Starting 1 January 2026, new rules for claiming VAT deductions on passenger vehicles will enter into force. The current 80/20 system, which was not compliant with EU law, will be abolished and replaced by a new flat-rate deduction of 50%. This new regime is based on a derogation granted by the European Commission, which is valid until 30 June 2028.

Abolition of the 80/20 flat-rate VAT deduction for fuel

Under the current system, VAT payers who do not keep a mileage logbook may apply a flat-rate VAT deduction of 80% on fuel purchases, provided they use the flat-rate fuel consumption method for income tax purposes.

From 1 January 2026, the rules will change as follows:

• Fuel used exclusively for business purposes
  • 100% VAT deduction – if supported by verifiable records
  • 50% flat-rate VAT deduction – if no records are kept
• Fuel used for mixed purposes (business and private)
  • A 50% flat-rate VAT deduction will automatically apply under the new §85n of the VAT Act.

The changes go beyond fuel, the new regime will fundamentally affect how VAT is applied to vehicle purchases, leasing, and operation.

50% flat-rate VAT deduction on vehicles and related expenses

The new rules apply to M1, L1e and L3e category vehicles (typical passenger cars, mopeds, motorcycles) that are used for mixed purposes, or where the taxpayer cannot prove exclusive business use.

The 50% flat-rate VAT deduction applies to:

• the purchase, lease, or import of such vehicles between 1 January 2026 and 30 June 2028,
• the purchase of goods and services related to the operation of these vehicles (e.g. fuel, maintenance, spare parts).

Important: The flat rate also applies to goods and services used for vehicles acquired before 1 January 2026.

This change removes the need to keep mileage logbooks and calculate VAT on private use, representing a significant administrative simplification for VAT purposes.

Exceptions to the flat-rate regime

The 50% flat-rate deduction will not apply to the following vehicle categories:

I. Vehicles used exclusively for business purposes, where the taxpayer declares such use and keeps detailed electronic records for each vehicle as required by the VAT Act.

II. Vehicles used for specific purposes:

• vehicles used exclusively for resale, rental, or leasing,
• taxis and driving school vehicles,
• demonstration, test, and replacement vehicles provided to customers during repairs.

Application of an exception must be notified to the tax authority using the prescribed form, no later than the deadline for filing the VAT return for the period in which the deduction is applied for the first time.

Detailed records are not required for vehicles used for the specific purposes listed above.

Record-keeping requirements

A full VAT deduction (100%) will remain possible for vehicles used exclusively for business purposes, provided that detailed electronic records are kept for each vehicle. The records must include at least:

• vehicle identification data,
• odometer readings at the start, end of each tax period, and upon termination,
• detailed trip records,
• records of purchases of goods and services related to vehicle operation.

Taxpayers must keep these records in electronic form and provide them to the tax authority upon request.

Notification to the tax authority

The notification obligation applies when claiming exemptions, when using vehicles exclusively for business purposes under the required record-keeping conditions, as well as when switching from the 50% flat-rate deduction to the full VAT deduction. The notification must be submitted for the period in which the input VAT deduction is first applied, either at the time of purchase or at the start of the first lease.

Practical implications

The introduction of the 50% flat-rate deduction will bring a significant reduction in administrative burden for businesses. It will no longer be necessary to keep mileage logbooks for mixed-use vehicles to ensure compliance with VAT legislation. At the same time, it will reduce opportunities for unjustified tax deductions. A potential drawback is that even where business use exceeds 50%, the deductible VAT amount will still be capped at 50%.

Our recommendation

We recommend reviewing your internal processes and company car policies in advance. Consider whether it is beneficial for you to maintain detailed records and claim the full 100% deduction, or to switch to the flat-rate regime. Pay close attention to fulfilling notification obligations towards the tax authority. Remember that full deduction will only be possible in cases of exclusive business use combined with proper record-keeping. If needed, a mileage logbook containing all mandatory legal requirements is available in our e-shop.

Michaela Salayová

Senior Tax Manager | Accace Slovakia

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