Tax alert: Limitation of the right to deduct the input VAT in the case of vehicles used also for private purposes from 1.7.2025

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Limitation of the right to deduct the input VAT

The Slovak Republic has requested an authorization from the Commission to limit the deduction of the input VAT on certain vehicles and motorcycles not used fully for business purposes to 50% of the amount of VAT, including the deduction of VAT on the related purchases of goods and services.

At the same time, this restriction would relieve the VAT payer from the obligation to pay output VAT on the private use of certain motor vehicles.

This measure is intended to reduce the administrative burden on the VAT payers, as they will not be obliged to keep records of the private use of vehicles, and also to prevent tax evasion or avoidance due to incorrect record keeping.

This special measure will apply to the following categories of vehicles (if they are also used for private purposes):

• M1 motor vehicles;
• Motorcycles of category L1e;
• Motorcycles of category L3e.

The transactions to which the restriction on the deduction of the input VAT should apply are: the purchase, intracommunity acquisition and importation of the abovementioned vehicles, as well as their leasing. The restriction on the right to deduct the input VAT will also apply to related purchases of spare parts, accessories, services and fuel for these vehicles.

Vehicles and motorcycles used and purchased for business purposes only, for the purpose of resale, hire or lease, or used for the carriage of passengers for consideration, including taxi services, the provision of driving lessons, driver training or as a replacement for vehicles on which work is carried out, will be exempt from this special restriction, as any use for non-business purposes is considered negligible in relation to the type of business for which they are used.

The abovementioned measure should enter into force as from 1.7.2025, with a limited validity until 30.6.2028. At the same time, the Slovak Republic may request an extension of the measure at the latest by 30.9.2027.

The above-mentioned treatment should not impact tax deductibility of such costs from the corporate income tax perspective.

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If you would like to discuss the above changes in more detail or assess their impact on your business, our tax team at Forvis Mazars is at your disposal.