Can you deduct more than 50% of VAT on car fuel and repairs? The DGT says yes, if you can prove business use.

One of the best-known VAT rules is the 50% rule for vehicles.

A business or professional buys a passenger car and uses it both for business and private purposes. As a general rule, the Spanish VAT Act presumes that it is used for business purposes to the extent of 50%.

But there is a less familiar question:

Does this also mean that only 50% of the VAT on fuel, repairs, servicing, parking or tolls can be deducted?

The answer is not necessarily.

The Spanish Directorate General for Taxation (DGT) confirms this in binding ruling V1450-26, dated 9 June 2026 (official DGT tax-ruling search; search for V1450-26).

The deductible VAT percentage on the purchase of the vehicle and the percentage applicable to certain expenses related to its use do not have to be the same.

The familiar 50% VAT rule for vehicles

The starting point is Article 95(Three)(2) of Law 37/1992 on VAT.

When a passenger car is used for both business and private purposes, the law establishes a presumption:

it is presumed to be used for business purposes to the extent of 50%.

This means that, in principle, 50% of the input VAT on its purchase, lease or other transfer of use may be deducted.

The law provides for a 100% presumption of business use for certain vehicles, including, in some cases, vehicles used to transport goods or passengers for consideration, driving-school vehicles, and vehicles used by commercial representatives or agents.

For an ordinary passenger car used partly for an economic activity, however, the usual starting point is 50%.

That presumption can be rebutted with evidence.

A taxpayer seeking to deduct a higher percentage must prove a higher degree of business use.

What about fuel and repairs?

This is where the key issue arises.

Ruling V1450-26 concerns a company that provides advertising services in the automotive sector.

The company had vehicles used in its business, and a tax audit had determined that their business-use percentage was 50%, because no different percentage had been substantiated.

The company then asked the DGT how the VAT on expenses such as the following should be treated:

• fuel;

• repairs;

• maintenance;

• servicing;

• tolls; and

• other expenses linked to those vehicles.

Must the same 50% automatically apply to all of them?

The DGT's answer is no.

VAT on the car and VAT on its running costs must be assessed separately

The DGT expressly relies on case law from the Court of Justice of the European Union.

In particular, it refers to the Court's judgment of 8 March 2001 in Case C-415/98, Bakcsi (official CJEU case record).

The case law supports a fundamental point:

whether the vehicle is used for business and whether VAT on goods and services used to operate and maintain it is deductible are separate questions.

Accordingly, the DGT concludes that the right to deduct VAT on fuel, repairs or servicing must be considered independently of the percentage applied to the vehicle's purchase.

Each expense must be assessed according to its own connection with the economic activity.

A car can be 50% deductible while fuel is 100% deductible

This is probably the ruling's most practical consequence.

Imagine a professional who uses a passenger car for both business and private purposes and is entitled to deduct 50% of the VAT on the car.

During a particular week, they make only business journeys and can adequately prove that a specific fuel purchase was used entirely for those journeys.

The fact that the car has a recognised 50% business-use percentage does not automatically require the VAT deduction on that fuel to be capped at 50%.

If the taxpayer can prove that the specific fuel was used entirely for the economic activity, the deduction may reflect that business use.

The same reasoning also works in the opposite direction.

Having a 50% VAT deduction on the car does not automatically entitle the taxpayer to deduct 50% of every expense related to it.

Each expense must meet its own requirements.

Evidence remains essential

This is the point that should not be overlooked.

Ruling V1450-26 does not create an automatic right to deduct 100% of the VAT on fuel.

It establishes something different:

the percentage applied to the vehicle does not automatically determine the deductible percentage for related expenses.

To deduct VAT on fuel, repairs, servicing, parking or tolls, the taxpayer must prove the link with the business or professional activity.

Article 95 of the VAT Act provides that the degree of business use must be substantiated by any means of evidence admissible in law.

It also gives an important warning: the taxpayer's own tax return or merely recording the asset in the business books is not sufficient evidence on its own.

The higher the percentage claimed, the more important it is to have objective evidence to support it.

How can business use be proved?

The law does not prescribe a single type of evidence.

The evidence must be assessed case by case in light of the circumstances.

Relevant material may include the nature of the business, journeys made, invoices, the dates and locations of refuelling, customers visited, work orders, travel records, mileage, and any other documents that reasonably connect the expense with the economic activity.

The key is to be able to reconstruct and substantiate the connection between the particular expense and the business or professional activity.

A practical example

Suppose a business owner has a passenger car for which they deduct 50% of the VAT.

Fuel invoice:

Taxable amount: €100
VAT: €21.

Applying the usual percentage automatically would mean deducting €10.50.

But if the owner can adequately prove that all the fuel was used for business journeys, the DGT ruling allows that invoice to be assessed independently from the percentage applied to the vehicle.

In that situation, all €21 of VAT could potentially be deductible.

The converse must also be stressed:

It is not enough to say that the fuel was used for business. The taxpayer must be able to prove it.

An important conclusion for the self-employed and businesses

Binding ruling V1450-26, dated 9 June 2026, confirms a point with significant practical implications:

The familiar 50% VAT deduction on a car does not automatically carry over to fuel, repairs, servicing and other expenses connected with the vehicle.

They must be assessed separately.

Therefore, a vehicle whose input VAT deduction is limited to 50% may give rise to expenses for which a higher percentage of VAT is deductible, potentially even 100%, provided business use can be adequately substantiated.

The opposite may also be true.

The rule is not:

“car at 50%, all expenses at 50%”.

The correct rule is:

assess each expense according to its actual use in the economic activity, and be ready to prove that use.

A seemingly small distinction that can have significant financial consequences for self-employed people and businesses with mixed-use vehicles.