Index
When this situation arises
Key tax difference: company seller vs private seller
VAT when selling a company car
Personal Income Tax or Corporation Tax: how the transaction is taxed
The role of depreciation in the tax price
How to calculate the profit or loss on the sale
Formalities for selling a company car
How to set the price of a company car
Where to sell a company car
Frequently asked questions
Many self-employed people and small businesses have a car they bought for their work that they now want to sell: they have changed vehicle, the business no longer needs it, or they simply want to free up some cash. The problem is that selling a company car is not the same as selling a private car. There is VAT involved, there is accumulated depreciation that affects the tax calculation, and there are invoicing obligations that a private individual does not have.
If you do not handle it properly, you can end up paying more tax than you should. And if you ignore it, the tax office will remind you at the next inspection.
In this article we explain the tax treatment and the formalities involved in selling a company car to a private buyer (or to another professional), with practical examples so you can see exactly what impact the transaction has on your accounts.
When this situation arises
This situation affects three main profiles.
Self-employed people who bought a car for their work. The sales rep who bought a car to visit clients. The photographer who needed a vehicle to travel to shoots. The consultant who used the car to go to meetings. If you bought the car as a business expense and reclaimed the VAT (in full or in part), you now have tax obligations when selling it.
Small companies (SL, SA) with cars in their fleet. Companies that have one or more cars registered in the company’s name and want to dispose of them. The car is on the company balance sheet as a depreciable asset.
Professionals who used the car in a mixed way. Many self-employed people use the car both for business and personal use. In these cases, VAT recovery is usually 50% (the general rule for mixed-use cars), which affects the VAT calculation on the sale.
If you bought the car as a private individual (without claiming anything back) and it is simply in your name as a natural person, the sale works like a normal private sale. None of the following applies. Go straight to the formalities for selling a car in Spain.
Key tax difference: company seller vs private seller
When a private individual sells their personal car, the transaction does not carry VAT. The buyer pays transfer tax, and the seller, in most cases, does not have to do anything tax-wise (other than declare any capital gain, which is extremely rare).
When a company or self-employed person sells a car used for their activity, the transaction does carry VAT. It is a supply of goods subject to tax, exactly the same as if you sold any other product or service from your business. This has two direct consequences: you must issue an invoice with VAT to the buyer, and you must declare the transaction in your quarterly return.
In addition, the profit or loss generated by the sale (comparing the sale price with the car’s net book value) is taxed in your Personal Income Tax (if you are self-employed) or in Corporation Tax (if the company is an SL or SA).
VAT when selling a company car
If you reclaimed 100% of the VAT when buying
If when buying the car you reclaimed 100% of the input VAT (because the car was intended exclusively for business use: commercial vehicles, taxis, driving schools, rental cars, sales reps with justification), you must charge 21% VAT on the sale price.
Example. You sell the car for 10,000 euros. The invoice will be: taxable base 10,000 euros + VAT 2,100 euros = total 12,100 euros. The buyer pays 12,100 euros. You pay the 2,100 euros of VAT to the tax office in the quarterly return (form 303).
If you reclaimed 50% of the VAT when buying
This is the most common case for self-employed people with mixed use of the vehicle (business and personal). If you reclaimed 50% of the VAT when buying, you only have to charge VAT on 50% of the sale price.
Example. You sell the car for 10,000 euros. The taxable base subject to VAT is 50%: 5,000 euros. The VAT is 5,000 x 21% = 1,050 euros. The invoice shows: taxable base subject to VAT 5,000 euros + VAT 1,050 euros + non-taxable base 5,000 euros = total 11,050 euros.
This is a calculation worth doing with your tax adviser, because the proportion of VAT to charge must match the proportion you reclaimed when buying.
If you did not reclaim any VAT
If you bought the car for your work but did not reclaim the VAT (because you could not or because you chose not to), the sale is subject to VAT but exempt. In practice, you do not charge VAT to the buyer. The buyer will pay transfer tax as if it were a private sale.
