan, but rather an optional measure to improve loan terms.

The question raised

Whether the insurance premium paid is considered a deductible expense for Personal Income Tax (IRPF) purposes.

The DGT's ruling

For the insurance to be deductible, both the loan and the insurance must be necessary for the generation of income from the activity. Although the loan is an asset-related liability and its interest is deductible, the insurance premium is not if its contracting was not a condition required by the entity for the granting of the financing, but rather an option to improve the terms of the loan.

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