Did you know that from January 1, 2026, the accounting for non-deductible VAT on car acquisitions will be clarified?

In connection with the amendment to the VAT Act, effective from January 1, 2026, the accounting for value added tax (VAT) on the acquisition of assets for which the accounting entity is not entitled to deduct VAT, as specified in § 85n of the VAT Act, is being clarified. This applies, for example, to the purchase of a motor vehicle for purposes other than business. According to accounting procedures, the acquisition cost includes, in addition to additional costs and any reductions in the acquisition cost, also the portion of VAT for which there is no entitlement to deduction.

Non-deductible VAT as part of accounting depreciation

If an accounting entity acquires tangible assets and the VAT on this acquisition is not fully deductible (for example, when the asset is used for both business and other purposes), the non-deductible portion of VAT is included in the acquisition cost of the asset in account No. 042. This amount is then reflected in accounting expenses through depreciation.

After the asset is put into use, long-term assets valued at acquisition cost are recorded in the relevant asset accounts, and accounting depreciation calculated from the acquisition cost is recorded through accumulated depreciation in favour of accounts in group 08 – Accumulated Depreciation of Long-term Tangible Assets and charged to account 551 – Depreciation of Long-term Intangible and Tangible Assets.

Non-deductible VAT from the perspective of the Income Tax Act

According to the Income Tax Act, VAT is not considered a tax-deductible expense if the VAT payer is not entitled to deduct it. Furthermore, if the VAT relates to tangible assets defined in § 85n of the VAT Act, it is not included in the tax acquisition cost.

Accordingly, if a taxpayer acquires tangible assets between January 1, 2026 and June 30, 2028, as per § 85n(1) of the VAT Act, and uses them for purposes other than business, resulting in entitlement to a flat-rate VAT deduction of 50% (i.e., the taxpayer is not entitled to deduct the remaining 50% of VAT), this non-deductible portion of VAT is not included in the tax acquisition cost. This means the taxpayer will have a different acquisition cost for accounting depreciation and for tax depreciation purposes.

The changes effective from January 1, 2026, have been published by the Financial Administration in a methodological guideline, which describes in detail how to correctly determine the acquisition cost and when to include it in the income tax base.