This case requires specific advice because it depends on the circumstances of the original purchase. Check with your adviser before issuing the invoice.
If the transaction is VAT-exempt, the buyer will pay transfer tax as in a private sale. See our guide to taxes when selling your car.
Personal Income Tax or Corporation Tax: how the transaction is taxed
In addition to VAT, the sale generates a profit or a loss that is taxed under your income tax system (Personal Income Tax if you are self-employed, Corporation Tax if it is an SL/SA).
The calculation depends on the car’s net book value at the time of sale, which in turn depends on how much depreciation you have claimed.
Net book value = Purchase price − accumulated depreciation
If you sell above the net book value, there is a profit. If you sell below it, there is a loss.
The role of depreciation in the tax price
Depreciation is the accounting reduction in value you apply to the car each year as a deductible expense in your business. Cars are depreciated at a maximum of 16% per year according to the tax office’s depreciation tables (straight-line method), which means that a car is fully depreciated in about 6.25 years.
Full practical example:
You bought a car for 20,000 euros (excluding VAT) 4 years ago for your work. You have depreciated it at 16% per year for 4 years: 20,000 x 16% x 4 = 12,800 euros of accumulated depreciation.
Net book value: 20,000 − 12,800 = 7,200 euros.
If you sell for 9,000 euros, the tax profit is: 9,000 − 7,200 = 1,800 euros. Those 1,800 euros are taxed as business income in Personal Income Tax (at your applicable marginal rate) or in Corporation Tax (25% standard for SLs).
If you sell for 5,000 euros, the tax loss is: 5,000 − 7,200 = −2,200 euros. That loss reduces your taxable base and, therefore, you pay less tax.
Important point. Even if the car has depreciated in the market (it is worth less than you paid), for tax purposes you can still have a profit if accumulated depreciation has reduced its book value below the sale price. This surprises many self-employed people: “I sold it for less than I paid, but the tax office says I made money”. That is correct, because over those years you have claimed the depreciation as an expense.
How to calculate the profit or loss on the sale
To understand the tax impact before selling, follow these steps.
Step 1: Calculate accumulated depreciation. Purchase price (excluding VAT) x annual depreciation rate x number of years. If you depreciated at the maximum 16%: 16% for each full year.
Step 2: Calculate the net book value. Purchase price (excluding VAT) − accumulated depreciation.
Step 3: Compare it with the sale price (excluding VAT). If the sale price is higher than the net book value: profit. If it is lower: loss.
Step 4: Apply the tax rate. The profit is taxed at the Personal Income Tax marginal rate (self-employed) or at the standard Corporation Tax rate (25% for SLs). The loss reduces the taxable base.
If you are not sure about the depreciation you have applied, check with your tax adviser before selling. A mistake in this calculation can leave you with an unpleasant surprise in your next return.
Formalities for selling a company car
The formalities are similar to those for a private sale, but with additional invoicing obligations.
Issue an invoice. Unlike a private individual, you as a company or self-employed person must issue an invoice for the sale. The invoice must include your tax details, the buyer’s details, the vehicle description (make, model, registration, VIN), the taxable base, VAT itemised separately (if applicable), and the date of the transaction.
Declare the transaction on form 303 (quarterly VAT return). The VAT on the sale is included in the quarterly return for the period in which the transaction takes place.
Declare the profit or loss in Personal Income Tax or Corporation Tax. In the corresponding annual return.
Remove the asset from the accounts. The car leaves the company balance sheet. The difference between the sale price and the net book value is recorded as an extraordinary profit or loss.
Notify the DGT of the sale. As with any sale: deadline of 10 calendar days.
In addition to notifying the DGT, there are other follow-up steps you should not forget. See what to do after selling a car.
Change of ownership. If the car was in the company’s name (with CIF), the buyer will handle the ownership change into their name. If you sell to a private individual, the private buyer will pay transfer tax (calculated on the invoice price excluding VAT).
