Table of Contents
What is a tax withholding and how does it work
Buying a vehicle from a private individual: is there a withholding tax?
Selling a vehicle to a private individual: is there a withholding tax?
Transactions between professionals: when there is a withholding tax
Commissions to intermediaries and collaborators: the most frequent case
Premises rental: compulsory withholding tax
Other payments subject to withholding in the day-to-day running of a dealership
What happens if you do not apply withholding tax when it is compulsory
How to declare withholding taxes: forms and deadlines
Frequently asked questions
What is a tax withholding and how does it work
Withholding tax is a mechanism whereby the person making a payment (the payer) retains a percentage of that payment and pays it directly to the Tax Agency on behalf of the recipient. It is an advance payment of the tax that the recipient will have to declare in their own tax return.
For example, if a dealership pays €1,000 to a self-employed tax advisor, it retains 15% (€150) and pays them only €850. Those €150 are paid to the Tax Agency using Form 111. When the advisor submits their annual Income Tax (IRPF) return, they already have those €150 as tax paid on account.
Withholding is not an additional tax for the payer: it is the recipient's money that the payer manages on behalf of the Tax Agency. The cost is borne by the recipient, not the payer. What is the payer's obligation is to apply it correctly, pay it on time and declare it. If they fail to do so, the responsibility for that payment falls on them, regardless of whether the recipient declares their income correctly.
Buying a vehicle from a private individual: is there a withholding tax?
No. When a dealership buys a car from a private individual, there is no obligation to apply withholding tax on the purchase price.
Withholding tax is applied to income subject to IRPF that the recipient must declare as employment income, investment income, real estate income, economic activity income or capital gains. The sale of a car by a private individual may generate a capital gain or loss that the individual must declare in their IRPF, but that obligation lies with the individual, not the dealership making the purchase.
The Spanish tax system does not oblige the professional buyer to withhold tax on the purchase price of used movable goods from private individuals. The reason is that the individual is not providing a service: they are selling an asset. Withholdings apply to income, not to asset transfers.
What the dealership does have documentary obligations for is to generate the purchase document from a private individual with all the seller's details, proving the agreed price and enabling the REBU (Special Scheme for Second-Hand Goods) on resale. For more details on this documentation, you can consult the guide on how to declare the purchase of used vehicles.
Selling a vehicle to a private individual: is there a withholding tax?
No. When a dealership sells a car to a private individual, no withholding tax is applied to the sale price. The transaction is taxed by VAT (under the general scheme or REBU depending on the origin of the vehicle), but there is no withholding tax to be applied.
The purchasing private individual does not apply a withholding tax either: withholding is an obligation that falls on companies and professionals who make payments for certain types of income, not on individuals who purchase goods.
What does concern the private buyer is paying the ITP (Property Transfer Tax) to their autonomous community. This tax is managed by the buyer themselves: the dealership does not intervene in its settlement nor is it responsible for its payment.
Transactions between professionals: when there is a withholding tax
When the dealership makes payments to other professionals or companies for services received, withholding tax may be compulsory. The key lies in whether the payment is income from the recipient's economic activity.
Self-employed workers providing services to the dealership. If you hire a self-employed photographer, a self-employed mechanic, a tax advisor, a designer or any other professional registered with the IAE (Economic Activities Tax), their invoices will be subject to a 15% withholding tax (or 7% during the first three years of activity). The dealership must withhold that percentage, pay it to the Tax Agency and include it in the quarterly Form 111.
Professionals with activities expressly subject to withholding tax. Not all economic activities of self-employed workers are subject to withholding. Activities in section one (business activities) of the IAE generally do not carry it. Activities in sections two and third (professional and artistic) are indeed subject. A self-employed haulier who transports a car for you is a business activity, without withholding. A self-employed lawyer who drafts a contract for you is a professional activity, with a 15% withholding.
Companies. Payments to corporations (S.L., S.A.) generally do not carry withholding, except for rent and some specific types of income. If you hire services from a mercantile company, in most cases you should not apply withholding tax.
To see how billing affects each type of transaction, consult how to issue invoices correctly in car buying and selling.
Commissions to intermediaries and collaborators: the most frequent case
This is the scenario where the most errors occur in dealerships. A car finder, an intermediary who brings in clients, or a sales representative working on a freelance basis may be in different tax situations that determine whether there is withholding tax or not.
