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V2014-20 18 June 2020 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · renting

Car rental expenses deductible in IS if legal requirements met; vehicle IVA presumed at 50%

A real estate company asks whether car rental expenses are fully deductible in income tax and VAT. The DGT responds that rental expenses are deductible in income tax if registration, liability, and justification requirements are met, while VAT deduction for cars is presumed at 50% unless proven otherwise.

The question raised

Given the circumstances of the vehicle's use, whether the invoice issued by the company providing the renting will be 100% deductible in relation to Corporate Income Tax and Value Added Tax.

The DGT's ruling

In Corporate Income Tax, renting is deductible provided that it meets the conditions of accounting registration, accrual basis, documentary justification, and is not a specifically non-deductible expense. Regarding VAT, the deduction for passenger cars is presumed at 50% once their use for business purposes is proven, although a different degree may be demonstrated. Related expenses (fuel, repairs) follow the same logic of business use.

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