As we have already informed you, within the framework of consolidation measures for 2026, there will be a fundamental adjustment of the rules for VAT deduction on passenger motor vehicles. The new rules will apply from January 1, 2026, until June 30, 2028.
- Limitation of VAT Deduction to 50%
For passenger motor vehicles also used for private purposes, it will be possible to deduct a maximum of 50% of the applied VAT. This limitation applies to:
- a) Acquisition of vehicles in categories M1, L1e, and L3e
- passenger cars,
- certain motorcycles and tricycles,
- as well as vehicles used under a lease agreement (including operating leasing).
- b) Goods and services related to the use of these vehicles
- repairs and maintenance,
- fuel,
- consumables,
- spare parts and other related expenses.
- When is Full Deduction (100%) Preserved?
Full VAT deduction will only be possible in exceptional situations, specifically if the vehicle is used:
- for specific business activities (e.g., taxi services, driving schools, vehicle rental),
- as a demonstration, test, or replacement vehicle,
- exclusively for business purposes, whereby the entrepreneur must prove that the vehicle has no private use.
In cases where exclusive business use is declared, the entrepreneur is obliged to notify the tax authority of such use and keep appropriate records.
- Income Tax – Related Adjustments
The change in VAT rules has a direct impact on the Income Tax Act. From January 1, 2026, the following applies:
- VAT for which the taxpayer cannot claim deduction is not considered a tax-deductible expense.
The practical consequence is that the non-deductible part of VAT (i.e., 50%) becomes an item added back to the income tax base.