VAT and used vans: a guide for the self-employed in the Balearics

Why VAT changes the real price of your van

For a private buyer, the price of a vehicle is the price, full stop. For a self-employed person or a company it is not: what the van really costs you is the price before VAT, provided you can deduct that tax. The difference is not small. At the standard 21 % rate, a van advertised at €18,000 has a taxable base of €14,876 and €3,124 of VAT. If that VAT is deductible, your real cost is the first of those two figures.

That is why two adverts showing the same price can be radically different offers. And it is also why you should be wary of adverts that do not make clear whether the price includes VAT: when the seller does not say, it is often because they cannot issue an invoice with VAT.

When is the VAT on a van deductible?

The VAT paid on the purchase of a vehicle is deductible when the vehicle is used for a business or professional activity. Spanish VAT law (Ley 37/1992) sets out two different presumptions depending on the type of vehicle, and this is where vans come out ahead.

For passenger cars, the law presumes 50 % business use: you deduct half the VAT without having to prove anything. For mixed-use vehicles employed to carry goods — the typical work van — the presumption rises to 100 %. The law also lists other cases of full deduction, such as vehicles used to carry passengers, those of sales representatives, security vehicles and those used in driving instruction.

One point is often overlooked: these presumptions can be rebutted in both directions. You can prove more than 50 % business use for a passenger car, and the tax office can challenge the 100 % on a van if there is clear evidence of private use. So the more consistent the whole picture — signwritten vehicle, recorded use, associated expenses, an activity that justifies carrying goods — the stronger your position.

• Van or mixed-use vehicle for carrying goods: 100 % presumption.
• Passenger car used in the business: 50 % presumption.
• Sales representatives and agents: 100 % even for a passenger car.
• Passenger-transport vehicles and driving-school cars: 100 %.
• In every case: the presumption can be challenged with evidence.

Buying from a professional or from a private seller is not the same

This is the decision that moves the most money and the one worst explained on classified-ad sites. If you buy the van from a dealership or a company, the transaction carries VAT and you receive an invoice with the taxable base and the tax shown separately. That VAT is what you will be able to deduct.

If you buy from a private seller, the transaction carries no VAT: it is subject to transfer tax (ITP), managed by each autonomous region and, in the Balearics, settled with the Agencia Tributaria de las Illes Balears. You pay the ITP as the buyer, you cannot deduct it, and it is calculated on the vehicle's official tax value, not necessarily on what you paid.

In practice: a private-sale van at €12,000 and a dealership van at €13,500 with deductible VAT are not comparable. On the first you pay €12,000 plus the relevant ITP and recover nothing; on the second your net cost is around €11,157 and you also get a warranty, a prior inspection and someone to claim from.

The second-hand goods margin scheme (REBU): the crucial detail

There is one case that confuses many buyers. When a dealership buys a vehicle from a private individual and resells it, it can apply the second-hand goods margin scheme, where VAT is calculated on the seller's profit margin rather than on the full price.

In a margin-scheme sale the invoice does not show VAT separately and the buyer cannot deduct it, even as a company. You can usually spot it because the invoice mentions the second-hand goods special scheme instead of showing a separate VAT amount.

So the useful question before signing is not "does the price include VAT?" but "will you issue me an invoice with VAT shown separately and deductible?". They are different things, and only the second lets you recover the tax. On our van listings we state explicitly whether the VAT is deductible and what the taxable base is, precisely so that you do not have to guess.

What paperwork you need to deduct safely

The deduction stands or falls on paperwork. If a tax inspection lands tomorrow, this is what they will ask you for:

• A full invoice in the name of your company or of you as a self-employed person, with your tax number — not a simple sales contract.
• VAT itemised on the invoice: taxable base, rate and amount.
• Registration document and technical data sheet in the name of whoever claims the deduction.
• The vehicle entered in the capital goods register and in fixed assets.
• Consistency with your activity: a 6 m³ van fits an installation business; it is harder to justify in a consultancy.
• Receipts for associated costs (fuel, insurance, servicing) also in the name of the business.

