Ing. Marcel Muráni, LL.M.
Tax Advisor
VAT on a Company Car: 100% or 50% Input VAT Deduction?
A company car is a common part of doing business for many companies. It may be used by a managing director, salesperson, technician, or another employee for business meetings, customer visits, service calls, or other business-related purposes.
From a VAT perspective, however, it is not enough for the vehicle to be registered in the company’s name. What matters is how the vehicle is actually used and whether the company can demonstrate that use.
Since 2026, the rules for passenger motor vehicles have become stricter. For vehicles used partly for private purposes, VAT can generally be deducted only at a rate of 50%. A full 100% VAT deduction is available only where the vehicle is used exclusively for business purposes and all statutory requirements are met.
Why This Topic Matters
The Slovak Financial Administration has launched a control campaign focused on the correct application of VAT deductions on passenger vehicles. The inspections are aimed particularly at situations where a VAT payer has claimed a 100% deduction and declares that the vehicle is used exclusively for business purposes.
This means that companies should review whether they have correctly set up the VAT deduction regime for their company vehicles, filed the required notification with the tax authorities, and maintain proper mileage records.
100% VAT Deduction: When Is It Possible?
A 100% VAT deduction for a company vehicle is possible if the vehicle is used exclusively for business purposes and the company can prove this fact.
In practice, this means that an internal statement such as “the car is a company vehicle” is not sufficient. The company must have evidence showing how the vehicle has actually been used.
For a 100% VAT deduction, it is particularly important to:
- use the vehicle exclusively for business purposes,
- submit a notification regarding the vehicle’s exclusive business use,
- maintain electronic mileage records in a processable format,
- keep separate records for each vehicle,
- be able to demonstrate the business purpose of every trip.
50% VAT Deduction: When Does It Apply?
If a passenger vehicle is also used for private purposes, or if the company cannot prove its exclusive business use, VAT is generally deductible only at a rate of 50%.
This regime applies not only to the vehicle itself but also to expenses related to its operation, such as:
- fuel,
- spare parts,
- servicing,
- repairs and maintenance,
- related services.
For many companies, the 50% VAT deduction may be administratively simpler. On the other hand, it results in a lower amount of recoverable VAT. Therefore, it is important to choose the appropriate VAT deduction regime based on the vehicle’s actual use rather than on what may appear more beneficial on paper.
It Is Not Enough That the Vehicle Is Registered to the Company
One of the most common mistakes is assuming that if a vehicle is included in the company’s assets or its expenses are paid by the company, it is automatically considered to be used exclusively for business purposes.
This is not the case.
What matters is the actual use of the vehicle. If the managing director uses the car for private trips, weekend travel, family activities, or commuting between home and work, the vehicle can no longer be regarded as being used exclusively for business purposes.
This is precisely why, when claiming a 100% VAT deduction, it is essential that the mileage records are not merely a formal document but accurately reflect the vehicle’s real use. The company must be able to demonstrate that each recorded journey had a genuine business purpose and that the records correspond to the actual operation of the vehicle.
What Should Mileage Records Include?
For a 100% VAT deduction, mileage records must be maintained electronically and in a processable format. In practice, this may include an Excel spreadsheet or another system that allows the data to be reviewed, analyzed, and exported as needed.
The mileage record should include, in particular:
- vehicle identification,
- registration number (license plate number),
- Vehicle Identification Number (VIN),
- date of the trip,
- start and end time of the journey,
- place of departure,
- destination,
- driver’s name,
- purpose of the trip,
- odometer reading before the trip,
- odometer reading after the trip,
- number of kilometres travelled,
- notes or references to related supporting documents.
It is important that the purpose of each trip is specific and clearly described. A generic entry such as “business trip” may not always be sufficient. Instead, it is advisable to state the actual business reason for the journey, such as “meeting with a client,” “service visit,” “meeting with a supplier,” or another clearly identifiable business activity.
Providing a detailed description of the trip purpose helps demonstrate the business use of the vehicle and strengthens the company’s position in the event of a tax audit or VAT review.
A PDF Is Not Enough
For a 100% VAT deduction, it is not sufficient to keep mileage records solely in PDF format. The records must be maintained in an electronically processable format.
This is an important practical distinction. A PDF document may serve as an output file or archive copy, but it may not be adequate as a record that the tax authorities can further analyze and review.
For this reason, companies should use a system that allows mileage records to be exported in a spreadsheet format, such as Excel, or in another electronically processable format that enables data filtering, verification, and analysis when required.
Common Risk Areas in Practice
When it comes to company vehicles, the following situations are particularly sensitive from a VAT perspective:
- the managing director uses the vehicle for private purposes as well,
- the vehicle is parked at the driver’s home,
- journeys between home and the workplace are recorded as business trips,
- mileage records are completed retrospectively,
- the purpose of the trip is described too generally,
- the company has not submitted the required notification for a 100% VAT deduction,
- fuel and maintenance costs do not correspond with the mileage records,
- a small company has several vehicles, but it is unclear who uses each one.
These situations do not automatically mean that there is a tax problem. However, they do require careful assessment, proper documentation, and a correctly structured approach to vehicle use and record-keeping.
Where a company claims a 100% VAT deduction, the tax authorities may pay particular attention to these areas when verifying whether the vehicle is genuinely used exclusively for business purposes. Therefore, it is important that the company’s documentation, mileage records, and actual vehicle usage are consistent and can be clearly explained if requested during a tax audit.
