If you use a vehicle in your business, the tax authorities will assume that you are also using it privately and will refuse to deduct the corresponding expenses. But don't settle...
Vehicle expenses
Exclusive use. If you are a sole trader and wish to purchase a vehicle for your business, you should be aware that the tax authorities make it very difficult to deduct the expenses related to the purchase and use of the vehicle (depreciation, repairs, fuel, registration tax, insurance, parking, etc.). Attention! With a few exceptions, for these expenses to be deductible for personal income tax purposes, the vehicle must be used exclusively for the activity (it is not sufficient for private use to be accessory or irrelevant), which is very difficult to prove.
Exceptions. In fact, only the following vehicles are exempted from this strict rule (allowing, in the case of private and business use, the deduction of the proportional part corresponding to business use):
- Mixed vehicles (such as vans) intended for the carriage of goods.
- Those transporting passengers for consideration (e.g. taxis or car hire companies).
- Also deductible, in proportion to their business use, are driving school vehicles and vehicles used by entrepreneurs acting as sales representatives or agents.
Diabolical test. When these three assumptions are not met, for the deduction in the IRPF of any expense related to the purchase of a vehicle or its use (depreciation, petrol, parking, insurance, repairs...), the Treasury requires the taxpayer to prove "non-use" for private purposes. Attention! And as such negative proof is practically impossible, the tax authorities usually do not allow the deduction of these expenses.
Generate evidence
For the tax authorities to prove. Since proving a negative fact (the "non-use for private purposes") is very complicated, there are already several courts that consider that in these cases it is up to the tax authorities to prove that the expenses are not deductible, and not the other way round. Note. Therefore, if you encounter a restrictive attitude on the part of the tax authorities, demand that they prove private use, and not you.
Additional evidence. But don't just sit on your hands either. Note. Even if, according to these courts, the tax authorities are obliged to provide evidence, you can also provide evidence that the vehicle is really only used for business purposes:
- Label your commercial or industrial vehicles with your company logo, and make sure that they do not have windows in the rear doors.
- Ensure that these vehicles are adapted to the activity carried out and that they are not models more suitable for private use.
- Having an additional private vehicle will not, by itself, be enough. But with the rest of the evidence, it will help you in your goal.
Example. You are a painter and you use a van to move and transport materials, scaffolding, ladders, etc., so you do not fall into the cases indicated above, which allow a partial deduction of expenses (according to the tax authorities, paint or building materials for installation are not considered "goods"). Note. Well, if the vehicle bears your company logo, is suitable for loading equipment and you have another car at your disposal, the tax authorities will hardly be able to deny you the deduction of expenses.
Demand that the tax authorities prove that there is a private use. You can also generate evidence in your favour by labelling the vehicle with your company logo and proving that you have other vehicles for private use.
