The 2021 rental campaign is underway. Employed workers have a special tax treatment that allows them to recover part of the amount paid for the purchase of a vehicle. we tell you how to deduct the fees of your renting car if you are self-employed.
From the hands of the experts of Northgate Renting Flexiblewe review the keys that every self-employed person must take into account when making the Income Statement if they drive a rental car.
Can I deduct VAT from renting if I am self-employed?
it’s possible deduct VAT from renting being autonomous in percentages ranging from 50% to 100%, as long as it is shown that the vehicle is intended for professional work.
The applicable deduction Depends on how the vehicle is used and, although it is the self-employed person who declares what they use it for, the Tax Agency reserves the right to check whether the vehicle is used for professional or personal purposes.
For example, checking if the vehicle is labeled or if it is parked on the premises of the work center when the work activity is finished are some of the most common indications to demonstrate that it is for professional use. The type of vehicle can also have an influence, making it easier to associate industrial vehicles with a professional activity.
How can I deduct renting as a self-employed person?
There are several ways to ensure that the payment of a car rental entails a tax credit, but it is usually carried out through the Income Tax on Individuals when making the Income Statement and indicating it as a deductible expense.
To do this, the user must demonstrate in all cases that the use of the vehicle is exclusively professional, because in this case, a partial deduction cannot be made, as is the case with VAT.
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What other deductions are there?
The self-employed can not only deduct the service itself, but also have deductions associated with travel for work activity.
For example, in the general deductions established by the Tax Agency, the fuel costs or parking in car parks.
In the case of deductions for gasoline consumption in renting vehicles, the self-employed can deduct up to 50% of this expense, provided they demonstrate that the trips have been for work. These deductions also apply to the payment of parking in car parks exclusively related to professional activity. For this, it is essential that the receipts that demonstrate these payments are presented.