One of the measures approved as part of the third consolidation package is the limitation of VAT deduction on company vehicles that are also used for private purposes. Below we provide a concise overview of this limitation, based on the methodological guidance of the Financial Directorate of the Slovak Republic No. 3/DPH/2025/MU, the transitional provisions of Article 85n of Act No. 222/2004 Coll. on Value Added Tax, as amended, and Article 55 zzzk of Act No. 595/2003 Coll. on Income Tax, as amended.
1. Scope and Time Period
- The regime applies to passenger motor vehicles of category M1, as well as quadricycles of category L1e and motorcycles of category L3e (hereinafter referred to as “PMVs”).
- This is a temporary measure applying to the acquisition of PMVs (purchase and financial leasing treated as a supply of goods) and the rental of PMVs in the period from 1 January 2026 to 30 June 2028 (inclusive).
- For related goods and services (fuel, servicing, spare parts, parking fees, leasing instalments, motorway vignette, etc.), the regime applies to supplies received between 1 January 2026 and 30 June 2028, even if the PMV was acquired before 1 January 2026.
2. Mixed Use (Business + Private / Other Use) – 50% VAT Deduction
If a PMV is not exclusively used for business purposes, a flat-rate VAT deduction of only 50% may be applied.
The 50% limitation applies to:
- acquisition of a PMV (including financial leasing treated as a supply of goods),
- rental of a PMV other than short-term rental (short-term rental = continuous possession/use for a maximum of 30 days),
- related goods and services received in connection with the PMV.
If the PMV is also used for VAT-exempt activities without the right to deduct VAT, the final VAT deduction (after applying the 50% limitation) is further reduced by a pro rata coefficient pursuant to Article 50 of the VAT Act.
When applying the flat-rate 50% VAT deduction, taxation of private use as a supply of services under Article 9(2) of the VAT Act generally will not apply.
3. Exclusive Business Use – Possibility of 100% VAT Deduction
A full (100%) VAT deduction is possible only if the PMV is used exclusively for business purposes and the conditions set out in Article 85n are met, namely:
- Keeping detailed electronic records pursuant to Article 85n(6) (the records must be in a format that can be further electronically processed; a scan/PDF of a manually completed table is not sufficient; the standard accepted output is typically in Excel format).
This requirement applies to PMVs acquired both before and after 1 January 2026. - Submitting the form “Notification of the use of a passenger motor vehicle for business purposes” within the deadline for filing the VAT return for the period in which the taxable person first claims the VAT deduction (upon acquisition or rental during the first deduction period).
This requirement applies to PMVs acquired after 1 January 2026.
The records must include, in particular, the VIN and registration number, details of each journey (route, date, purpose, number of kilometres), refuelling/consumption data, and other information required under Article 85n(6). In addition, records of received related goods and services must be kept (specification, tax base, date).
This means that for PMVs purchased after 1 January 2026, a taxable person must meet both conditions (keeping detailed records and submitting the notification) in order to apply a 100% VAT deduction on the purchase, rental, and related costs. The first notifications will be submitted by 25 February 2026.
If the taxable person is unable to prove exclusive business use (in particular due to missing records or failure to submit the notification), the tax authority may reduce the applied VAT deduction to 50% and make corresponding adjustments to deductions on related goods and services linked to the specific PMV.
A taxable person who owns a PMV acquired before 1 January 2026 must meet only one condition—keeping detailed records—in order to apply a 100% VAT deduction on related costs (fuel, servicing, spare parts, parking fees, motorway vignette).
4. Advance Payments Made Before 1 January 2026
If a tax liability on an advance payment arose before 1 January 2026, the VAT deduction on that advance payment is generally assessed under the rules applicable at the time the tax liability arose. However, the subsequent settlement/supply after 1 January 2026 is already subject to the regime under Article 85n (i.e. in the case of mixed use, the final deduction is set at 50%).
If VAT was deducted in full from a paid advance, it will then be necessary to adjust the deducted VAT upon the first private use of the PMV.
5. Income Tax Impacts (Brief Overview)
- The non-deductible 50% of VAT is not considered a tax-deductible expense as of 1 January 2026 pursuant to Article 52zzzk of the Income Tax Act.
If this non-deductible VAT relates to tangible assets (e.g. the purchase of a PMV), it is also not included in the tax acquisition cost; however, for accounting purposes, it increases the acquisition cost/expense. - In the case of a company vehicle provided to an employee also for private use, the non-cash benefit (1% of the acquisition cost) is calculated from the tax acquisition cost increased by VAT.
Recommendation: When acquiring a PMV, determine the applicable regime (50% vs. 100%) in advance, adjust internal processes for electronic record-keeping, and ensure timely submission of the required notification.
