Rules for the taxation of sweetened soft drinks

As we have informed you in previous issues of our Newsletter, a new tax on sweetened soft drinks has been introduced as part of consolidation measures to stabilise the state of public finances in the Slovak Republic. The Sweetened Soft Drinks Act was published in the Collection of Laws on 5 October 2024 and applies to sweetened soft drinks supplied after 1 January 2025.

In the 02/2024 edition of the Newsletter, we informed you about what the subject to tax would be, what the tax calculation base would be and what rates would apply. Below is further important information and obligations under this new law.

The taxpayer is the manufacturer of the sweetened soft drink (hereinafter referred to as the “drink”) or the supplier of the drink which first supplies the drink acquired from abroad in the Slovak Republic (SR).

Generally, the tax liability arises on the date of the first supply of the drink in the SR after 1 January 2025. However, if the supplied drinks are acquired from abroad, the taxpayer may decide whether to apply the origination of the tax liability on the date of the first supply of the drink in the SR or on the date of acquisition of the drink from abroad (in this case, the taxpayer is obliged to apply the chosen procedure for a period of two calendar years).

A taxpayer, who has been assigned a tax identification number (TIN), does not have to register for this tax, they are only obliged to submit a notification to the tax administrator within five days of the origination of the first tax liability. If the taxpayer does not have a TIN assigned, they must submit an application for tax registration to the tax administrator within five days from the date of the origination of the tax liability (the tax administrator will register the taxpayer within ten days from the date of the submission of the application).

At the same time, the transitional provision defines a specific taxation for the overstocking of drinks that could have a negative impact on fair competition (i.e. the supply of drinks after 1 January 2025 from stocks created in 2024, at a lower price than the competition). The tax liability for this specific taxation will arise if the volume of drinks purchases for July to December 2024 is greater than 1.25 times the volume of drinks purchases for July to December 2023. In the case of a positive difference, this difference shall be compared with the stock of drinks as of 31 December 2024. The stock of drinks as of 31 December 2024 will therefore be subject to tax on account of overstocking, but only up to a maximum of the positive difference resulting from the comparison of the purchase volumes for July to December 2024 and 1.25 times the volume of drinks purchases for July to December 2023.

Taxation for excessive frontloading (overstocking) applies to business entities that are required to have their financial statements approved by an auditor. At first glance, it may appear that this provision only applies to retail chains, food service establishments and hotels, but it applies to any business entity that is audited and overstocked (regardless of the purpose of the supply).

The Ministry of Finance of the Slovak Republic has already published on its website a model of the tax return for the tax on sweetened drinks as well as instructions on how to fill it in.