How to set the price of a company car
The market price of a company car is no different from that of a private car of the same model and condition. The buyer does not pay more or less because the seller is a company.
What does change is your internal calculation. You need to take the tax impact of the transaction into account when setting your minimum acceptable price.
Example. You want the transaction to leave you at least 8,000 euros net. The VAT you must charge is 21% (if you reclaimed 100%). The tax profit will be X euros, which will be taxed at Y%. Your adviser helps you calculate the gross price you need to ask for in order to keep 8,000 net after VAT and Personal Income Tax/Corporation Tax.
To find out the market value of your car before setting the price, you can value it for free with Dealcar. The offers from dealerships give you a real reference to use in your tax calculations.
To find out the market value before doing your tax calculations, see how to find out how much your car is worth.
Where to sell a company car
The options are the same as for a private individual, but there are some nuances.
To a private individual. You can sell to any natural person. You issue an invoice with VAT and the private buyer pays the full price (base + VAT). The private buyer cannot reclaim that VAT, but for them it is simply the car price.
If you sell to a private individual, formalise the transaction with a sale and purchase agreement that includes the invoice details.
To another company or self-employed person. If the buyer is a professional, the invoice also carries VAT, but the buyer can reclaim all or part of that VAT on their return. This can make your car more attractive to a professional buyer than to a private individual, because the real cost for the professional is lower.
To a dealership. Dealerships regularly buy company cars. The billing is direct and the dealership handles everything. It is the simplest option from an administrative point of view.
Through Dealcar. With Dealcar, you upload your car and more than 1,000 professional dealerships compete for it. As professional buyers, invoicing with VAT is not a problem for them (they are used to it). And the competition between them ensures you a market price. The winning dealership handles collection and paperwork.
Dealcar: value your car for free and receive offers from dealerships
Dealcar provides a free valuation tool that values your car in under 30 seconds, whether it is a company car or a private one. Enter the registration number and the vehicle details, and you receive a valuation based on real prices from completed sales.
More than 1,000 verified professional dealers bid against each other to buy it. The dealerships in the network are used to buying company cars and handling VAT invoicing. You simply compare offers, choose one and issue the invoice.
100% free for you. No commissions or hidden costs.
You get paid before handing over the keys. Bank transfer before you deliver the car.
They collect the car from your home. No travel needed.
No transfer paperwork. The dealer handles the ownership change and the DGT.
On average, €1,400 more than selling on Wallapop.
More than 12,000 cars sold and an average rating of 4.9 out of 5.
Use Dealcar’s free valuation tool.
Frequently asked questions
Do I have to charge VAT if I sell my company car to a private individual?
Yes, if you reclaimed the VAT when buying. You must issue an invoice with 21% VAT (or the proportion you reclaimed, if it was partial). The private buyer pays the full price including VAT. If you did not reclaim any VAT, the transaction may be exempt. Check with your adviser.
Can I sell my company car below market value?
You can, but the tax office may consider that the transaction has been made at a price below market value and adjust the taxable base. This is especially relevant if you sell the car to a partner, relative or connected person. In transactions between connected parties, the price must be at market value.
What happens if the car is fully depreciated?
If the car is 100% depreciated (net book value = 0), any price you charge for the sale is 100% taxable profit. You sell for 3,000 euros, you are taxed on 3,000 euros of profit. This is a common situation for cars over 6–7 years old.
Does the private buyer pay transfer tax if I charge VAT?
No. If you issue an invoice with VAT, the private buyer does not pay transfer tax. Transfer tax only applies in private sales (without VAT). If the sale carries VAT, transfer tax does not apply.
Can I sell the company car to myself as a private individual?
Technically yes, but it is a transaction between connected parties. You must do it at market value and issue an invoice with VAT. If you do it at an artificially low price, the tax office may adjust the transaction. This is a case where tax advice is essential.
