From 1 January 2026, a VAT payer can deduct only half of the VAT on a passenger car that is also used privately. The full VAT goes only to those who use the car exclusively for business, notify the tax office of this and keep an electronic logbook. Let's look at exactly what the law requires, how the Financial Administration checks it and what to do if you have deducted 100 % and the car also drives home.
Until the end of 2025, a company had a choice for a car that is also driven privately: deduct the full VAT and tax the private trips every month, or deduct only a part from the start according to an estimated proportion. From 1 January 2026 that choice has disappeared for passenger cars. Anyone who buys a passenger car, motorcycle or moped from 2026 to 30 June 2028 and does not use it exclusively for business deducts exactly 50 % of the VAT on it. It is not a choice, it is an obligation – Slovakia requested a derogation from the VAT Directive for it.
The half does not apply only to the purchase. The instalments of an operating lease and of hire longer than 30 days are cut in the same way and so are fuel, servicing, tyres or parking – even for a car you bought before 2026. It does not matter whether the particular trip was for work – what counts is how the car is used overall.
The rule is deliberately temporary. The derogation applies until 30 June 2028; what happens after that, nobody knows today. The deduction on a car bought in this period does not change retroactively – what counts is the date of acquisition, not the date you deduct the VAT. For fuel and servicing received after June 2028, the general rules return unless the law is changed by then.
The full VAT stays with those who use the car exclusively for business. The word exclusively is meant literally here, and the law has attached three conditions to it at once: the car really is not driven privately, you keep electronic records of it and you have notified the tax office on the prescribed form, by the deadline for filing the return for the month in which you deducted the VAT. Anyone who bought a car in January 2026 had to file the notification by 25 February. Without the notification and without the records, it stays at 50 %, even if the car really is driven only for work.
| Situation | VAT deduction |
|---|---|
| Car bought from 2026 onwards, also driven privately (private trips are not taxed) | 50 % |
| Operating lease or hire for more than 30 days | 50 % of the instalments |
| Fuel, servicing, parking for a car that is also driven privately – even if you bought it before 2026 | 50 % |
| Car used exclusively for business, with a notification and electronic records | 100 % |
| Taxi, driving school, car hire, demonstration and replacement vehicles (no records, but a notification is required) | 100 % |
| Van or other category N vehicle (proportion according to use, or 100 % with private trips taxed) | Under the old rules |
| Car bought by 31 December 2025: the deduction on the purchase does not change; fuel and servicing with private use from 2026 | 50 % |
The law does not know the term ‘logbook’; it speaks of records. But it lists their content precisely, and there is more of it than most companies are used to keeping:
The paper logbook is finished. A scanned notebook in PDF does not count as an electronic record; a spreadsheet in Excel or an app does. Records are kept separately for each car, for the whole time the car is driven in the company, and they are retained for ten years after the year of purchase. At the tax office's request you must send them electronically within the deadline the tax office sets.
The notification you filed for the 100 % is at the same time the list they select from. By mid-July 2026 there had been 5 681 notifications for 22 265 vehicles, and for 10 866 of them the company also has to keep records. In summer 2026 the Financial Administration described how it selects from them: it compares the notified cars with the company's revenue, the number of employees and managing directors, the tax returns and the trip records, and asks whether the trips fit the business activity. A company with no employees and no revenue and a sports car ‘exclusively for business’ is the typical case it notices. For a car it has singled out, it can also check where it is parked, but it rejects blanket checks in car parks.
Its tools are the classic ones. It usually starts with a request to send in the records, or an on-site inquiry; if something does not add up, what follows is a tax audit, which begins with a written notification and may last up to a year. What matters is who has to prove what: it is not the tax office that has to prove you drove privately, but you who have to prove that your records are credible, correct and complete. A logbook in which the odometer reading does not match the roadworthiness test (STK) report or a servicing invoice will not pass this test. The tax office has five years from the end of the year in which the return was due to assess additional tax.
