Self-employed individuals cannot deduct passenger car expenses with private use

The deductibility of passenger car expenses is one of the areas subject to the highest level of control by the Tax Administration. Recently, the Dirección General de Tributos (DGT) has clarified the strict conditions that must be met for a self-employed professional to apply these expenses in their Personal Income Tax (IRPF) return.

What the DGT has ruled

The advisory body has determined that, for expenses associated with a passenger car to be deductible, the vehicle must constitute an asset exclusively assigned to the economic activity. This implies two fundamental requirements:

• Accounting registration: The vehicle must be duly recorded in the professional's accounts.
• Exclusivity of use: The vehicle must be used solely for the development of the economic activity.

The ruling emphasizes that passenger cars do not benefit from the exception of accessory use for private purposes. Therefore, if the professional also uses the car for travel or needs of a private nature, the vehicle loses its status as an assigned asset and, consequently, its expenses cannot be deducted.

What this means for you

If you are a self-employed professional, this criterion significantly limits the ability to reduce the taxable base through mobility expenses. The existence of mixed use, even if minimal, invalidates the deductibility of all vehicle expenses. The Administration does not allow the fragmentation of use for this type of asset to prevent deductions being claimed on items that have a personal use component.

What you should do

Given this situation, it is necessary to evaluate the nature of the vehicle's use and how its assignment is managed. It is essential to have documentation that supports the exclusivity of use if you intend to apply the deduction. Since the interpretation of asset assignment is strict, it is recommended to assess each case individually to ensure the correct tax treatment is applied and to avoid possible inspections.