VAT Shock for Company Cars in Slovakia

Slovakia has secured an exemption from the European Commission under Council Implementing Decision (EU) 2025/852, permitting a flat 50% VAT deduction on passenger vehicles (M1, L1e, L3e) used at least partly for private purposes. This rule, enacted via Act No. 261/2025 Coll. amending Act No. 222/2004 Coll. on VAT, takes effect from 1 January 2026. [grantthornton.sk], [pwc.com], [kpmg.com]

2. Scope & Timing

• Period: Applicable to purchases, leases (financial or operational), or imports from 1 January 2026 through 30 June 2028. [adpacc.sk], [grantthornton.sk], [pwc.com]
• Threshold: Applies to vehicles with a net purchase price above €1,700. [grantthornton.sk], [adpacc.sk]
• Expenses Covered: Includes related costs such as fuel, maintenance, repairs, tires, accessories, parking, and car washes. [adpacc.sk], [grantthornton.sk], [leitnerleitner.sk]

3. Deduction Rules

• Standard Deduction: Only 50% of input VAT may be claimed on eligible vehicles and related services, regardless of actual business use or usage documentation. [pwc.com], [leitnerleitner.sk], [adpacc.sk]
• Full Deduction Allowed: If the vehicle is proven to be used exclusively for business—including via detailed electronic records and a notification to the tax authority—the taxpayer can still claim 100% VAT. [tax-audit.sk], [pwc.com], [leitnerleitner.sk], [taxadvisory.sk]
• Exceptions: Full VAT deduction remains for vehicles used in:
  • Short- or long-term rental / leasing
  • Passenger transport (e.g. taxi, ride-hailing)
  • Driving schools (training vehicles)
  • Demonstration, testing, or replacement vehicles
  • Vehicle resale or exclusive business capital assets. [tax-audit.sk], [pwc.com], [grantthornton.sk], [taxadvisory.sk]

4. Record-Keeping & Reporting

• Logbooks: Mandatory electronic records per vehicle, including VIN, registration, odometer at first and last day of the tax period, and details of every use and related expense. [tax-audit.sk], [leitnerleitner.sk], [taxadvisory.sk]
• Notification Requirement: Taxpayers must file a formal notification with the Financial Directorate to declare a vehicle’s exclusive business use. [tax-audit.sk], [leitnerleitner.sk], [taxadvisory.sk]

5. Income Tax Implications

Non-deductible VAT (i.e., the 50% not claimed) cannot be treated as a tax-deductible expense under the Income Tax Act. This effectively increases the cost base of these vehicles. [taxadvisory.sk], [grantthornton.sk]

6. Strategic Insights & Ambiguities

• Cost impact: Businesses will face approximately a 10% increase in VAT costs when using vehicles privately. [kpmg.com], [adpacc.sk]
• Administrative simplification: The flat-rate approach reduces the burden of segregating private vs. business usage, but for businesses with higher actual business use, maintaining records could still be advantageous. [leitnerleitner.sk], [grantthornton.sk], [adpacc.sk]
• Pending clarifications: Further legislative amendments or guidelines are expected to resolve uncertainties around:
  • Ownership vs. acquisition timing
  • Transition rules
  • Changes in vehicle usage over time. [pwc.com], [leitnerleitner.sk], [grantthornton.sk]

Summary Table