What expats should know about incentives and taxes when buying a car in Spain by 2025

You should be aware that the price of a new car in Spain is not just about the showroom sticker.

In 2025, new rules will be implemented that could affect your budget. The good news? Spain offers its most generous subsidies ever for greener vehicles. The bad news is? If you are not prepared, the paperwork can seem like a maze.

Here’s a breakdown in plain English of the major taxes, the costs expats will face when importing cars, and the places where they can save the most.

Newcomers often get caught out by taxation

In Spanish, VAT is called IVA. The tax is already included in the price of new cars. It’s 21 percent. But there are exceptions. Families with at least three children and drivers who are disabled can qualify for rates as low as four percent.

Second-hand vehicles are taxed in a different way. You will be charged the Patrimonial Transfer Tax if you purchase from a private seller instead of a dealer. This tax can range from 4 to 8 percent depending on your region. Some areas are more generous than others—Cataluña, for example, often exempts cars more than ten years old from this tax.

This is when emissions become important. If your car is clean and efficient, producing under 120 grams of CO₂ per kilometre, you’ll pay nothing. The bill will increase as the pollution level of the vehicle increases. It can range from 4.75 percent to 15 percent for the worst polluters. This is not applicable to hybrids or electric cars, as part of Spain’s drive to encourage more people to switch to fossil fuels.

Importing a vehicle when moving to Spain

Many expats bring their cars to Spain, only to find out that the rules are complicated. Expect to pay a 10% import tax plus a 21% VAT on your vehicle if it is from outside of the European Union. Even used vehicles are subject to these fees, and registering one requires a large amount of paperwork.

It’s easier if your car comes from the EU. If the vehicle was previously taxed, no import duty is due. That said, VAT can still be due if the car is classed as ‘new’ – which means less than six months old or with under 6,000 km on the clock.

Some people who have owned their car abroad for some time can be exempted from paying import taxes. Some import taxes are waived for those who qualify, but it is important to get the right help.

Why switching to electric in 2025 makes sense

Spain’s renewed push towards electric vehicles is the real story of this year. The main story of the year is Spain’s renewed drive for electric cars. MOVES III programmeEVs have never been more attractive.

Buyers can knock up to €7,000 off the price of a new electric car worth under €45,000. Plug-in hybrids can qualify for up to €5,000, while electric vans and commercial vehicles come with subsidies as high as €9,000. Families on low incomes or anyone scrapping an old petrol or diesel car get even more—an extra €1,000.

A brand new incentive is also hidden in Spain’s tax code. Anyone buying an EV this year can claim a 15 per cent income tax deduction on one eligible car, up to a base of €20,000. It’s flexible too. You can claim it after you’ve registered the vehicle or even if only a 25% deposit has been paid by the end of Decembre.

Charging points come with additional benefits. Install one at home or in your building’s garage, and you can deduct 15 per cent of the cost – up to €4,000 per year – while the MOVES scheme can cover a large chunk of the bill as well.

You can’t avoid the costs of everyday life

After you purchase your vehicle, taxes continue. Spanish municipalities charge an annual road tax called IVTM. The amount you pay is based on your car’s engine size and power. Sports cars and SUVs with large engines are the highest-priced. In large cities it can run from just over €20 to well above €200. What’s the silver lining? Electric vehicles are often eligible for discounts up to 75 percent.

There’s also the ITV in Spain, which is the equivalent of the MOT. For the first four years of ownership, new cars do not require an inspection. After that they are required to be inspected every two years. It’s an annual inspection after that. Imported cars, even brand new ones, must go through ITV.

Another non-negotiable is insurance. Before you can drive away in your car, comprehensive cover is required. Costs vary widely, but it’s often a surprise to expats who underestimated Spanish prices.

Recycling bonuses and eco-schemes

Spain has smaller regional programs that reward drivers who scrap their old cars. Known as ‘Plan Renove’ in many areas, these can be stacked with the national MOVES grants, making it even cheaper to switch to something greener. In some cities, incentives are now extended beyond cars and include electric scooters or e-bikes as part of an overall push to reduce urban emissions.

What should expats do?

It’s important to remember that buying a vehicle in Spain is not just about the price. If you are not prepared for taxes, the cost of a car can increase significantly. This is especially true for cars that are imported or have high emissions. On the other hand, 2025 will be a great year for those who want to go electric. Subsidies and deductions can save you thousands of euros.

You should consider if you will be staying in the country permanently whether it is better to bring your own vehicle or buy locally and take advantage of the incentives. And whatever route you choose, getting advice from a gestor before signing paperwork can save a lot of frustration—and potentially a lot of money.

The message from Spain is clear: greener vehicles are the future. Understanding the tax landscape in Spain can transform a fearful purchase for expats into a smart investment.