Spanish companies that rely on combustion vehicles face uncertainty after a European Commission document pointed to possible future limits on VAT deductions for corporate fleets. Nothing has changed yet: there is no new law, and the idea remains under discussion.
Concern grew when Communication COM(2025) 96, published by the Commission on March 5, 2025, began circulating in the industry. Titled “Decarbonizing corporate fleets,” the document is neither a directive nor a regulation. It sets out a political direction and lists measures member states might consider while Brussels works on a broader legislative proposal.
In September 2026, the European Commission officially launched a public consultation on VAT rules, including the treatment of passenger cars used in business. Responses are accepted until November 4, 2026.
Nearly 60% of new passenger cars registered in the EU are bought by companies. Corporate buyers account for an even larger share of commercial vehicles, including vans and buses, as well as trucks. These vehicles rack up more kilometers and enter the used market sooner, making them basic targets for electrification. The Commission’s reasoning is straightforward: encouraging companies to buy electric vehicles speeds up the transition, and those cars eventually become more affordable for private buyers.
Spain already offers accelerated depreciation for electric vehicles under corporate tax rules, making it financially attractive for companies to go electric. The same logic applies to VAT: if electric cars are more tax-efficient for businesses, the shift to electrification accelerates. This is more effective than trying to convince millions of individual buyers one at a time.
The basic controversy stems from the Commission’s mention of a possible “progressive elimination” of VAT deductions for conventional vehicles under a future “green VAT” plan. The document sets no start date or definition of affected vehicles. It also leaves unclear how plug-in hybrids would be treated. Claims that VAT deductions will immediately drop to 0% for combustion cars and rise to 100% for electric ones are unfounded. No specific percentages or timelines have been set.
Current rules on VAT deductions for company cars vary significantly across EU countries. Belgium, for example, has imposed strict limits on deductions for vehicles with CO2 emissions while offering more favorable treatment for electric cars. This reflects a broader EU trend toward using tax policy to encourage cleaner corporate fleets.
For Spanish fleets, the bigger issue is the shrinking window to buy combustion vehicles without extra fiscal penalties, rather than an immediate tax hike. Spain lags behind its neighbors: just 7.1% of corporate registrations are electric. Portugal’s share is 24.7%, while Belgium’s stands at 54.2%, with tax reforms already in place. Brussels is signaling that change is coming, and Spain has yet to respond.
Similar worries have surfaced elsewhere in the Spanish automotive sector, as seen in the recent case of electric cars being blocked from parking garages despite no legal basis for such bans.
Google/SpainAuto describes the current situation as anticipation, with no crisis underway. The Commission’s document signals intent, not immediate action. Spanish companies still have options, but the fiscal environment is shifting. The real test is how quickly Spain updates its policies to avoid falling further behind in the move to electrify corporate fleets. The details and timing remain undecided. For businesses, waiting too long to adapt could be costly.