What Should You Review Before a Tax Audit?
If a company claims a 100% VAT deduction on a company vehicle, it should ask itself several practical questions:
- Have we submitted the required notification regarding the vehicle’s exclusive business use?
- Is the vehicle actually used solely for business purposes?
- Are mileage records maintained electronically and in a processable format?
- Do the records contain a specific business purpose for every trip?
- Do the recorded kilometres, fuel costs, servicing expenses, and other vehicle-related costs correspond with the actual use of the vehicle?
- Are journeys between home and the workplace incorrectly recorded as business trips?
- Can we explain the business purpose of every recorded journey?
If a company cannot confidently answer these questions, it is advisable to review the situation before it becomes the subject of a tax audit.
How EMINEO PARTNERS Can Help
When it comes to VAT on company vehicles, the issue is not simply a question of 50% versus 100% VAT deduction. It involves the overall setup of vehicle usage, mileage records, expense accounting, VAT compliance, and preparation for a potential tax audit.
EMINEO PARTNERS helps clients assess whether their VAT deduction regime has been set up correctly, whether their mileage records contain all required information, and whether vehicle-related expenses are reasonable and properly supported from both an accounting and tax perspective.
If you are unsure whether a 100% or 50% VAT deduction is appropriate for your company vehicle, it is advisable to review the situation promptly and make any necessary adjustments before it becomes the subject of a tax inspection.
Conclusion
A company vehicle can be an important business tool. However, the VAT treatment applied to its use deserves careful attention.
A 100% VAT deduction is available only if the company can demonstrate that the vehicle is used exclusively for business purposes and has fulfilled all related legal and administrative requirements. If the vehicle is also used privately, or if the company cannot substantiate its exclusive business use, a 50% VAT deduction may be the safer and more appropriate option.
The most important consideration is not the vehicle’s formal ownership or registration, but its actual use. Ultimately, what matters is the reality of how the vehicle is used, the supporting documentation available, and the quality and accuracy of the mileage records maintained by the company.
The above information on this website is intended to give you a basic overview of tax, accounting and legal regulations. It is in no way intended as a guide to their application in practice, which may differ significantly from the legislation in force at any given time. The information on this website does not guarantee legal, accounting, tax or other professional advice or services. As such, the information should not be taken as a substitute for professional consultation with accounting, tax, legal or other advisors. EMINEO PARTNERS shall not be responsible or liable for any discrepancies, omissions or results obtained from the use of this information. All information and examples are provided without any warranty as to their applicability in practice. EMINEO PARTNERS is not obliged to reflect the applicable legislation on the information and examples provided on this website.
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Article summary
The Slovak Financial Administration has recently launched a nationwide audit campaign focusing on VAT deductions claimed on company vehicles. Since 2026, there has been significantly greater scrutiny of the correct application of VAT rules. If a company uses a passenger vehicle for both business and private purposes, it can generally claim only a 50% VAT deduction. A full 100% VAT deduction is available only where the vehicle is used exclusively for business purposes and the company can prove this.
In this article, we explain why it is not enough for a vehicle to be registered in the company’s name, what conditions must be met to qualify for a 100% VAT deduction, what information should be included in electronic mileage records, and why a PDF file alone may not be sufficient. We also examine practical risk areas, such as travel between home and the workplace, private use of a company car by a managing director, and inadequate mileage records.
The aim of this article is to help companies review whether the VAT deduction applied to their company vehicles has been set up correctly and to prepare for a potential tax audit without unnecessary surprises.
FAQ
Can a company claim 100% VAT on a company vehicle?
Yes, but only if the vehicle is used exclusively for business purposes and the company can demonstrate this fact. For a 100% VAT deduction, it is also important to submit the required notification to the tax authorities and maintain properly kept electronic mileage records.
When does the 50% VAT deduction apply?
A 50% VAT deduction generally applies to vehicles that are also used for private purposes or where the company cannot prove exclusive business use.
Is it enough that the vehicle is registered to the company?
No. Simply owning the vehicle or recording it as a company asset is not sufficient. What matters is how the vehicle is actually used and whether the company can substantiate that use.
Is a company required to keep mileage records?
For a 100% VAT deduction, the company must maintain electronic mileage records that demonstrate the vehicle’s exclusive business use. Under the 50% deduction regime, the administrative requirements are generally less demanding.
Can mileage records be maintained in Excel?
Yes. Excel can be a practical solution provided that the records contain all required information and are maintained in an electronically processable format. A PDF file alone may not be sufficient.
Is travel between home and the workplace considered a business journey?
Generally, no. Travel between an employee’s residence and workplace is not regarded as business use of the vehicle. Therefore, this is a particularly sensitive area when claiming a 100% VAT deduction.
Does the 50% deduction also apply to fuel and servicing costs?
Yes. Where a vehicle is used for both business and private purposes, the 50% VAT deduction also applies to related expenses such as fuel, servicing, spare parts, repairs, maintenance, and other vehicle-related services.
How can EMINEO PARTNERS help?
EMINEO PARTNERS helps companies verify whether their VAT deduction regime for company vehicles has been set up correctly, establish appropriate mileage records, assess related vehicle expenses, and prepare accounting and tax documentation that is practical, compliant, and ready for use in the event of a tax review or audit.
