Ganvam proposes a VAT reduction to 8% to revive the Spanish market

With car sales sunk to historic lows, the various employers’ organisations and associations have begun to make public their proposals which, in theory, would boost car sales through some tax advantages, within the framework of a new scrappage scheme.

The latest proposal comes from Ganvam, the National Association of Motor Vehicle Dealers. It proposes a VAT tax cut for new or used vehicles less than 5 years old, to 8%, provided that the buyer signs up to a new scrappage scheme, handing in another used vehicle that is 10 years old or more.

According to the association’s calculations, 30% of the Spanish car fleet could be renewed in this way, also resulting in an average saving of 2,200 euros per car for the buyer.

Acceptance of this idea by the government will not be easy, as it would mean losing around 528 million euros a year due to the VAT reduction. However, the benefits from registration tax, VAT paid on other services and fuel would bring the government 364 million.

It is also proposed to eliminate the registration tax or modify it so that it is very low or not payable at all on cars that emit certain amounts of CO2 per kilometre.