Motorway cameras as a tool for tax audits? The tax authorities use various types of analytical data to scrutinise company cars.

The use of cars for private purposes remains administratively burdensome.

In recent months, the tax authorities have stepped up checks on business owners who claim a 100 per cent VAT deduction on their private motor vehicles. In doing so, inspectors are increasingly using data analytics and information from various sources to verify whether vehicles declared as being used exclusively for business purposes are in fact used solely for such purposes. As part of its investigative work, the tax authorities also monitor the presence of private motor vehicles used exclusively for business purposes in selected public spaces. Data from motorway cameras operated by the National Motorway Company (NDS), or other cameras in public spaces, are also a significant source of information.

To claim a 100% VAT deduction, you must register for it and not use the car for private purposes. However, even with a 50% VAT deduction, tax inspectors may check for private use of the car for income tax purposes

From 1 January 2026, a business owner may only claim a full VAT deduction for a vehicle used exclusively for business purposes, which in most cases must be proven by electronic journey logs. If a car is also used for private purposes or if journey logs are not kept in the form prescribed by law, the entitlement to a VAT deduction is automatically limited to half. When claiming a 100 per cent VAT deduction on the purchase of a passenger car after 1 January 2026, the business owner is obliged to notify the tax office at the same time, thereby involuntarily drawing attention to themselves. The tax authorities may subsequently verify not only the eligibility of the deduction but also the keeping of records as required by law and compliance with reporting obligations. 

The new rules restricting VAT deduction in this way apply not only to the purchase of M1 category passenger cars and L1e or L3e category motorcycles, but also to their hire after 1 January 2026, including all costs associated with these vehicles, such as repairs, maintenance, motorway tolls, fuel and any other operating expenses. The introduction of the flat-rate VAT deduction provides a kind of safe haven for business owners who also use their vehicles for private purposes, enabling them to retain at least half of the VAT deduction without having to prove the actual proportion of business use. However, by claiming the flat-rate deduction, the business owner does not automatically acknowledge that the car is also used for private purposes. Taxpayers who do not keep the legally required electronic log of journeys and use cars solely for business purposes are also entitled to a deduction of only half the amount.

Although, from a VAT perspective, a 50 per cent deduction is risk-free, from an income tax perspective, a business owner must still carefully consider whether such a reduction in VAT arises solely because of a failure to keep a logbook, or whether it is also due to the car being used for private purposes. The use of cars for private purposes has further tax implications for the claiming of tax-deductible expenses and the taxation of employee benefits, which the tax authority may also examine during a tax audit. Some business owners may not even realise that using a car for private purposes can raise further questions during a tax audit, such as whether an employee’s fuel consumption is taxed via their wages, whether the provision of the car itself is taxed as an employee benefit, or whether vehicle-related expenses are disallowed for sole traders who are not employers. In this context, an employee for these purposes also includes a managing director and a partner in a limited liability company, regardless of whether they have an employment contract.

The new system is unfair to those who use their car predominantly for business purposes

Although the flat-rate 50 per cent VAT deduction simplifies administration for business owners, it is only a half-measure. This arrangement is at the expense of honest business owners. To be fair, the rules should also be simplified in the area of income tax so that declaring the private use of a car does not become an administrative burden for business owners. If someone can prove that they use their car 99 per cent of the time solely for business purposes, limiting the VAT deduction to half is unfair. The current legal framework, with its complexity, literally encourages entrepreneurs not to declare the private use of their car. A flat-rate VAT deduction has indeed been introduced, but not in the most appropriate way. Furthermore, we continue to note shortcomings in the Income Tax Act, as taxpayers should be able to claim flat-rate tax deductions for fuel in the actual proportion, up to a maximum of 80 per cent. Another unresolved issue is the administratively burdensome obligation on employers to tax employees’ actual private consumption of fuel via their wages. The tax authorities have so far failed to explain anywhere how businesses are supposed to do this if they do not keep a logbook.

Tax inspectors also monitor motorway cameras

According to the Financial Administration, checks on the use of company cars are not based on random observations, but on comparing data from multiple databases and information sources. High-risk cases are identified primarily through data analytics.

Although the tax authorities have not specified this in detail, data collected by the National Motorway Company (NDS) is also a significant source of information, as is data obtained through searches of CCTV footage from shopping centres and other public spaces, records of motor vehicle parking at specific car parks, and so on. We are also aware from practical experience of instances where tax inspectors have actually compared motorway records with logbooks and identified discrepancies between the declared journeys and the reality. As a result, the taxpayer filed an amended tax return and halved their tax deduction.

The Financial Administration can therefore use various sources of information, which it requests from taxpayers by means of a simple request, or it can obtain them during a tax audit or an on-site inspection at another business.

The Motorway Vignette Act authorises the NDS to collect, process and store data on vehicle registration numbers, as well as photographs of vehicles recorded by electronic devices. At the same time, it imposes an obligation on the NDS to provide the tax authorities with continuous and direct access to the data collected in this way.

For the tax authorities, this information can serve as a valuable basis for verifying the accuracy of journey logs. If a taxpayer claims that a vehicle is used exclusively for business purposes, the tax authority can compare the collected data with the journey logs. Any discrepancies may raise questions about the validity of the VAT deduction claimed.

Many business owners are unaware that the tax authority now has significantly broader options for verifying data than in the past. Records from road cameras can serve as an independent source of information to help verify whether the declared business journeys correspond to reality.