Intermediary registered as self-employed with professional activity. If the person who brings you the client or manages the purchase of a car is self-employed and their activity is considered professional (mediation, agency), the commission you pay them is subject to a 15% withholding tax. You must withhold, pay to the Tax Agency and include it in Form 111.
Intermediary with business activity (commercial agent heading or similar). Some commercial agents are registered under business, not professional, activity headings. In that case, their invoices may not carry withholding. To know for sure, the safest way is to ask them to indicate on the invoice whether their activity is subject to withholding or not.
Occasional collaborator without self-employment registration. If someone brings you a client on a highly occasional basis, without being registered as self-employed, and you pay them for it, you are dealing with employment income or irregular income that generates obligations both for them (IRPF) and for you (possible withholding and payment). This situation can generate tax problems for both parties if it is not correctly structured.
The rule of thumb: before any payment to a natural person for a service, always ask for the invoice indicating whether the activity is subject to withholding. If the collaborator does not know how to answer, it is a sign that there is something to review.
Premises rental: compulsory withholding tax
If the dealership rents the premises where it develops its activity and the lessor is a natural person (not a company), the rent is subject to a 19% withholding tax on the monthly rent. This is one of the most frequent and most easily forgotten withholdings.
The obligation to withhold falls on the lessee (the dealership paying the rent), not on the lessor. If the lessor is a natural person, the dealership must withhold 19% of each monthly payment and pay it to the Tax Agency using the quarterly Form 115.
If the landlord is a company (S.L., S.A.), there is no withholding tax to be applied to the rent.
Example: rent of €1,200/month to a natural person owner. The dealership pays €1,200 − €228 (19%) = €972 to the owner and €228 to the Tax Agency using Form 115. Per year, it pays €2,736 in withholding taxes on rent.
Failure to apply this withholding when it is compulsory is one of the most common tax infractions in small businesses. The minimum penalty for not paying withholding taxes is 50% of the amounts not withheld.
Other payments subject to withholding in the day-to-day running of a dealership
Employee payrolls. Withholding taxes on employment (IRPF of employees) are calculated according to the AEAT withholding tables based on the annual gross salary and the employee's personal circumstances. They are paid monthly or quarterly using Form 111.
Prizes and rebates to self-employed sales agents. If you pay an extraordinary incentive to a self-employed sales representative in addition to their usual commission, that payment is also subject to withholding tax if their activity is subject to it.
Interest on loans to partners or related parties. If the company has loans with partners or related parties and pays interest, that interest is subject to a 19% withholding tax (investment income).
Dividends. If the dealership distributes dividends to its shareholders, it must withhold 19% on the gross amount distributed.
To see what expenses you can deduct as a dealership, consult deductible expenses for second-hand car dealers.
What happens if you do not apply withholding tax when it is compulsory
The consequence of not applying withholding tax when it is compulsory is that the payer (the dealership) becomes jointly and severally liable for the payment that should have been made. The Tax Agency can demand the payment of the non-withheld amount from the dealership, plus late-payment interest, plus the corresponding penalty.
Penalties for failure to pay withholding taxes range from 50% to 150% of the amounts not paid, depending on whether there is concealment or repeat offences. The minor infraction (non-payment without concealment) starts at 50%. The serious infraction (with concealment or repeat offences) can reach 100-150%.
Furthermore, failing to submit Form 111 or Form 115 when there is an obligation to do so, even if there are no withholdings to pay, is also a formal infraction with a minimum penalty of €200.
For a complete overview of dealership taxation including withholdings, forms and deadlines, you can consult the tax guide for dealerships.
How to declare withholding taxes: forms and deadlines
The withholding taxes applied are declared and paid through two main forms:
Form 111 (withholdings on employment income and professional activities): covers payroll withholdings and withholdings on invoices from self-employed professionals. It is submitted quarterly during the first 20 calendar days of April, July, October and January. At the close of the year, Form 190 (annual summary) is submitted before 31 January of the following year.
Form 115 (withholdings on property leases): covers withholdings on premises rental. Same quarterly calendar. At the close of the year, Form 180 (annual summary) is submitted before 31 January.
If in a quarter there are no withholdings to declare (there were no invoices from self-employed professionals nor rent with withholding), there is no obligation to submit these forms, unless the business is registered under monthly declaration.
