- The Spanish Supreme Court held that free private use by an employee of a company car leased under renting and allocated 50% to business activity is not subject to VAT, even if the company deducted 50% of the input VAT on the lease.
- The Court ruled that partial VAT deduction on the renting does not, by itself, make the employee’s private use a taxable supply of services; a real consideration is required.
- A VAT-taxable supply would only exist if the employee paid for the car, accepted a salary reduction, or gave up another economically valuable benefit in exchange.
- The Court also confirmed the non-deductibility of VAT on entertainment and client hospitality expenses under Article 96.Uno.4.º and 5.º of the VAT Law, in line with the CJEU ruling of 12 March 2026 (C-515/24).
Source: allyon-etl.es
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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