The Financial Administration is checking over 22,265 vehicles

The Financial Administration repeatedly emphasises that its aim is not to monitor ordinary drivers or check their purchases. The checks focus on cases where there is a risk of an unauthorised claim for a 100 per cent VAT deduction, with the aim of ensuring a level playing field for all taxpayers. “For business owners, this leads to one practical recommendation: if they claim a full VAT deduction for a private car, the logbook must also correspond to the data and records held by the state,” explains Branislav Mačuha from the consultancy firm Grant Thornton.

In other words, it is not enough simply to keep thorough and verifiable records of the vehicle’s use exclusively for business purposes; in this era of interconnected databases, one must also bear in mind that the tax authorities have access to data and records with which they can verify the information in the logbook.

As at 15 July 2026, the tax authorities had received a total of 5,681 notifications relating to 22,265 vehicles declared as being used exclusively for business purposes. In 10,866 of these cases, business owners are subject to and the obligation to keep detailed records proving that the vehicle is used exclusively for business purposes. Certain entities may be exempt from this obligation upon fulfilment of the statutory requirements, such as taxi services, driving schools, car hire companies and others.  The appropriateness of the price or number of cars in relation to the business activity and the number of employees, data from VAT control statements, including details of the prices of luxury vehicles and the quantity of fuel purchased, the submission of a notification regarding the use of a vehicle for business purposes and the provision of journey logs to the tax authorities upon request enable the tax administration to identify high-risk taxpayers, which may subsequently lead to the initiation of a targeted tax audit where deemed necessary.

In practice, it can also be a problem if employees themselves let slip that they use company cars for private purposes; even a seemingly innocent journey from home to work and back can, if not properly documented, serve as a pretext for denying the right to deduct VAT in full. “A cigarette break during a tax audit with tax authority officials can loosen tongues on both sides and create temporary friendships. At the same time, not everyone wants to lie when giving evidence,” says Branislav Mačuha,   citing real-life examples.  

What a logbook must contain to ‘pass the audit’

A tax audit or on-site inspection does not even have to be formally initiated. A taxpayer is obliged to make electronic records of journeys available upon request by the tax office, and the tax authority may set a very short deadline of eight days for their submission. It is therefore not worth relying on the entrepreneur to create the logbook at a later date. Entrepreneurs claiming a 100 per cent VAT deduction on the basis that a car is used exclusively for business purposes should check that the electronic journey records contain the following details required by law:

• the vehicle identification number (VIN),
• the vehicle registration number, the make and model of the vehicle,
• the vehicle’s odometer reading on the date records began, at the end of each tax period, and on the date records ceased,
• a record of each use of the vehicle, which must include, in particular, the serial number of the journey record, the first name and surname of the person driving the vehicle during the journey, the date, the start and end times of the journey, the purpose of the journey demonstrating that the vehicle was used exclusively for business purposes, the starting point and the destination of the journey, the number of kilometres travelled for each journey, the odometer reading before and after each journey,
• records of the purchase of goods and the receipt of services used for the operation of the vehicle, broken down by individual goods and services, specifying their details, the purchase price excluding tax, and the date of purchase of the goods or receipt of the service.

The Financial Administration points out that the term ‘keeping records in electronic form’ means keeping records in an electronically processable format. Such formats may include, for example, Excel, Word or an electronic log of journeys from a satellite-based vehicle tracking system. The Financial Administration does not accept digital scans of manually completed tables. However, the vehicle does not necessarily have to be fitted with a satellite-based tracking system.

Anyone who has claimed a 100 per cent deduction on a new car must keep detailed records until the car is sold

Every business owner should carefully consider the decision to claim a 100 per cent VAT deduction, as the tax authorities are relatively strict regarding the cessation of journey log records in the future, and the wording of the VAT Act is not entirely clear on this matter. Although the tax authorities’ view may be debatable, according to their interpretation, an entrepreneur who claims a 100 per cent VAT deduction on the purchase of a vehicle must keep mileage records until they cease to use the vehicle for business purposes. Under a strict interpretation, this could mean for life, or at least until the car is sold or reclassified for private use. 

If, in future, a business owner ceases to keep a logbook, even though they continue to use the vehicle exclusively for business purposes, they should, in the opinion of the tax authorities, submit supplementary tax returns and adjust the VAT already deducted – not only from the purchase of the vehicle but also from operating expenses – to 50 per cent. As a result of this procedure, he will even be fined on the additional VAT assessed, despite having acted in accordance with the tax authority’s methodological guidance.

At the same time, if an entrepreneur has deducted the full amount of VAT when purchasing a vehicle on the grounds that it is used exclusively for business purposes, they cannot subsequently switch to the simplified flat-rate VAT deduction scheme if they start using the car for private purposes as well. I am, however, pleased that common sense has prevailed in this case and that the business owner does not have to submit additional tax returns, but instead pays VAT on the so-called costs of providing a service free of charge. However, as the law does not define the term ‘costs of providing a service’, the taxpayer faces legal uncertainty. I therefore recommend avoiding this approach. At the same time, the business owner must continue to keep records of journeys in the form prescribed by law, even if they have started using the car privately.

Anyone who originally claimed a 50 per cent deduction and later switches to 100 per cent will receive a pro rata share of the VAT via their tax return

However, if an entrepreneur claims a flat-rate VAT deduction of 50 per cent when purchasing the vehicle, the situation is more favourable. Should the entrepreneur decide in future to keep journey logs demonstrating that the vehicle is used exclusively for business purposes, they may subsequently claim a VAT deduction. In such a case, they must notify the tax office by the end of the calendar year at the latest that, from the following year, they will begin using this private motor vehicle exclusively for business purposes for the first time. If, at the same time, five calendar years have not elapsed since the year the vehicle was first used, the tax office will also refund the proportionate share of VAT on its purchase price via the tax return.