The first results show how it works in practice: of the first eight breaches found, seven ended with the company filing a supplementary return and no audit even being opened. So the tax office first warns you and gives you room to put it right.
This is the most common question we get. The bad news first: there is no ‘reclassify to 50 %’ form. What can and must be done depends on when you bought the car and whether you really met the conditions for 100 % at the time of purchase.
You bought it exclusively for business, notified the tax office, kept the records – and from some month onwards the managing director or an employee also uses it privately. The deduction on the purchase is not corrected. Instead, every month you tax the private use as a service and carry on keeping the records, because they show what share is private. For a car costing 30 000 euros excluding VAT with 30 % private trips, the Financial Administration's method gives 43.13 euros of VAT per month. From that moment on, you deduct only 50 % on fuel and servicing.
The new rule does not apply to the deduction on the purchase – the date of acquisition is decisive. The same applies here: the deduction is not paid back, private use is taxed monthly as a service, and for that you need to know how many private kilometres the car has driven. From January 2026, without electronic records, only 50 % is deductible on fuel and servicing, even if the car is driven only for work; no notification is filed for older cars.
A car from 2026 has been driven privately from the start, the records are missing, they are on paper or you stopped keeping them. In that case it was not a change of use but a deduction you were never entitled to. The remedy is a supplementary tax return for the month in which you deducted the VAT, reducing it to 50 %, together with a correction of the fuel and servicing for that car. The deadline is the end of the month after you discovered it, and the difference has to be paid within the same deadline. The penalty is at least 3 % a year. Once the audit notification has been delivered, you have only 15 days left to do it and the penalty rises to at least 7 %; after that the tax office decides and the rate is at least 10 %.
That works, but with a one-year delay. By 31 December you notify the tax office that from January the car will be driven exclusively for business, from 1 January you keep records, and in the return for the last tax period of that year you add part of the VAT back through the adjustment of deducted VAT – and so on every further year until five years from the purchase have passed, one fifth of the difference for each year. It works similarly for a sale with VAT within five years: the rest of the period is counted as if the car had been driven only for business, and part of the VAT that was not deducted comes back.
Half for VAT does not mean half for income tax. Income tax has its own rules: for a car that is also used privately, costs including depreciation are claimed either at a flat 80 % or in the proven proportion, fuel can be claimed as an expense at 80 % without a logbook, and an employee is taxed on 1 % of the entry price per month for a company car used for private purposes. None of this helps you with VAT: even if you tax the employee on 1 % and deduct private fuel from their wages, the VAT deduction on both the car and the fuel is 50 %. Conversely, an electronic logbook kept for VAT purposes can be used without any extra work as evidence of the proportion for income tax.
The VAT decision is made before the purchase, not at year-end closing. For most companies where the car is parked outside someone's home in the evening, 50 % pays off better than one hundred per cent that has to be paid back two years later with a penalty on top.
If the car will also be driven privately, take the 50 % and spare yourself the record-keeping. Choose one hundred per cent only if you are certain the car will never go shopping or on holiday – and you have someone who will log the trips every day.
Neither paper nor PDF will do. The cheapest route is an app that records the trip by itself, or a spreadsheet with all the details required by law. Describe the purpose of each trip specifically: ‘meeting with client XY, signing a contract’, not ‘business’.
Anyone who deducts 100 % files the notification within the deadline for the return for the month in which the VAT was deducted – that is, by the 25th day of the following month. When switching to exclusively business use from the new year, the notification has to be filed by 31 December, otherwise the year is lost.
A supplementary return filed before the tax office sends a request costs at least 3 % a year of the difference. The same thing discovered by the tax office costs at least 10 % and a year of tax audit. Seven of the first eight companies understood this.
Tell us when you bought the car, how much VAT you deducted and who drives it. We'll tell you whether anything needs correcting and what it will cost – with no obligation.
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