Entrepreneurs in Slovakia will soon face tighter restrictions on the use of company cars for private purposes, under measures unveiled by Finance Minister Ladislav Kamenicky of the ruling Smer party.
Under the plan, vehicles purchased by firms will qualify for a full VAT deduction only if they are used exclusively for business. Once a car is employed for private trips – whether for shopping or collecting children from school – the company will be entitled to claim back just half of the VAT paid.
The measure, part of a EUR 2.7 billion fiscal consolidation package announced on September 9 is expected to generate EUR 86 million for the state.
“Let’s be honest, many wealthy businesspeople – perhaps even your neighbours – have multiple cars which are used by all family members,” Kamenicky said.
Currently, a firm purchasing a car worth EUR 50,000 pays a further EUR 11,500 in VAT at the new 23% rate, and can deduct the full amount. From 2026, if the car is also used privately, only 50% of the tax will be reclaimable. The same rule will apply to related expenses such as fuel, servicing and tyres.
The policy will cover cars and motorcycles bought between January 2026 and June 2028, and applies equally to associated costs. The Finance Ministry says the change brings Slovakia in line with practice in 11 other EU states, including Poland, where a similar 50% deduction applies to mixed use.
Opposition MPs have condemned the move as a hidden tax rise.
“This is nothing more than another form of raising taxes – another deception at the expense of citizens,” said SaS MP Marian Viskupic.
Kamenicky insists the reform is necessary to tackle widespread abuse. A ministry survey of more than 200,000 vehicles found that just 1.6% of entrepreneurs reduced their VAT claims to account for private use, even though over 63% of taxpayers admitted that company cars were also used outside work.
The ministry estimates that around 142,000 businesses will be affected.
Neighbouring countries have adopted similar curbs. The Czech Republic recently imposed a cap on VAT deductions, limiting claims to CZK 420,000 (EUR 16,800), while Austria allows deductions only for smaller, non-luxury vehicles.
The measure, which required approval from the European Commission, is set to take effect in January 2026. (The Slovak Spectator)