The Directorate General of Taxes (DGT) has resolved a query in which it analyzes whether the transfer of these vehicles to employees, at no cost to them, implies a self-consumption of services that is subject to VAT.
We want to clarify a frequent doubt that we have been asked about the free transfer of vehicles to employees and how this may affect the VAT, especially when the company has already deducted part of the VAT when acquiring these vehicles through leasing.
In this case, the Directorate General of Taxes (DGT) has resolved a binding consultation V1374/2024 in which it analyzes whether the assignment of these vehicles to employees, at no cost to them, implies a self-consumption of services that is subject to VAT.
When is there self-consumption of services?
For a transaction to be considered as self-consumption of services and subject to VAT, two conditions must be met:
- That the company has deducted the input VAT when acquiring the good or service.
- That the good or service is used for non-business purposes.
Treatment of the transfer of vehicles
- Part not affected to the business activity: When a company acquires a vehicle and only a part is destined to the activity of the company, while another part remains for the private use of the employer or is transferred to employees for personal purposes, this transfer will not be subject to VAT, according to current case law (STS of January 29, 2024).
- Part affected to the business activity: If the transfer of the vehicle to the employees is to comply with the company’s own activities (for example, for work-related travel), this operation is not considered as self-consumption of services. In this case, no additional VAT would have to be declared, since the vehicle continues to be used for business purposes.
In summary, if the vehicle that is assigned to the employees is used for the performance of their duties within the company, you will not have to worry about a self-consumption of services or adjust the VAT initially deducted.
For more information, please consult with Tax consulting
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