Index
When this situation arises
Key tax difference: company seller vs private seller
VAT when selling a company car
Personal Income Tax or Corporation Tax: how the transaction is taxed
The role of depreciation in the tax price
How to calculate the profit or loss on the sale
Formalities for selling a company car
How to set the price of a company car
Where to sell a company car
Frequently asked questions
Many self-employed people and small businesses have a car they bought for their work that they now want to sell: they have changed vehicle, the business no longer needs it, or they simply want to free up some cash. The problem is that selling a company car is not the same as selling a private car. There is VAT involved, there is accumulated depreciation that affects the tax calculation, and there are invoicing obligations that a private individual does not have.
If you do not handle it properly, you can end up paying more tax than you should. And if you ignore it, the tax office will remind you at the next inspection.
In this article we explain the tax treatment and the formalities involved in selling a company car to a private buyer (or to another professional), with practical examples so you can see exactly what impact the transaction has on your accounts.
When this situation arises
This situation affects three main profiles.
Self-employed people who bought a car for their work. The sales rep who bought a car to visit clients. The photographer who needed a vehicle to travel to shoots. The consultant who used the car to go to meetings. If you bought the car as a business expense and reclaimed the VAT (in full or in part), you now have tax obligations when selling it.
Small companies (SL, SA) with cars in their fleet. Companies that have one or more cars registered in the company’s name and want to dispose of them. The car is on the company balance sheet as a depreciable asset.
Professionals who used the car in a mixed way. Many self-employed people use the car both for business and personal use. In these cases, VAT recovery is usually 50% (the general rule for mixed-use cars), which affects the VAT calculation on the sale.
If you bought the car as a private individual (without claiming anything back) and it is simply in your name as a natural person, the sale works like a normal private sale. None of the following applies. Go straight to the formalities for selling a car in Spain.
Key tax difference: company seller vs private seller
When a private individual sells their personal car, the transaction does not carry VAT. The buyer pays transfer tax, and the seller, in most cases, does not have to do anything tax-wise (other than declare any capital gain, which is extremely rare).
When a company or self-employed person sells a car used for their activity, the transaction does carry VAT. It is a supply of goods subject to tax, exactly the same as if you sold any other product or service from your business. This has two direct consequences: you must issue an invoice with VAT to the buyer, and you must declare the transaction in your quarterly return.
In addition, the profit or loss generated by the sale (comparing the sale price with the car’s net book value) is taxed in your Personal Income Tax (if you are self-employed) or in Corporation Tax (if the company is an SL or SA).
VAT when selling a company car
If you reclaimed 100% of the VAT when buying
If when buying the car you reclaimed 100% of the input VAT (because the car was intended exclusively for business use: commercial vehicles, taxis, driving schools, rental cars, sales reps with justification), you must charge 21% VAT on the sale price.
Example. You sell the car for 10,000 euros. The invoice will be: taxable base 10,000 euros + VAT 2,100 euros = total 12,100 euros. The buyer pays 12,100 euros. You pay the 2,100 euros of VAT to the tax office in the quarterly return (form 303).
If you reclaimed 50% of the VAT when buying
This is the most common case for self-employed people with mixed use of the vehicle (business and personal). If you reclaimed 50% of the VAT when buying, you only have to charge VAT on 50% of the sale price.
Example. You sell the car for 10,000 euros. The taxable base subject to VAT is 50%: 5,000 euros. The VAT is 5,000 x 21% = 1,050 euros. The invoice shows: taxable base subject to VAT 5,000 euros + VAT 1,050 euros + non-taxable base 5,000 euros = total 11,050 euros.
This is a calculation worth doing with your tax adviser, because the proportion of VAT to charge must match the proportion you reclaimed when buying.
If you did not reclaim any VAT
If you bought the car for your work but did not reclaim the VAT (because you could not or because you chose not to), the sale is subject to VAT but exempt. In practice, you do not charge VAT to the buyer. The buyer will pay transfer tax as if it were a private sale.
