Spain’s National Court Rules on VAT for Vehicle Rental and Insurance Services

• Spain’s National Court issued key decisions in March and April 2025 on VAT treatment of vehicle rental contracts.
• The court addressed whether insurance damage cover is an autonomous service exempt from VAT or a VATable ancillary service.
• In the Lease Plan case, the court ruled that insurance services are integrated into the vehicle rental agreement, forming a single transaction subject to VAT.
• The court found that Lease Plan’s self-insurance does not meet the criteria for VAT exemption under the Spanish VAT Act.
• The court ruled that Lease Plan is entitled to deduct input VAT on vehicle repair services as it is the actual recipient of these services.
• The court rejected the tax authorities’ application of the pro rata rule, supporting Lease Plan’s right to a full deduction of input VAT.

Source: bdo.global

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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