Prepare for changes in tax rules - the right decision could save you thousands of euros

📆 New rules from 1 July 2025

From 1 July 2025, new rules on VAT deductions for the purchase of passenger cars will come into force. This change will fundamentally affect thousands of entrepreneurs and companies in Slovakia. Now, companies that use vehicles not only for business but also for private purposes (e.g. travelling home, weekend trips or holidays) will be able to claim only 50% of the VAT paid - not only on the purchase of the vehicle, but also on its operating costs.

Why this change ?

Slovakia did not "make" this change on its own. The European Commission has approved an exemption which allows Slovakia to apply a simplified VAT deduction scheme. The main objective is to simplify administration, reduce the risk of abuse of the system and limit tax evasion. The new rules will apply until at least 30 June 2028, and may be extended at a later date.

Who is affected and what exactly is changing ?

The change affects M1 passenger cars (classic cars) and L1e and L3e motorcycles which are used for 'mixed purposes' - a combination of business and private journeys. From July 2025 the following will apply:

• You will only be able to deduct 50% of the VAT when you buy, lease or rent such a vehicle.
• The same limit will apply to fuel, maintenance, repairs, tyre servicing, insurance and other related expenses.
• There will be no obligation to keep a logbook, recalculate mileage or prove the business use ratio. On the other hand - you will save on red tape, but you will lose some of the deductible VAT, which will increase your costs.

✅ Who can keep the full (100%) VAT deduction ?

Only those vehicles that are demonstrably used exclusively for business purposes will be exempt from the above restriction . For example:

• Taxis
• Driving schools
• Renting and leasing of vehicles
• Company cars assigned to employees exclusively for business purposes (private use must be demonstrably excluded)

In these cases, it will still be possible to deduct the full 100% VAT, but the company must havean internal directive or a prohibition on private use to prove this exclusivity.

❗Practical example - how might this affect you ?

Imagine that your company is planning to buy a new car for €30,000 + VAT (€6,000).

• You can still deduct the full €6,000 of VATuntil 30 June 2025.
• After 1 July 2025, you will only deduct half of it - i.e. €3,000. The remaining €3,000 automatically becomes part of the company's costs. In other words - the car will cost you 10% more in real terms.

And that's not all - a similar principle will apply to fuel, servicing, tyres and insurance costs. This means that your total operating costs for company cars may go up in the long term.

💡How to react to this ? Renting can be the solution

At a time when car ownership is becoming more expensive and less profitable, more and more companies are considering alternatives. Leasing may be the ideal solution - especially if you're looking for predictable costs, worry-free vehicle management and tax efficiency.

The main benefits of renting a vehicle through Payless Gigarent:

• No upfront costs - you don't need a high initial investment.
• 50% VAT deduction on the monthly payment - even when using the car privately.
• Fixed monthly instalments - you keep costs under control.
• Service, insurance and assistance included - the landlord takes care of everything.
• No worries about selling the used car at the end of the contract.

📢 How does Payless Gigarent help you ?

Payless Gigarent is one of the leading car rental providers in Slovakia. We help businesses and sole traders optimise their mobility costs - professionally, fairly and sensibly. Whether you need a single car or an entire fleet, you'll find a solution with us:

• With the selection of the right vehicle,
• with setting the ideal lease length,
• optimising operating costs.

🧭 Decide in advance - you can save thousands of euros

The change in VAT deduction rules from 1 July 2025 means the end of the 100% deduction for most businesses. So if you're considering a new vehicle, make your decision well in advance. And if you're looking for a more efficient and simpler solution, hiring from Payless Gigarent could be the answer.

📞 D on't hesitate to contact us - together we'll find a solution that's worth your while.