This case requires specific advice because it depends on the circumstances of the original purchase. Check with your adviser before issuing the invoice.
If the transaction is VAT-exempt, the buyer will pay transfer tax as in a private sale. See our guide to taxes when selling your car.
Personal Income Tax or Corporation Tax: how the transaction is taxed
In addition to VAT, the sale generates a profit or a loss that is taxed under your income tax system (Personal Income Tax if you are self-employed, Corporation Tax if it is an SL/SA).
The calculation depends on the car’s net book value at the time of sale, which in turn depends on how much depreciation you have claimed.
Net book value = Purchase price − accumulated depreciation
If you sell above the net book value, there is a profit. If you sell below it, there is a loss.
The role of depreciation in the tax price
Depreciation is the accounting reduction in value you apply to the car each year as a deductible expense in your business. Cars are depreciated at a maximum of 16% per year according to the tax office’s depreciation tables (straight-line method), which means that a car is fully depreciated in about 6.25 years.
Full practical example:
You bought a car for 20,000 euros (excluding VAT) 4 years ago for your work. You have depreciated it at 16% per year for 4 years: 20,000 x 16% x 4 = 12,800 euros of accumulated depreciation.
Net book value: 20,000 − 12,800 = 7,200 euros.
If you sell for 9,000 euros, the tax profit is: 9,000 − 7,200 = 1,800 euros. Those 1,800 euros are taxed as business income in Personal Income Tax (at your applicable marginal rate) or in Corporation Tax (25% standard for SLs).
If you sell for 5,000 euros, the tax loss is: 5,000 − 7,200 = −2,200 euros. That loss reduces your taxable base and, therefore, you pay less tax.
Important point. Even if the car has depreciated in the market (it is worth less than you paid), for tax purposes you can still have a profit if accumulated depreciation has reduced its book value below the sale price. This surprises many self-employed people: “I sold it for less than I paid, but the tax office says I made money”. That is correct, because over those years you have claimed the depreciation as an expense.
How to calculate the profit or loss on the sale
To understand the tax impact before selling, follow these steps.
Step 1: Calculate accumulated depreciation. Purchase price (excluding VAT) x annual depreciation rate x number of years. If you depreciated at the maximum 16%: 16% for each full year.
Step 2: Calculate the net book value. Purchase price (excluding VAT) − accumulated depreciation.
Step 3: Compare it with the sale price (excluding VAT). If the sale price is higher than the net book value: profit. If it is lower: loss.
Step 4: Apply the tax rate. The profit is taxed at the Personal Income Tax marginal rate (self-employed) or at the standard Corporation Tax rate (25% for SLs). The loss reduces the taxable base.
If you are not sure about the depreciation you have applied, check with your tax adviser before selling. A mistake in this calculation can leave you with an unpleasant surprise in your next return.
Formalities for selling a company car
The formalities are similar to those for a private sale, but with additional invoicing obligations.
Issue an invoice. Unlike a private individual, you as a company or self-employed person must issue an invoice for the sale. The invoice must include your tax details, the buyer’s details, the vehicle description (make, model, registration, VIN), the taxable base, VAT itemised separately (if applicable), and the date of the transaction.
Declare the transaction on form 303 (quarterly VAT return). The VAT on the sale is included in the quarterly return for the period in which the transaction takes place.
Declare the profit or loss in Personal Income Tax or Corporation Tax. In the corresponding annual return.
Remove the asset from the accounts. The car leaves the company balance sheet. The difference between the sale price and the net book value is recorded as an extraordinary profit or loss.
Notify the DGT of the sale. As with any sale: deadline of 10 calendar days.
In addition to notifying the DGT, there are other follow-up steps you should not forget. See what to do after selling a car.
Change of ownership. If the car was in the company’s name (with CIF), the buyer will handle the ownership change into their name. If you sell to a private individual, the private buyer will pay transfer tax (calculated on the invoice price excluding VAT).
