Tax differences between selling vehicles to companies vs. individuals

In the daily life of a used vehicle dealership, not all customers are the same before the Tax Agency. The tax implications of selling a car to a company are not the same as if you do so to an individual. This guide is designed for dealers and dealerships that want to clearly understand the key tax differences, avoid costly mistakes, and professionalize their management.

Introduction to the tax context in vehicle sales

Why is it important to differentiate between business and individual customers?

From a tax perspective, the type of customer determines whether an invoice with VAT should be issued, whether that VAT is deductible, and which type of tax regime applies. Additionally, businesses can exercise tax rights (such as the deduction of input VAT), while individuals cannot.

Tax obligations of the dealership

Every dealership is required to issue an invoice for their sales operations, correctly apply VAT according to the type of operation, and declare their income in accordance with regulations. A mistake in these areas can lead to penalties and tax audits.

Sales to individuals: obligations and considerations

Impact of VAT in sales

When selling to an individual, VAT must be included in the final price. However, in the case of used vehicles, many dealers adhere to the Special Regime for Used Goods (REBU), which allows them to only tax the profit margin.

Simplified vs. full invoice

In sales to individuals, a simplified invoice (similar to a receipt) can be issued if the amount does not exceed €400. But for greater transparency and traceability, it is advisable to issue a full invoice detailing:

• Price of the car

• Taxable amount

• Applied VAT (if REBU is not used)

• Customer details

What happens if the car was sold with a profit margin?

If the car was acquired without the right to deduct VAT (for example, bought from an individual), the REBU can be applied, which only taxes the margin between the purchase price and the selling price, not on the total. VAT is not itemized on the invoice.

Sales to companies or self-employed: key differences

Deductible VAT and right to refund

When the customer is a company or self-employed and the car will be used for economic activity, VAT can be deducted in their tax declaration. Therefore, it is mandatory to issue an invoice with an itemized VAT breakdown.

Formal requirements of the invoice

• Complete tax details of the company

• Tax ID and company name

• Taxable amount and VAT rate applied (usually 21%)

• Date of operation and signature

Intra-community deliveries or exports

If a vehicle is sold to a company in another EU country with a valid intra-community Tax ID, the operation may be exempt from VAT, provided the requirements for intra-community delivery are met. The same applies to exports to countries outside the EU.

Practical comparison: selling the same car to a company or an individual

Let's suppose you sell a car acquired for €6,000.

Sale to an individual (REBU applied):

• Sale price: €8,000 (VAT included in the margin)

• VAT on the margin (€2,000): €347.11

• Net profit before taxes: €1,652.89

Sale to a company (invoice with VAT):

• Base price: €8,000 + 21% VAT (€1,680) = €9,680

• VAT charged: €1,680

• Company can deduct that VAT

• Net profit for the dealership: €2,000

Result: selling to companies generates more transparent operations from a tax standpoint and may imply greater apparent benefits, but also greater control and documentation obligations.

Tax consequences of not invoicing correctly

Penalties from the Tax Agency

Errors such as not correctly breaking down VAT, incorrectly applying the REBU, or failing to identify the customer as a business can result in inspections and penalties ranging from 1% to 100% of the undeclared amount.

Reputational and legal risks

A business customer who cannot deduct VAT due to an incorrect invoice may claim or even file a complaint. Furthermore, poor tax management undermines the dealership's image.

Best practices for professional dealerships

Use of management software adapted to regulations

Having tools that allow you to issue invoices according to the type of customer and correctly apply the tax regime is key to avoiding errors.

Specialized tax advice

Having an advisor or manager who periodically reviews your operations helps to prevent tax contingencies.

How Dealcar can help you

Dealcar integrates functionalities to automatically apply the REBU, issue invoices with or without VAT according to the type of customer, and maintain clear control of stock, margins, and the taxation of each operation.

Conclusion

Selling to companies or individuals not only involves different ways of conducting business but also distinct tax obligations. For a professional dealership, knowing these differences is vital to avoid mistakes, maximize profits, and ensure transparent management. With platforms like Dealcar, this tax control becomes much simpler and safer.

Frequently asked questions (FAQs)

What VAT applies when selling a car to a company?

The general VAT of 21% is applied if the operation is not exempt, and a full invoice must be issued.

What happens if I sell a car under the margin regime?

You only pay tax on the profit margin, not on the total. VAT is not itemized on the invoice.

Do I always need to issue an invoice to an individual?

It is not mandatory, but it is highly recommended. For low amounts, a simplified invoice can be used.

How does selling outside of Spain affect taxes?

If it is to a company in the EU with a valid intra-community Tax ID, it may be exempt from VAT. If it is outside the EU, it is treated as an export and may also be exempt.