The transfer of vehicles to employees is a taxable transaction, and therefore, the taxable amount must be calculated using the criterion of availability of that element and not only that of effective use.

In order to analyze the criteria, we will explain this specific case in which an entity that leases vehicles that it subsequently transfers to its employees, is subject to a tax inspection. As a result of these actions, the Administration finds that the criterion of effective use used to impute the use of the vehicles does not comply with the law, so it modifies the VAT quotas passed on, taking into account the criterion of availability of these elements, since it has been shown that there was no real control over their use.

The taxpayer, dissatisfied, goes to the Economic administrative Tribunal (TEAC) where he challenges the settlement agreements issued by the Tax Control Unit of the Central Delegation of Large Taxpayers.

What is the criteria for calculating the percentage of transfer of vehicles to employees?

That Court provides in its decision as follows:

1. Remuneration in kind the employees of a company are supplied services for consideration and as such are subject to tax, since the requirements required by the rule for this are met: realization of the taxable event, reference to the territory of application of the tax, intervention of employers or professionals and acting as such (CJEU 29-7-10, case Astra Zeneca UK C-40/09; 19-11-98, Société financière d’investissements case C-85/97).

This taxableness allows the taxable person to deduct the fees paid for the lease.

2. There is no clear case-law criterion which makes it possible to defend both positions, however, in the Court’s view, the criterion of imputation by availability is the one that allows the service provided to be quantified in a more appropriate way.

A ski pass system is not acceptable according to hours of use or mileage of the vehicle (DGT CV 25-4-12; CJEU 26-9-96, Enkler case C-230-94).

​3. The percentage of utilization established by the Inspection is correct. This figure is a consequence of the collective agreement applicable to the activity of the company where the annual working hours are established. The entity’s claim to differentiate availability according to the functions performed by the workers is not acceptable, since the annual working hours are the same for all of them.

For all the above, the TEAC dismisses the appeal filed against the liquidations, finding the regularization carried out adjusted to the legality.


If you are faced with a similar case, you can contact our team of business advisors and they will help you solve it.