To understand how these forms fit in with the rest of the dealership's quarterly tax obligations, you can review the guide on how to declare the purchase of used vehicles and the forms that correspond to each type of transaction.
More than 750 dealerships already use Dealcar to manage their daily operations
Dealcar allows you to register each business expense with its associated invoice, making it easy to identify which payments carry withholding tax and which do not. With centralised documentation, preparing quarterly Forms 111 and 115 becomes a task of minutes instead of hours of reviewing scattered invoices.
If you want to see how it works, you can book a free demo at dealcar.io.
Frequently asked questions
Should I withhold tax on the invoice from the administrative agency (gestoría) that handles my vehicle transfers?
It depends on how it is constituted. If the agency is a company (S.L., S.A.), there is no withholding. If it is a self-employed administrative manager (gestor) acting as a professional, the invoice carries a 15% withholding tax. Usually, the invoice itself will indicate this.
And what about the invoice from the garage that repairs my cars?
Garages are usually registered under business activity headings (section one of the IAE), not professional activities. In that case, their invoices do not carry withholding, regardless of whether they are self-employed or companies.
If I pay cash to a collaborator without an invoice, is there a withholding tax?
Cash payment without an invoice is not correctly documented and generates tax problems regardless of the withholding. If the collaborator should have issued an invoice with withholding tax and did not do so, the dealership remains jointly and severally liable for that non-applied withholding. This is a situation that should be regularised.
Can I deduct the expense even if I have not applied the withholding tax?
The Tax Agency (AEAT) may query the deductibility of the expense if the dealership did not comply with its obligation to withhold. In practice, the deduction of the expense and the obligation to withhold are independent, but an inspection that detects a lack of withholdings normally reviews the deductibility of those expenses too.
If the landlord tells me that I do not need to withhold tax, should I listen to them?
Not necessarily. The obligation to withhold falls on the payer (the dealership), not on the landlord. If the landlord is a natural person and the rent exceeds the exempt limits, withholding tax is compulsory even if the landlord says otherwise. In case of any doubt, consult with your tax advisor before ceasing to withhold.
Table of Contents
What is a tax withholding and how does it work
Buying a vehicle from a private individual: is there a withholding tax?
Selling a vehicle to a private individual: is there a withholding tax?
Transactions between professionals: when there is a withholding tax
Commissions to intermediaries and collaborators: the most frequent case
Premises rental: compulsory withholding tax
Other payments subject to withholding in the day-to-day running of a dealership
What happens if you do not apply withholding tax when it is compulsory
How to declare withholding taxes: forms and deadlines
Frequently asked questions
What is a tax withholding and how does it work
Withholding tax is a mechanism whereby the person making a payment (the payer) retains a percentage of that payment and pays it directly to the Tax Agency on behalf of the recipient. It is an advance payment of the tax that the recipient will have to declare in their own tax return.
For example, if a dealership pays €1,000 to a self-employed tax advisor, it retains 15% (€150) and pays them only €850. Those €150 are paid to the Tax Agency using Form 111. When the advisor submits their annual Income Tax (IRPF) return, they already have those €150 as tax paid on account.
Withholding is not an additional tax for the payer: it is the recipient's money that the payer manages on behalf of the Tax Agency. The cost is borne by the recipient, not the payer. What is the payer's obligation is to apply it correctly, pay it on time and declare it. If they fail to do so, the responsibility for that payment falls on them, regardless of whether the recipient declares their income correctly.
Buying a vehicle from a private individual: is there a withholding tax?
No. When a dealership buys a car from a private individual, there is no obligation to apply withholding tax on the purchase price.
Withholding tax is applied to income subject to IRPF that the recipient must declare as employment income, investment income, real estate income, economic activity income or capital gains. The sale of a car by a private individual may generate a capital gain or loss that the individual must declare in their IRPF, but that obligation lies with the individual, not the dealership making the purchase.
The Spanish tax system does not oblige the professional buyer to withhold tax on the purchase price of used movable goods from private individuals. The reason is that the individual is not providing a service: they are selling an asset. Withholdings apply to income, not to asset transfers.
