Electric vehicles : New tax incentives in Spain, but are these enough……..?


On June 27, 2023, Spain introduced a 15% deuction on the purchase of electric vehicles and their related charging equipment.

This financial incentive is subject to a maximum limit of 20,000€ (3,000€ deduction) for the vehicles and 4.000 euros for the charging equipment (600€ deduction). Therefore, if the car costs 30.000€ and the charging equipment 6.000€, the deduction is on 20.000€ and on 4.000€, not on the 36.000€ that you have spent.  Thanks Spain……

The deduction will be applicable in 2023 or 2024, depending on the amount paid for the car each year. As always, there is a trick behind the deduction: to be able to claim this deduction in your income tax declaration, the car needs to be paid for, in full, before 2026. Below there are nice summaries of the applicable deduction at the official Spanish tax office website:

Tax Agency: Deduction for the acquisition of “pluggable” electric vehicles-Right to deduction (agenciatributaria.gob.es)

Tax Agency: Deduction for the installation of charging infrastructures-Right to this deduction (agenciatributaria.gob.es)

Although these deductions, together with the direct grants that I will mention next, indicate Spain is starting to catch up with the rest of the most ecofriendly countries, to our modest opinion this is not enough considering that the cost of an electric car is much more expensive than the 20,000€ limit that the government has elected for.  Obviously, this incentive is better than nothing, but it is not enough to move Spain from its current position of being at the bottom of the European electromobility indicator (this indicator measures the number of electric vehicles purchased and the number of public charging points available).  

In Spain, “moves III” is the name of the program that deals with the grants available to purchase an electric car. The program has a budget of 1.200 million€, of which 876 million has been transferred to the autonomous communities. An individual can receive up to 7.000€, however we are in Spain and as the process requires the involvement of different administrations, the participation of dealers, and each transaction varies case to case, the grant is not received at the time of the purchase of the vehicle, in fact it will probably be received many months after the actual purchase. Finally, if the grant is ever received, it would be considered as taxable income in the following income tax declaration, which can be taxed up to 48% depending on each individual’s situation.

Other countries have more direct aids for the purchase of electric cars. In Portugal, for example the electric cars are exempt from registration tax and VAT is deductible. In Sweden, the sales of electric cars exceed 60%, being the bestselling type of technology and they are also testing ways of charging the car through the road when driving. In Germany between the government and the car dealers you can get a direct grant of 7.000€ from 2023, just reduced from 9.000€ that was available in 2022.  Taking into account that by 2035 only electric cars will be allowed to be sold in Spain, if the prices of these electric cars are not reduced and Spain continues offering mediocre grants and aids, I can see Spain being called the Cuba of Europe. Let’s hope that Spain does not continue on this path and starts working very hard to make the necessary changes.

Spence Clarke specialises in the provision of Spanish tax, accounts, law and labour services, mainly to foreigners with interests in Spain. Our cross-border knowledge helps clients adapt to the Spanish system with the minimum of doubt and disruption. If you have any questions about this article or any other matter contact us, with no obligation, to see how we can help you.