As part of the third consolidation package, a limitation on VAT deduction has been introduced for company vehicles that are also used for private purposes. This page provides a structured overview of the new regime, 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. Scopeand Applicable Period
The regime applies to passenger motor vehicles classified as category M1, as well as quadricycles of category L1e and motorcycles of category L3e (together referred to as “PMVs”).
It represents a temporary measure covering the acquisition of PMVs (purchase and financial leasing treated as a supply of goods) and the rental of PMVs during the period from 1 January 2026 to 30 June 2028 (inclusive).
For related goods and services - such as fuel, servicing, spare parts, parking fees, leasing instalments, and motorway vignettes - the regime applies to supplies received between 1 January 2026 and 30 June 2028, regardless of whether the PMV was acquired before 1 January 2026.
2. MixedUse(Business and Private or Other Use): 50% VAT Deduction
Where a PMV is not used exclusively for business purposes, a flat-rate VAT deduction limited to 50% applies.
This 50% limitation covers:
- the acquisition of a PMV, including financial leasing treated as a supply of goods,
- the rental of a PMV other than short-term rental (short-term rental being continuous possession or use for a maximum of 30 days),
- related goods and services connected with the PMV.
If the PMV is also used for VAT-exempt activities without the right to deduct VAT, the resulting VAT deduction - after applying the 50% limitation - is further reduced by a pro rata coefficient in accordance with Article 50 of the VAT Act.
When the flat-rate 50% VAT deduction is applied, taxation of private use as a supply of services under Article 9(2) of the VAT Act generally does not apply.
3. ExclusiveBusiness Use: Possibility of 100% VAT Deduction
A full VAT deduction (100%) is available only where the PMV is used exclusively for business purposes and the conditions set out in Article 85n are fulfilled.
These conditions include:
- maintaining detailed electronic records in accordance with Article 85n(6). The records must be kept in a format suitable for further electronic processing; scans or PDFs of manually completed tables are not sufficient. In practice, the accepted standard output is typically an 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” by the deadline for filing the VAT return for the period in which the taxable person first claims the VAT deduction (either upon acquisition or rental during the first deduction period). This requirement applies only to PMVs acquired after 1 January 2026.
The records must include, in particular, the VIN and registration number of the PMV, details of each journey (route, date, purpose, number of kilometres), refuelling and consumption data, as well as other information required under Article 85n(6). In addition, records of related goods and services received must be maintained, including their specification, tax base, and date.
For PMVs purchased after 1 January 2026, both conditions - keeping detailed electronic records and submitting the notification - must be met in order to apply a 100% VAT deduction on acquisition, rental, and related costs. The first notifications will be submitted by 25 February 2026.
If a taxable person cannot demonstrate exclusive business use, particularly 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 VAT deductions on related goods and services linked to the specific PMV.
For PMVs acquired before 1 January 2026, the taxable person is required to meet only one condition - maintaining detailed records - in order to apply a 100% VAT deduction on related costs such as fuel, servicing, spare parts, parking fees, and motorway vignettes.
4. AdvancePayments Made Before 1 January 2026
Where 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 or supply taking place after 1 January 2026 is already subject to the regime under Article 85n. In cases of mixed use, the final VAT deduction is therefore limited to 50%.
If VAT was deducted in full from an advance payment, an adjustment of the deducted VAT will be required upon the first private use of the PMV.
5. IncomeTax Implications (Brief Overview)
From 1 January 2026, the non-deductible 50% portion of VAT is not treated as a tax-deductible expense pursuant to Article 52zzzk of the Income Tax Act.
Where this non-deductible VAT relates to tangible assets, such as the acquisition of a PMV, it is not included in the tax acquisition cost. For accounting purposes, however, it increases the acquisition cost or expense.
In the case of a company vehicle provided to an employee for both business and private use, the non-cash benefit (calculated as 1% of the acquisition cost) is determined from the tax acquisition cost increased by VAT.
Recommendation: When acquiring a PMV, it is advisable to determine in advance whether the 50% or 100% VAT deduction regime will apply, to adapt internal processes for electronic record-keeping accordingly, and to ensure timely submission of the required notification.
