Companies may deduct vehicle renting if they prove professional use

The deductibility of expenses derived from vehicle leasing through the renting modality is a recurring point of friction in the tax management of companies. The Dirección General de Tributos (DGT) has specified the requirements necessary for these fees to be considered deductible expenses in Corporate Income Tax.

What the DGT has ruled

The Administration has confirmed that the fees accrued for the rental of a vehicle are tax-deductible as long as the asset is used for the development of the entity's activity. For this right to be effective, the ruling establishes that three fundamental conditions must be met:

• Accounting registration: The expense must be correctly recorded in the company's books.
• Accrual-based recognition: The expense must be recognized in the fiscal year to which the fees correspond.
• Documentary justification: There must be reliable evidence supporting the use of the vehicle for business activity.

Furthermore, the DGT emphasizes that the burden of proof lies exclusively with the entity seeking to apply the deduction. The assessment of whether the vehicle is actually used for professional purposes is a matter of fact that the Administration will determine through the documentation provided.

What this means for you

If your company uses vehicles through renting, especially those intended for administrators or managers, presenting the supplier's invoice is not enough. Deductibility is not automatic; it is conditional on the ability to demonstrate that the vehicle is a necessary tool for the economic activity. A lack of clear traceability regarding the use of the vehicle could lead to the disallowance of the expense during an inspection.

What should be done

To mitigate tax risks, it is necessary to establish control protocols that allow for the accreditation of the vehicle's professional use. This involves maintaining solid documentation that supports the economic reality of the operation, ensuring that the accounting faithfully reflects the accrual of the fees and that there are means of proof to justify the use of the asset in the exercise of the business activity.