If you buy goods and services used at the same time for supplies that carry a VAT deduction right and supplies that do not, you cannot deduct the full input VAT. You deduct only a proportionate share — and Slovakia and Czechia calculate that share through different mechanisms.
The situation affects any VAT payer who, alongside ordinary taxable sales, also makes supplies exempt without a deduction right — typically renting flats to individuals, financial and insurance services, or certain educational and healthcare activities. Where a purchase can be assigned clearly to one group, the answer is simple. The difficulty lies with shared costs that serve both groups at once, such as office rent, energy, accounting software or phones.
Both countries build on the same EU VAT Directive, yet the practical rules diverge enough that a company operating on both sides of the border must treat them separately. Below we compare how the apportionment works in each.
When does apportionment apply?
In both countries, you must first try to assign input VAT directly. A cost used purely for taxable supplies is deducted in full; a cost used purely for exempt supplies without a deduction right is not deducted at all. The coefficient only enters the picture for indivisible shared costs.
Before you reach that point, it helps to be clear on which of your own supplies carry a deduction right. If your business invoices across borders, our guide on how to invoice abroad from a VAT perspective explains how those supplies are classified, while the overview of how to issue a domestic invoice in Slovakia and the Czech Republic covers the basics of correct output documentation.
How does Slovakia calculate the coefficient?
Slovakia uses a single coefficient under Section 50 of the VAT Act. It is the ratio of turnover (net of VAT) from supplies with a deduction right to turnover from all supplies, including exempt ones. The result is rounded up to two decimal places, and — importantly — Slovakia has no threshold that would waive the apportionment at a high ratio.
Example: with EUR 180,000 of taxable sales and EUR 20,000 of exempt flat rentals, the coefficient is 0.90, so you deduct 90% of VAT on shared costs. Private use of business assets is handled separately under Sections 49(5) and 49a, by the actual proportion of business use rather than by the coefficient.
How does Czechia calculate it?
Czechia splits the task into two instruments. The proportional coefficient under Section 75 separates economic from non-economic use (for example, a laptop used partly privately). The reduction coefficient under Section 76 then addresses the ratio between taxable and exempt supplies. Where both apply, the deduction is the product of the two coefficients — a two-stage apportionment.
Example: a company with a reduction coefficient of 80% deducts CZK 1,680 from a rent invoice carrying CZK 2,100 of VAT. Sales of fixed assets and occasional financial activities are excluded from the ratio so that one-off transactions do not distort it.
What is the 95% rule and why does it matter?
The clearest difference is the Czech 95% rule. Under Section 76(5), if the reduction coefficient reaches 95% or more, it is treated as 100% and the payer deducts VAT in full. Slovakia has no equivalent — a Slovak payer must apply the coefficient even at a very high taxable ratio.
In practice this means many smaller Czech payers with only marginal exempt supplies escape apportionment altogether, whereas their Slovak counterparts do not. For a group with entities in both countries, the same cost structure can therefore produce a full deduction in Czechia and a reduced one in Slovakia.
How does the annual settlement work?
Both systems use a provisional (advance) coefficient during the year — usually the figure from the previous calendar year — and then reconcile it. After year-end, you calculate the actual annual coefficient and settle the difference in the last tax period of the year. If you deducted too much, you repay part of the VAT; if too little, you claim the shortfall.
The mechanics are similar on both sides of the border, but the inputs differ: the Slovak settlement works with the single Section 50 coefficient, while the Czech one may reconcile both the Section 75 and Section 76 figures.
What should cross-border businesses watch for?
The most common mistake is ignoring apportionment entirely when exempt supplies exist. For companies active in both countries, the second trap is assuming the rules mirror each other — the 95% threshold, the two-stage Czech calculation and Slovakia’s separate private-use regime all require country-specific handling.
Keep a separate record of shared costs and exempt turnover throughout the year, model how the coefficient develops, and never skip the year-end settlement. Where the stakes are high, a tailored review of each jurisdiction pays for itself.
Operating in both Slovakia and Czechia and unsure how to split your input VAT? We will set up the coefficient and the annual settlement correctly in each country.
FAQ
What is the main difference between the Slovak and Czech systems?
Slovakia uses a single coefficient under Section 50, rounded up to two decimal places, with no threshold to waive it, and handles private use separately under Sections 49(5) and 49a. Czechia splits the calculation into a proportional coefficient under Section 75 and a reduction coefficient under Section 76, applied as a two-stage apportionment, and waives reduction entirely once the coefficient reaches 95%.
Does the 95% rule exist in Slovakia?
No. The 95% rule is specific to the Czech VAT Act, where a reduction coefficient of 95% or more is treated as 100%. Slovakia has no comparable threshold, so a Slovak payer must apply the coefficient even when the share of taxable supplies is very high. This is one of the key practical differences between the two systems.
Is the annual settlement required in both countries?
Yes. In both Slovakia and Czechia you use a provisional coefficient during the year and then recalculate it from actual annual figures. The difference is settled in the last tax period of the calendar year — you either repay excess VAT or claim an additional deduction. Only the underlying coefficients differ between the two jurisdictions.