Starting January 1, 2026, Slovakia will introduce an important amendment to the VAT Act that affects all businesses purchasing passenger vehicles for company use. The new regulation limits the VAT deduction to 50% when a car is used for both business and private purposes.
Below, we break down what this means in practice — who will be affected, what exceptions apply, what records will be required, and how businesses can prepare for the upcoming change.
Why Are the Rules Changing?
This legislative change is part of the government’s fiscal consolidation package, aimed at reducing the state budget deficit and preventing the misuse of VAT deductions — particularly in cases where vehicles purchased “for business” are also used privately.
In essence, the amendment closes a loophole that allowed businesses to deduct the full VAT even if the car was used, at least partly, for personal activities such as commuting, family trips, or errands.
Who Will Be Affected?
The new rule applies to all VAT-registered taxpayers who, between January 1, 2026 and June 30, 2028, purchase or lease a passenger vehicle (categories M1, L1e, or L3e) that is not used exclusively for business purposes.
For these vehicles, only 50% of the VAT on the purchase price and related expenses will be deductible. This includes:
- fuel and energy costs,
- maintenance, servicing, and tire replacement,
- car washes and parking fees,
- and other expenses connected with operating the vehicle.
Exceptions: When Can You Still Deduct 100% of VAT?
The law still allows a full (100%) VAT deduction if you can prove that the car is used solely for business activities. This includes:
- rental or leasing companies,
- taxi services and ride-hailing businesses,
- driving schools,
- and delivery or transport companies using vehicles as part of their core business.
Additionally, this restriction does not apply to:
- commercial vehicles (vans, trucks, etc.),
- vehicles outside the listed categories (M1, L1e, L3e),
- or vehicles with a purchase price below €1,700.
Timing and Ownership: The Key Moment
The moment of acquiring ownership determines whether the restriction applies — not the registration date or delivery date.
If you legally acquire ownership of the vehicle before January 1, 2026, even if it is registered afterward, the 50% VAT limitation will not apply. This creates a window of opportunity for businesses planning to invest in company vehicles before the new rule takes effect.
New Record-Keeping Requirements
To justify a full VAT deduction (100%) for vehicles used exclusively for business, companies will be required to maintain detailed and ongoing mileage records. These must include:
- the date and purpose of each trip,
- start and end points,
- the driver’s name,
- the odometer readings at the start and end of the period,
- and identifying details such as the VIN number and registration plate.
These records must be accurate, consistent, and available for inspection by the tax authorities. Failure to provide proper documentation may result in VAT adjustments and penalties.
Practical Example
Let’s look at a simple case:
Company ABC Ltd. buys a passenger car in April 2026 for €30,000 including VAT (net €25,000 + €5,000 VAT). The car will be used partly for business purposes and occasionally for private trips by the director.
- Under the new rule, the company can deduct only 50% of the VAT, i.e., €2,500.
- The remaining €2,500 cannot be deducted, nor can it be added to the car’s tax base for depreciation.
- The same 50% limitation applies to all related costs — for example, only half of the VAT on fuel and maintenance will be deductible.
Implications for Businesses
The new restriction introduces both financial and administrative consequences for companies:
- The ability to deduct VAT on company cars will be significantly reduced.
- Entrepreneurs will face increased administrative obligations, especially in maintaining travel logs and ensuring compliance.
- Many businesses may find it more advantageous to purchase vehicles before the end of 2025, particularly if mixed (business/private) use is expected.
- Firms using company cars for private purposes will need to adjust their accounting and internal policies accordingly.
It’s also expected that this change will influence leasing companies and car dealers, as demand for business vehicles may temporarily increase in late 2025 before the rule takes effect.
How to Prepare
- Plan your purchases early – If you’re considering buying or leasing a passenger car for your business, doing so before December 31, 2025, may help you avoid the new restriction.
- Assess vehicle usage – Determine whether each vehicle is used solely for business or partially for private purposes.
- Set up proper record-keeping – Implement a system for tracking trips and vehicle use (digital mileage logs, GPS tracking, or accounting software).
- Consult your accountant – A qualified accounting firm can help you apply the correct VAT rules, maintain compliance, and avoid potential fines.
Conclusion
The restriction on VAT deduction for passenger cars from 2026 marks a major shift in Slovak tax policy. While it aims to make the system fairer, it also increases the administrative burden on honest businesses.
If you’re planning to invest in a company vehicle, take a proactive approach — evaluate your needs, adjust your timing, and ensure you have the right documentation in place.
👉 Need expert advice?
Our accounting firm can help you evaluate your situation and design the most effective strategy before the new rule takes effect.