What the dealership does have documentary obligations for is to generate the purchase document from a private individual with all the seller's details, proving the agreed price and enabling the REBU (Special Scheme for Second-Hand Goods) on resale. For more details on this documentation, you can consult the guide on how to declare the purchase of used vehicles.
Selling a vehicle to a private individual: is there a withholding tax?
No. When a dealership sells a car to a private individual, no withholding tax is applied to the sale price. The transaction is taxed by VAT (under the general scheme or REBU depending on the origin of the vehicle), but there is no withholding tax to be applied.
The purchasing private individual does not apply a withholding tax either: withholding is an obligation that falls on companies and professionals who make payments for certain types of income, not on individuals who purchase goods.
What does concern the private buyer is paying the ITP (Property Transfer Tax) to their autonomous community. This tax is managed by the buyer themselves: the dealership does not intervene in its settlement nor is it responsible for its payment.
Transactions between professionals: when there is a withholding tax
When the dealership makes payments to other professionals or companies for services received, withholding tax may be compulsory. The key lies in whether the payment is income from the recipient's economic activity.
Self-employed workers providing services to the dealership. If you hire a self-employed photographer, a self-employed mechanic, a tax advisor, a designer or any other professional registered with the IAE (Economic Activities Tax), their invoices will be subject to a 15% withholding tax (or 7% during the first three years of activity). The dealership must withhold that percentage, pay it to the Tax Agency and include it in the quarterly Form 111.
Professionals with activities expressly subject to withholding tax. Not all economic activities of self-employed workers are subject to withholding. Activities in section one (business activities) of the IAE generally do not carry it. Activities in sections two and third (professional and artistic) are indeed subject. A self-employed haulier who transports a car for you is a business activity, without withholding. A self-employed lawyer who drafts a contract for you is a professional activity, with a 15% withholding.
Companies. Payments to corporations (S.L., S.A.) generally do not carry withholding, except for rent and some specific types of income. If you hire services from a mercantile company, in most cases you should not apply withholding tax.
To see how billing affects each type of transaction, consult how to issue invoices correctly in car buying and selling.
Commissions to intermediaries and collaborators: the most frequent case
This is the scenario where the most errors occur in dealerships. A car finder, an intermediary who brings in clients, or a sales representative working on a freelance basis may be in different tax situations that determine whether there is withholding tax or not.
Intermediary registered as self-employed with professional activity. If the person who brings you the client or manages the purchase of a car is self-employed and their activity is considered professional (mediation, agency), the commission you pay them is subject to a 15% withholding tax. You must withhold, pay to the Tax Agency and include it in Form 111.
Intermediary with business activity (commercial agent heading or similar). Some commercial agents are registered under business, not professional, activity headings. In that case, their invoices may not carry withholding. To know for sure, the safest way is to ask them to indicate on the invoice whether their activity is subject to withholding or not.
Occasional collaborator without self-employment registration. If someone brings you a client on a highly occasional basis, without being registered as self-employed, and you pay them for it, you are dealing with employment income or irregular income that generates obligations both for them (IRPF) and for you (possible withholding and payment). This situation can generate tax problems for both parties if it is not correctly structured.
The rule of thumb: before any payment to a natural person for a service, always ask for the invoice indicating whether the activity is subject to withholding. If the collaborator does not know how to answer, it is a sign that there is something to review.
Premises rental: compulsory withholding tax
If the dealership rents the premises where it develops its activity and the lessor is a natural person (not a company), the rent is subject to a 19% withholding tax on the monthly rent. This is one of the most frequent and most easily forgotten withholdings.
The obligation to withhold falls on the lessee (the dealership paying the rent), not on the lessor. If the lessor is a natural person, the dealership must withhold 19% of each monthly payment and pay it to the Tax Agency using the quarterly Form 115.
If the landlord is a company (S.L., S.A.), there is no withholding tax to be applied to the rent.
Example: rent of €1,200/month to a natural person owner. The dealership pays €1,200 − €228 (19%) = €972 to the owner and €228 to the Tax Agency using Form 115. Per year, it pays €2,736 in withholding taxes on rent.
Failure to apply this withholding when it is compulsory is one of the most common tax infractions in small businesses. The minimum penalty for not paying withholding taxes is 50% of the amounts not withheld.
Other payments subject to withholding in the day-to-day running of a dealership
Employee payrolls. Withholding taxes on employment (IRPF of employees) are calculated according to the AEAT withholding tables based on the annual gross salary and the employee's personal circumstances. They are paid monthly or quarterly using Form 111.
