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How much of the owner's car is deductible: the 20% rule, cost caps, rental and fuel
The module’s worked examples, then cases to attempt before revealing their solution · 5 sections · 397 words · 5 min
Worked example
A 30,000 euro car also driven in free time
A sole trader buys a 30,000 euro car that the owner also uses privately. The cost that matters for tax stops at 18,075.99 euros, and over the full depreciation period 20% of it is deducted, that is 3,615.20 euros. The remaining 26,384.80 euros of the price never reduce taxable income at all.
Worked example
A 6,000 euro book charge
Assume, purely for illustration, a depreciation charge of 6,000 euros on a car that cost 30,000 euros. The ratio 18,075.99 / 30,000 is about 0.6025, so the admitted charge is 3,615.20 euros, and 20% of that gives 723.04 euros of deduction. The amount added back to profit for the year is 5,276.96 euros.
Worked example
A rental signed in July
A consultant rents a car from 1 July 2026 and pays 3,000 euros of rent up to December. The 3,615.20 euro annual ceiling, scaled to six months, becomes 1,807.60 euros. She deducts 20% of that figure, 361.52 euros; the rest of the rent, 2,638.48 euros, goes back into taxable income.
Worked example
Selling after four years
The 30,000 euro car from the example has built up 24,000 euros of book depreciation, of which 2,892.16 were deducted over four years. Sold for 9,000 euros, it shows an accounting gain of 3,000 euros. The ratio 2,892.16 / 24,000 is about 0.1205, so the gain that enters taxable income is about 361.52 euros.
Practical case
The engineer and the rented car
Marco, an engineer with a one-person practice under the ordinary regime, rents a car from 1 January 2026 at 6,000 euros a year and also uses it privately. He also spends 1,800 euros on fuel, 1,500 of it paid with the practice's card and 300 in cash, plus 700 euros on insurance and servicing not included in the rent. It is his only vehicle. How much can he deduct for 2026?
Hint: First bring the rent down to the annual ceiling, then leave out fuel not paid by card, and finally apply the professional's percentage to every item.
Show the solution
Rent: counts up to 3,615.20 euros; 3,615.20 × 20% = 723.04 euros. Fuel: only the 1,500 euros paid by card count; 1,500 × 20% = 300 euros. Insurance and servicing: 700 × 20% = 140 euros. Total: 723.04 + 300 + 140 = 1,163.04 euros. As this is his only vehicle, the one-car limit for professionals makes no difference.
Answer: 1,163.04 euros deductible
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