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The approved wording introduces news VAT deduction rules for taxpayers which related to the passenger motor vehicles used for purposes other than business.
The aim of this measure is to reduce the administrative burden associated with the obligation to keep detailed records on the side of VAT payers, as well as to prevent tax evasion and tax avoidance in the case of non-taxation of motor vehicles for purposes other than business.
In connection with the approved limitation of VAT deduction for business motor vehicles also used for private purposes, measures are being introduced in the area of value added tax as well as the area of income tax.
VAT Act – Limitation of the right to deduct the input VAT for certain motor vehicles
A taxpayer who acquires or uses a passenger motor vehicle of categories M1, L1e and L3e in the period from 1 January 2026 to 30 June 2028, which will be also used for purposes other than business, will only be able to deduct the input VAT only to the extent of 50%.
This special measure will apply to the to passenger motor vehicles with a purchase price of more than EUR 1,700, acquired from 1 January 2026 and used simultaneously for business and private purposes. This measure will only applied to the following categories of vehicles (if they are also used for private purposes):
- M1 motor vehicles– passenger cars with no more than eight seats in addition to the driver's seat, typically passenger vehicles, SUV, vans used for carriage of passengers;
- Vehicles of category L1e – lightweight two-wheeled vehicles, such as electric mopeds and scooters, with an engine cylinder capacity not exceeding 50 cm³ (in the case of a combustion engine) or 4 kW (in the case of an electric engine), maximum speed of 45 km/h;
- Vehicles of category L3e – motorcycles and two-wheeled vehicles with an engine cylinder capacity exceeding 4 kW, without a maximum speed limit.
At the same time, the 50% VAT deduction limitation will also apply to:
- The rental of motor vehicles (except short-term rental) based on a rental or similar contract;
- As well as the purchase of goods and the provision of services related to the operation of these motor vehicles.
50% VAT deduction for services and goods related to the operation of motor vehicles
Limitation of the right to deduct the input VAT of 50% will also apply to the purchase of goods and the provision of services related to the use and operation of passenger motor vehicles that are used for business purposes and at the same time for purposes other than business. These include, for example, purchase of spare parts, accessories, fuel, services of car service, tires, maintenance, repairs etc.
The 50% VAT deduction on such goods and services will also apply if these goods/services are acquired or received in connection with the use of passenger motor vehicles acquired before the reporting period or which began to be used before the reporting period, i.e. before 1 January 2026.
Motor vehicles not subject to the limitation of VAT deduction when purchased from 1 January 2026
The 50% VAT deduction measure does not apply to passenger motor vehicle of categories other than M1, L1e and L3e, as well as motor vehicles with a purchase price of up to EUR 1,700.
Other exceptions for which a full 100% VAT deduction can be applied are only passenger motor vehicles that the taxpayer has acquired and uses exclusively:
- For business purposes that is short-term rental or other than short-term rental of a passenger motor vehicle (in leasing companies);
- For business purposes that is the carriage of passengers and their baggage for consideration, including taxi services;
- For business purposes that is the operation and provision of driving lessons, if the passenger motor vehicle is a training vehicle;
- As a demonstration or test passenger motor vehicle or as a replacement passenger motor vehicle provided to the taxpayer's customer during the repair.
Another alternative to retain the full VAT deduction is to prove that the vehicle is used exclusively for business purposes and keep detailed electronic records on demonstrating the extent of use. This fact must then be reported to the Slovak Tax Authorities.
New reporting obligations and record-keeping for entrepreneurs
In the case of applying the full VAT deduction, the taxpayer is obliged to keep electronic records demonstrating the extent of use of the passenger motor vehicle exclusively for business purposes. The taxpayer is obliged to keep detailed records in electronic form for each acquired and used passenger motor vehicle separately, which should contain the following detail informaiton:
- Vehicle identification number VIN;
- Registration number (number plate), name and type of vehicle;
- The number of kilometres on the day the records are started, at the end of each tax period and on the day the records are ended;
- An accurate record of each use of the vehicle, which include in particular the following information:
- The serial number of the driving record;
- The name and surname of the person who was driving the passenger motor vehicle during the journey;
- Date, time of start and end of the journey;
- The purpose of the journey proving the use of a passenger motor vehicle for business purposes;
- The starting point and the ending point of the journey;
- The number of kilometers driven for each journey, the odometer reading before each journey and after each journey.
- A record of all goods and services related to the operation of the passenger motor vehicle, broken down into individual goods and services, indicating their specification, purchase price excluding tax and the date of acquisition of goods or receipt of services.
The taxpayer is obliged to make records available electronically to the Tax Authorities on request within the period specified specified in the appeal.
The taxpayer is obliged to notify the Tax Authorities of the use of the vehicle exclusively for business purposes on a prescribed form (the template will be determined and published by the Slovak Financial Directorate on the website of the Slovak Financial Directorate) within the deadline for filing the tax return for the period in which the full 100% VAT deduction was applied.
The payer is obliged to notify the Tax Authorities of the use of a passenger motor vehicle used under a lease contract other than a short-term lease contract or under a similar contract within the deadline for filing a tax return for the tax period in which the full 100% VAT deduction was applied for the first time.
CIT Act – Non-recognition of VAT as a tax-deductible expense
In connection with the approved limitation of VAT deduction for business motor vehicles also used for private purposes, a measure in the area of income tax, which regulates the recognition of tax-deductible expense, was also approved.
VAT for which the taxpayer will not be entitled to a VAT deduction will not be considered a tax-deductible expense in accordance with the CIT Act.
This means that the taxpayer will not be entitled to deduct part of the VAT (50%), and at the same time this amount of VAT will not be considered as tax-deductible expense.
In this regard, it will also be necessary to adjust the accounting for such an expense, as the previously unused part of the VAT was included in the purchase price of the vehicle for depreciation purposes. Specific guidelines in this regard are still in the process of being resolved.
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If you would like to discuss the specific proposals for consolidation measures in more detail or assess their impact on your business, our tax team at Forvis Mazars is at your disposal.
