The mystery of N and M plates: why so many rental luxury cars?
Spain's roads are full of BMWs and Mercedes with N and M plates: they are rental or leasing cars. We explain why the tax system pushes companies to offer vehicles this way.
English · Original discussion in Spanish · Published
The mystery of N and M plates: why so many rental luxury cars?
Spain's roads are full of high-end BMWs and Mercedes with plates starting with N or M. Most are two to three years old, with new prices ranging from 40,000 to 70,000 euros. Coincidence? No: they are rental or leasing cars, a formula that surges when taxes choke off salary increases.
The luxury leasing boom: a tax symptom
The proliferation of these vehicles is not the result of growing wealth, but of a tax distortion. With high marginal income tax rates (IRPF, Spain's personal income tax), a pay rise of 3,000 to 6,000 euros a year is swallowed up by the tax authorities. Companies, by contrast, offer company cars, restaurant cards, childcare or training, which are taxed less or are exempt. This way, the employee enjoys a 70,000-euro BMW without paying the real cost, and the company deducts it.
The result: garages full of identical Audi Q3s and Q2s, even with the same initial plate letters, as testimonies point out. "Half the garage in my building is the same, presumably on credit," one analysis notes. And with inflation, taking out a loan at 10% seems like the lesser evil for some.
SUVs and saloons: a shift in trends
The market reflects the dominance of the SUV: BMWs with their characteristic black plastic rear, high-end Mercedes and, among saloons, Tesla sweeping up 90% of sales. Low-cost brands like Dacia and MG are also gaining ground, although German brands dominate the luxury leasing segment. The paradox is that these cars, many with diesel or petrol engines, coexist with the official environmental narrative.
An open question
If high-end leasing is so profitable, why doesn't everyone opt for it? The answer lies in the type of contract: not all employees have access to these benefits, and those who do are usually in the highest income tax brackets. The tax system not only fails to redistribute, it pushes top earners to dodge tax through benefits in kind. Meanwhile, the average citizen pays for their car with already-taxed money. Something doesn't add up.
Spain's roads are full of high-end BMWs and Mercedes with plates starting with N or M. Most are two to three years old, with new prices ranging from 40,000 to 70,000 euros. Coincidence? No: they are rental or leasing cars, a formula that surges when taxes choke off salary increases.
The luxury leasing boom: a tax symptom
The proliferation of these vehicles is not the result of growing wealth, but of a tax distortion. With high marginal income tax rates (IRPF, Spain's personal income tax), a pay rise of 3,000 to 6,000 euros a year is swallowed up by the tax authorities. Companies, by contrast, offer company cars, restaurant cards, childcare or training, which are taxed less or are exempt. This way, the employee enjoys a 70,000-euro BMW without paying the real cost, and the company deducts it.
The result: garages full of identical Audi Q3s and Q2s, even with the same initial plate letters, as testimonies point out. "Half the garage in my building is the same, presumably on credit," one analysis notes. And with inflation, taking out a loan at 10% seems like the lesser evil for some.
SUVs and saloons: a shift in trends
The market reflects the dominance of the SUV: BMWs with their characteristic black plastic rear, high-end Mercedes and, among saloons, Tesla sweeping up 90% of sales. Low-cost brands like Dacia and MG are also gaining ground, although German brands dominate the luxury leasing segment. The paradox is that these cars, many with diesel or petrol engines, coexist with the official environmental narrative.
An open question
If high-end leasing is so profitable, why doesn't everyone opt for it? The answer lies in the type of contract: not all employees have access to these benefits, and those who do are usually in the highest income tax brackets. The tax system not only fails to redistribute, it pushes top earners to dodge tax through benefits in kind. Meanwhile, the average citizen pays for their car with already-taxed money. Something doesn't add up.
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Summary of a discussion on Burbuja.info - Foro de economía, actualidad y política., translated from Spanish and reviewed before publication. Read the full discussion (11 replies).
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