VAT, income tax and depreciation: three different things

People mix them up constantly, and it pays to keep them apart, because the rules are not the same. VAT is the tax you can deduct in your quarterly return according to how the vehicle is used. Depreciation is the part of the purchase price you claim as an expense in personal income tax or corporation tax, spread over the vehicle's useful life.

And watch out for a detail that surprises many self-employed people: in personal income tax the Spanish tax office is notably stricter than in VAT. For a self-employed individual there is no partial deduction: either the vehicle is considered exclusively used for the business, or the expense is not deducted at all. That is where a commercial vehicle, hard to use as a family car, works in your favour against a passenger car.

If you finance the purchase, the loan interest is also a deductible expense in the proportion matching the vehicle's business use. The capital repayment is not: that is recovered through depreciation.

Common mistakes that cost money

• Accepting a sales contract instead of an invoice: with no invoice there is no VAT to deduct.
• Buying in your personal name when a company carries out the activity, or the other way round.
• Assuming that "van" automatically means a 100 % deduction without the activity justifying it.
• Not asking whether the sale falls under the second-hand margin scheme until after signing.
• Comparing private and dealership prices without stripping out VAT or adding the transfer tax.
• Forgetting that ITP on a private purchase is calculated on the vehicle's official tax value, not on what you paid.

How we do it at Coches Ocasión Manacor

We work with a lot of self-employed people and small businesses in Manacor, Palma, Inca and across the Llevant region, so we have tried to take the ambiguity out of the equation. On every van listing we publish whether the VAT is deductible, what the taxable base is, and the figures you actually need in order to decide: payload, cubic metres, gross vehicle weight, length and roof height.

Before closing the deal we explain in writing what invoice you will receive and under which scheme, so that you can discuss it with your accountant using concrete figures rather than assumptions. We also look at financing and value your current van as part of the payment.

This guide is general information and does not replace tax advice: every business has its particularities and the rules change. Always talk to your accountant before signing.

Frequently asked questions

Can I deduct 100 % of the VAT on a van as a self-employed person?

Yes, if the van is a mixed-use vehicle intended to carry goods and is used in your business: VAT law presumes 100 % business use in that case, against 50 % for passenger cars. The presumption can be rebutted, so the real use has to be consistent with your activity. You need an invoice in your tax name with VAT shown separately.

If I buy the van from a private seller, can I deduct the VAT?

No. A purchase from a private seller carries no VAT but transfer tax (ITP), which you pay as the buyer and which is not deductible. In the Balearics it is settled with the Agencia Tributaria de las Illes Balears on the vehicle's official tax value.

What does it mean that a van is sold under the second-hand margin scheme (REBU)?

It means the seller applies VAT only to their profit margin, not to the full price. On those invoices VAT is not shown separately and the buyer cannot deduct it, even as a company. Always ask before signing whether the invoice will show VAT separately and deductible.

Are van prices advertised with or without VAT?

It depends on the seller, and that ambiguity is a constant source of misunderstandings. On our listings we state the final price, the taxable base and whether the VAT is deductible, so that you can compare offers by the same yardstick.

What paperwork do I need to deduct the VAT on the purchase?

A full invoice with your tax details and VAT shown separately, the registration document and technical data sheet in the name of whoever claims the deduction, the vehicle entered in fixed assets, and receipts for the associated costs. A sales contract is not enough to deduct.

Can I also deduct fuel, insurance and servicing?

For VAT, yes, in the same proportion as the vehicle itself, always with an invoice in the name of the business. For personal income tax the criterion is stricter: for a self-employed individual, the expense is only allowed if the vehicle is used exclusively for the business.

Is it better to buy the van in the company's name or in my own?

It must be in the name of whoever carries out the activity and will claim the deduction. If you operate through a company, the invoice and the vehicle go in the company's name; if you are a self-employed individual, in your own name with your tax number. A mismatch between the invoice and the registered owner is one of the most common reasons for a deduction being refused.

And if I finance the van? Does anything change for VAT?

No: the VAT is deducted at the time of purchase according to the invoice, regardless of how you pay for it. What does change is income or corporation tax, where the loan interest is a deductible expense in proportion to the business use, while the capital is recovered through the vehicle's depreciation.