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V1434-20 14 May 2020 · SG de Impuestos sobre el Consumo Criterion in force
IVA · prestación de servicios

Provision of vehicles for private use without salary reduction is not subject to VAT

A company inquired whether making vehicles available to executives for both business and private use, without affecting their salary, constitutes a taxable supply subject to VAT. The DGT ruled that, as there is no direct consideration or reduction in salary, it is a gratuitous supply not subject to the tax.

The question raised

Whether the provision of vehicles to certain employees by the consulting entity, without effect on their salary, can be considered an onerous provision of services for Value Added Tax purposes.

The DGT's ruling

For a benefit in kind to be onerous and subject to VAT, there must be a direct relationship between the service and the consideration, such as when the employee waives part of their cash salary. In the case of vehicles provided without the employee suffering a salary reduction, there is no consideration that constitutes the value of the service. Therefore, it is considered a gratuitous provision of services not subject to VAT.

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