Prizes and rebates to self-employed sales agents. If you pay an extraordinary incentive to a self-employed sales representative in addition to their usual commission, that payment is also subject to withholding tax if their activity is subject to it.
Interest on loans to partners or related parties. If the company has loans with partners or related parties and pays interest, that interest is subject to a 19% withholding tax (investment income).
Dividends. If the dealership distributes dividends to its shareholders, it must withhold 19% on the gross amount distributed.
To see what expenses you can deduct as a dealership, consult deductible expenses for second-hand car dealers.
What happens if you do not apply withholding tax when it is compulsory
The consequence of not applying withholding tax when it is compulsory is that the payer (the dealership) becomes jointly and severally liable for the payment that should have been made. The Tax Agency can demand the payment of the non-withheld amount from the dealership, plus late-payment interest, plus the corresponding penalty.
Penalties for failure to pay withholding taxes range from 50% to 150% of the amounts not paid, depending on whether there is concealment or repeat offences. The minor infraction (non-payment without concealment) starts at 50%. The serious infraction (with concealment or repeat offences) can reach 100-150%.
Furthermore, failing to submit Form 111 or Form 115 when there is an obligation to do so, even if there are no withholdings to pay, is also a formal infraction with a minimum penalty of €200.
For a complete overview of dealership taxation including withholdings, forms and deadlines, you can consult the tax guide for dealerships.
How to declare withholding taxes: forms and deadlines
The withholding taxes applied are declared and paid through two main forms:
Form 111 (withholdings on employment income and professional activities): covers payroll withholdings and withholdings on invoices from self-employed professionals. It is submitted quarterly during the first 20 calendar days of April, July, October and January. At the close of the year, Form 190 (annual summary) is submitted before 31 January of the following year.
Form 115 (withholdings on property leases): covers withholdings on premises rental. Same quarterly calendar. At the close of the year, Form 180 (annual summary) is submitted before 31 January.
If in a quarter there are no withholdings to declare (there were no invoices from self-employed professionals nor rent with withholding), there is no obligation to submit these forms, unless the business is registered under monthly declaration.
To understand how these forms fit in with the rest of the dealership's quarterly tax obligations, you can review the guide on how to declare the purchase of used vehicles and the forms that correspond to each type of transaction.
More than 750 dealerships already use Dealcar to manage their daily operations
Dealcar allows you to register each business expense with its associated invoice, making it easy to identify which payments carry withholding tax and which do not. With centralised documentation, preparing quarterly Forms 111 and 115 becomes a task of minutes instead of hours of reviewing scattered invoices.
If you want to see how it works, you can book a free demo at dealcar.io.
Frequently asked questions
Should I withhold tax on the invoice from the administrative agency (gestoría) that handles my vehicle transfers?
It depends on how it is constituted. If the agency is a company (S.L., S.A.), there is no withholding. If it is a self-employed administrative manager (gestor) acting as a professional, the invoice carries a 15% withholding tax. Usually, the invoice itself will indicate this.
And what about the invoice from the garage that repairs my cars?
Garages are usually registered under business activity headings (section one of the IAE), not professional activities. In that case, their invoices do not carry withholding, regardless of whether they are self-employed or companies.
If I pay cash to a collaborator without an invoice, is there a withholding tax?
Cash payment without an invoice is not correctly documented and generates tax problems regardless of the withholding. If the collaborator should have issued an invoice with withholding tax and did not do so, the dealership remains jointly and severally liable for that non-applied withholding. This is a situation that should be regularised.
Can I deduct the expense even if I have not applied the withholding tax?
The Tax Agency (AEAT) may query the deductibility of the expense if the dealership did not comply with its obligation to withhold. In practice, the deduction of the expense and the obligation to withhold are independent, but an inspection that detects a lack of withholdings normally reviews the deductibility of those expenses too.
If the landlord tells me that I do not need to withhold tax, should I listen to them?
Not necessarily. The obligation to withhold falls on the payer (the dealership), not on the landlord. If the landlord is a natural person and the rent exceeds the exempt limits, withholding tax is compulsory even if the landlord says otherwise. In case of any doubt, consult with your tax advisor before ceasing to withhold.
