How to deduct the electric car in the income tax return

In reference to the MOVES III plan that is extended until July 2024, it is possible deduct part of the amount of the electric car in the 2024 income tax return… and with a view to 2025.

In a very quick summary: it is possible to deduct up to a 15% of the purchase pricewith a maximum base of 20,000 euros. In addition, this movement is fully compatible with the aid of the Moves plan and the possibility of deducting purchases in installments, as long as 25% of the price is paid before 2024 and the payment is completed before 2026.

What can we deduce

The relief allows deduction of up to 15% of the purchase price, with a maximum base of 20,000 euros. This tax advantage extends to vehicles collected in the IDAE for the Moves Plan aid, ranging from pure electric vehicles to plug-in hybrids and motorcycles. The acquisition must be made before the end of 2024, with the possibility of deducting taxes in the following year’s personal income tax return.

An important novelty is the possibility of deducting taxes purchases made in installments. To do this, the vehicle must be purchased before the end of 2024, paying at least 25% of the total price in that period. The additional condition is to complete the payment before 2026.

It is important to highlight that the deduction is compatible with the aid from the MOVES plan. However, Moves III grants are considered capital gains, and must be declared in the corresponding personal income tax. It is recommended to verify the compatibility of the subsidies awarded to us by our Autonomous Community and/or City Council.

Questions and answers

Basically any vehicle that is eligible for MOVES III and/or the installation of a charging system is fully susceptible to tax relief, we are also going to review the most frequently asked questions to collect all the necessary information.

Who benefits?

Individuals and companies who purchase an eligible vehicle in MOVES III.

For companies we will have to take into account, within the scope of Corporate Tax, that this deduction is extended with the accelerated amortization of investments in existing vehicles and charging points that affect economic activities and that come into operation in 2023, 2024 and 2025. And most importantly, if you are a company you will not be able to use the car or the charging point for your business activity, and you may lose the right to the deduction.

What amount is the deduction?

Taxpayers will be able to deduct the 15% of the acquisition value of the new electric car or the quantities used in the installation of the charging point. It is important to mention that neither the vehicles nor the facilities may be linked to an economic activity.

What type of vehicles benefit?

  • BEV: pure electric
  • EREV: extended range electric
  • PHEV: plug-in hybrids
  • FCV: fuel cell electric
  • FCHV: fuel cell hybrid electric

Is it mandatory to request the deduction?

These tax incentives are totally volunteer and the taxes applied follow common self-assessment models. Of course, the deductions are applicable as long as the requirements established in the standard are met.

When does the personal income tax deduction occur?

If we buy an electric car, the deduction is applicable if we have purchased the car between June 30, 2023 and December 31, 2024. To take into account:

  • If you make a single payment: The deduction is made in the tax period in which the car is registered.
  • Whether pay in installments: The deduction is made when 25% of its acquisition value is paid between 06/30/23 and 12/31/2024. The rest of the amount will have to be paid and consequently, purchase the car, before the end of the second tax period from registration. That is, if we buy in installments in 2024, we will have to pay the rest before the end of 2026. Which shortens the financing times to 24 months instead of the usual 48 for multi-option purchases.

In the case of the charging pointsthe same period is maintained until December 31, 2024 but:

  • The deduction will be made in the same period in which the installation is completed. With a limit of December 31, 2024. Or in other words, you install in May 2024 and deduct in the 2024 tax return what you do in 2025.

How does it influence the calculation?

At most, the total base of the deduction is €20,000 for cars and €4,000 for chargers. Taking this information into account:

  • If the result of the operation is lower To the maximum deduction base (€20,000 and €4,000), 15% is applied to the price we pay for a Dacia Spring that costs, for example, €19,990. For example: 15% of 19,900 = €2,985 deduction.
  • If the result of the operation is superior at these €20,000 or €4,000 or what is the same, the vast majority of new electric cars on the market. These €20,000 and €4,000 will be the maximum base on which they will give us aid of €3,000. If we buy a car that costs €35,000, the aid will be the same as if we buy one that costs €70,000.

In essence, it is necessary to remember that this deduction applies only to purchases for private purposes, excluding those associated with companies. Before submitting applications, we recommend that you verify the availability of active calls for both MOVES and the presentation of the draft income as well as other local subsidies and their compatibility with state subsidies.

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