Draft amendment to the VAT Act
Approved amendment to the VAT Act effective from January 1, 2025 >
The Ministry of Finance of the Slovak Republic released a draft amendment to the Slovak VAT act for comments. Below, we summarize the main areas covered by the amendment. Different parts of the amendment have different effective dates from March 2024 to January 2025. The highlighted changes are set to take effect from 1 July 2024, except for the provisions related to small businesses, which are proposed to take effect from 1 January 2025.
Registration of a domestic person according to § 4
According to the proposed changes, a taxable person will become a payer from the day the turnover threshold is reached. The turnover threshold is increased to EUR 50,000 in a given calendar year. Entrepreneurs would be obliged to apply for registration within 5 days from the day a reason for registration arises. The Tax Office will issue a decision on registration within 10 days, and will be obliged to confirm the registration of the payer on the day the reason occurred.
The conditions of voluntary registration would remain unchanged.
Registration of a foreign person according to § 5
A foreign taxable person without a registered office or establishment in Slovakia would become a taxpayer by conducting a taxable transaction subject to tax in Slovakia (except for certain transactions specified in the law). A registration application would have to be submitted without delay from the day the foreign person became a payer. The tax office is obliged to register a foreign person and assign him a VAT number immediately after receiving the application.
Financial leasing
In accordance with EU legislation and established EU Court of Justice case law, it is proposed to change the VAT regime for the transfer of goods on the basis of a lease agreement with a negotiated option to purchase the object of the lease if at its conclusion the use of the purchase option represents the only economically rational choice for the lessee. Such delivery of the subject of the lease will represent the delivery of goods subject to tax, and the tax will have to be deducted from the entire value of the lease at the beginning of the lease period and not, as before, over the duration of the lease period from individual instalments.
Reverse-charge on import of goods
We informed you about the conditions for applying a reverse-charge on import of goods in our previous Tax & Legal Alert.
VAT deduction based on a document other than an invoice
The amendment introduces the option to deduct VAT when acquiring goods from another EU member state on the basis of a document other than an invoice, which documents the acquisition of goods and the amount of tax liability that must be reported. This option is intended to reduce the number of supplementary VAT returns of tax subjects due to the acquisition of goods in the home country.
Late registration
According to the current rules, if a taxable person applies for VAT registration late, they are obliged to submit a single tax return reporting all transactions for the entire period for which they should have been the payer. The new regulation proposes the submission of individual monthly tax returns for this period together with a control statement, in which the transactions for which the tax liability occurred in the given month are indicated. After meeting the conditions, it will also be possible to deduct the related input tax in this return. The proposed provision will increase the volume of admin for businesses, as well as penalties for late VAT registration.
Invoices
The following changes to invoicing are proposed:
- If the payer does not have a VAT number assigned at the time of the tax obligation, they will be obliged to issue an invoice within 5 days of receiving the registration decision.
- The option of deducting tax based on a document issued by the e-kasa client cash desk is currently only possible if the value of the document, including tax, is a maximum of EUR 1,000 when paid in cash, or EUR 1,600 when paying by credit card. For better control and to reduce the number of cases of multiple deductions from one cash receipt, it is proposed to reduce this maximum value to EUR 400.
Small businesses
The Slovak Republic is obliged to transpose the EU directive on special arrangements for small businesses. The goal is equal treatment between settled and non-settled persons from the point of view of exempting the exercise of economic activity from VAT up to a certain turnover.
In this context, an annual turnover in the home country of EUR 50,000 and an annual turnover in the EU of EUR 100,000 is being introduced. Taxable persons who do not reach these turnover thresholds will be assigned a special VAT number with the suffix EX, which will allow them to supply goods and services throughout the EU with a tax exemption, i.e. as a taxable person who is not a taxpayer.
The amendment proposes special reporting for domestic and foreign persons applying the scheme for small businesses and the conditions for starting and ending the application.
Other changes
Other notable proposed changes include:
- The obligation to return deducted VAT in the event of theft would be extended to any stolen or illegally appropriated goods.
- It is proposed to adjust the place of delivery of cultural, educational or entertainment services if they are delivered to a non-taxable person online / virtually.
- As regards unpaid obligations, the obligation to return the deducted tax will only arise in the tax period in which the 101st day from the due date has occurred (current wording is 100 days after the due date)
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