How to set the price of a company car
The market price of a company car is no different from that of a private car of the same model and condition. The buyer does not pay more or less because the seller is a company.
What does change is your internal calculation. You need to take the tax impact of the transaction into account when setting your minimum acceptable price.
Example. You want the transaction to leave you at least 8,000 euros net. The VAT you must charge is 21% (if you reclaimed 100%). The tax profit will be X euros, which will be taxed at Y%. Your adviser helps you calculate the gross price you need to ask for in order to keep 8,000 net after VAT and Personal Income Tax/Corporation Tax.
To find out the market value of your car before setting the price, you can value it for free with Dealcar. The offers from dealerships give you a real reference to use in your tax calculations.
To find out the market value before doing your tax calculations, see how to find out how much your car is worth.
Where to sell a company car
The options are the same as for a private individual, but there are some nuances.
To a private individual. You can sell to any natural person. You issue an invoice with VAT and the private buyer pays the full price (base + VAT). The private buyer cannot reclaim that VAT, but for them it is simply the car price.
If you sell to a private individual, formalise the transaction with a sale and purchase agreement that includes the invoice details.
To another company or self-employed person. If the buyer is a professional, the invoice also carries VAT, but the buyer can reclaim all or part of that VAT on their return. This can make your car more attractive to a professional buyer than to a private individual, because the real cost for the professional is lower.
To a dealership. Dealerships regularly buy company cars. The billing is direct and the dealership handles everything. It is the simplest option from an administrative point of view.
Through Dealcar. With Dealcar, you upload your car and more than 1,000 professional dealerships compete for it. As professional buyers, invoicing with VAT is not a problem for them (they are used to it). And the competition between them ensures you a market price. The winning dealership handles collection and paperwork.
Dealcar: value your car for free and receive offers from dealerships
Dealcar provides a free valuation tool that values your car in under 30 seconds, whether it is a company car or a private one. Enter the registration number and the vehicle details, and you receive a valuation based on real prices from completed sales.
More than 1,000 verified professional dealers bid against each other to buy it. The dealerships in the network are used to buying company cars and handling VAT invoicing. You simply compare offers, choose one and issue the invoice.
100% free for you. No commissions or hidden costs.
You get paid before handing over the keys. Bank transfer before you deliver the car.
They collect the car from your home. No travel needed.
No transfer paperwork. The dealer handles the ownership change and the DGT.
On average, €1,400 more than selling on Wallapop.
More than 12,000 cars sold and an average rating of 4.9 out of 5.
Use Dealcar’s free valuation tool.
Frequently asked questions
Do I have to charge VAT if I sell my company car to a private individual?
Yes, if you reclaimed the VAT when buying. You must issue an invoice with 21% VAT (or the proportion you reclaimed, if it was partial). The private buyer pays the full price including VAT. If you did not reclaim any VAT, the transaction may be exempt. Check with your adviser.
Can I sell my company car below market value?
You can, but the tax office may consider that the transaction has been made at a price below market value and adjust the taxable base. This is especially relevant if you sell the car to a partner, relative or connected person. In transactions between connected parties, the price must be at market value.
What happens if the car is fully depreciated?
If the car is 100% depreciated (net book value = 0), any price you charge for the sale is 100% taxable profit. You sell for 3,000 euros, you are taxed on 3,000 euros of profit. This is a common situation for cars over 6–7 years old.
Does the private buyer pay transfer tax if I charge VAT?
No. If you issue an invoice with VAT, the private buyer does not pay transfer tax. Transfer tax only applies in private sales (without VAT). If the sale carries VAT, transfer tax does not apply.
Can I sell the company car to myself as a private individual?
Technically yes, but it is a transaction between connected parties. You must do it at market value and issue an invoice with VAT. If you do it at an artificially low price, the tax office may adjust the transaction. This is a case where tax advice is essential.
