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Practical manual for Income Tax 2023.

2. Delivery or use of motor vehicles

• In the event of delivery of the vehicle

In this case, the remuneration will be valued at the cost of acquisition of the vehicle for the employer, including the expenses and taxes that tax the operation, such as: VAT , Registration Tax ( IEDMT ), customs duties, etc. Consequently, the entire VAT paid must be included, regardless of whether or not it is deductible for the payer.

• In the event of use of the vehicle

In the case of use, it is necessary to distinguish:

  1. Vehicle owned by payer : The value will be ## 20 percent of the annual acquisition cost of the vehicle for the employer, including the expenses and taxes that tax the operation.

  2. Vehicle not owned by the payer : The value will be 20 percent annually on the market value, including expenses and taxes inherent to the acquisition, which would correspond to the vehicle if it were new.

  3. Vehicle belonging to companies whose usual activity is the transfer of use of motor vehicles: the valuation may not be less than the price offered to the public of the service in question.

Reductions applicable to the valuation of energy-efficient motor vehicles

Regulations: Art. 48 bis Regulation IRPF

In the cases a, b and c above of transfer of use of vehicle, the resulting valuation may be reduced by up to it comes to vehicles considered energy efficient, under the terms and conditions indicated below:

In the case of vehicles considered to be energy efficient because they comply with the Euro 6 emission limits set out in Annex I to Regulation ( EC ) No 715/2007 of the European Parliament and of the Council of 20 June 2007 on type-approval of motor vehicles with respect to emissions from light passenger and commercial vehicles (Euro 5 and Euro 6) and on access to vehicle repair and maintenance information, the valuation of the income in kind for the use may be reduced by the following percentages :

  • 15% reduction of the resulting amount, when the vehicle meets the following conditions:

    1. Its official CO emissions2 do not exceed 120 g/km and
    2. The market value of the vehicle if it were new, before taxes, is not greater than 25,000 euros.

  • 20% reduction of the resulting amount, when the vehicle meets the following conditions:

    1. Its official CO emissions2 do not exceed 120 g/km.
    2. Whether they are hybrid vehicles or those powered by internal combustion engines that can use alternative fossil fuels (autogas –LPG– and Natural Gas) and
    3. The market value of the vehicle if it were new, before taxes, is not greater than 35,000 euros.

  • 30% reduction of the resulting amount, when it concerns any of the following categories of vehicles:

    1. Battery electric vehicle (BEV).
    2. Extended-range electric vehicle (E-REV).
    3. Plug-in hybrid vehicle (PHEV) with a minimum range of 15 kilometres, provided that, in this case, the market value that would correspond to the vehicle if it were new, before taxes, is not greater than 40,000 euros.

• In the case of mixed use of the vehicle (company purposes and personal purposes of the employee)

In the case of mixed use of the vehicle, for company purposes and for the employee's personal purposes, the taxpayer will only be charged with remuneration in kind to the extent that the latter has the power to use the vehicle for personal purposes, regardless of whether or not it is actually used for such purposes. Ultimately, in these cases, the determining parameter for the assessment of remuneration in kind must be the availability of the vehicle for private purposes.

• In the event of use and subsequent delivery

In this case, the valuation of the latter (the delivery) will be carried out taking into account the valuation resulting from the previous use. For these purposes, the assessment of use must be estimated at 20% annually, regardless of whether the car has been fully or partially available for personal purposes.

Conditions Rules of assessment
Motor vehicles
Delivery of property to the employee Acquisition cost + inherent expenses and taxes
Use by the employee Company owned vehicle 20% per year x (acquisition cost + inherent expenses and taxes)
Vehicle NOT owned by the company 20% per year x market value (new vehicle)
Use and subsequent delivery to the employee During the period of use

Rule for use case:

  • Company owned vehicle: 20% per year x (acquisition cost + inherent expenses and taxes)
  • Vehicle NOT owned by the company: 20% per year x market value (new vehicle)
Post delivery Market value (time of delivery) – valuation of use (*)

(*) The utilization rate should be estimated at 20% annually, regardless of availability for particular uses. (return)

Clarifications :

  • In any case, the unreperformed income on account must be added to the corresponding tax assessment in order to determine the total income from work.
  • As a general rule, the taxpayer will only be charged with remuneration in kind to the extent that he has the power to use the vehicle for private purposes , whether or not it is actually used for such purposes.

Example 1: mixed use of the vehicle

Mr. APL He has a car loaned to him by his company which he uses for work and personal purposes. Taking into account the nature and characteristics of the functions performed by the employee in his company, the percentage of use of the vehicle for company work purposes is estimated at 30%. The company cost the vehicle 30,000 euros. The car is a hybrid (non-electric) vehicle that complies with the Euro 5 and Euro 6 emission limits provided for in Regulation ( EC ) No 715/2007.

Determine the amount of the remuneration in kind corresponding to the use of the car in the year 2023 if the payments on account made by the company in said year for this remuneration in kind, which have not been passed on to the employee, have amounted to 1,300 euros.

Solution:

Use of the car for work purposes (30 percent): It does not constitute remuneration in kind.

Availability of the car for private purposes: It constitutes compensation in kind, regardless of whether or not it is actually used for private purposes (100 percent) – (30 percent) = 70 percent.

Value of remuneration in kind:

  • Total annual valuation before reduction: (20% s/30,000) = 6,000.00
  • Reduction for energy-efficient motor vehicles (20% s/6,000) = 1,200
  • Total annual valuation (6,000 – 1,200) = 4,800

Availability for particular purposes: (4,800 x 70%) = 3,360

Unreperformed income to account = 1,300.00

Total remuneration in kind ( 3,360 + 1,300 ) = 4,660.00

Example 2: use and subsequent delivery

Mr. AAP has had a company-owned vehicle at its disposal for personal use since 1 January 2020, which it acquired on that date for an amount of 23,000 euros. On January 1, 2023, the company will provide the vehicle to the employee free of charge.

Determine the amount of the remuneration in kind derived from the delivery of the motor vehicle in the year 2023, assuming that the payment on account made by the company in relation to said remuneration in kind, which has not been passed on to the worker, amounts to 4,300 euros.

Solution:

  • Vehicle Delivery Rating : (23,000 – 13,800) (1) = 9,200
  • Unreperformed income on account = 4,300

Total remuneration in kind: (9,200 + 4,300) = 13,500

Note to example: The valuation of the delivery on 01-01-2023 must be carried out by discounting the valuation of the use corresponding to the years 2020, 2021 and 2022. This valuation is estimated at 20% of the annual purchase price of the car (23,000 x 60%) = 13,800 euros.