Draft amendment to the VAT Act

The Ministry of Finance of the Slovak Republic has submitted a draft amendment to the Value Added Tax Act (hereinafter referred to as the “Amendment”), the main objective of which is the transposition of Council Directive (EU) 2020/285 and Regulation (EU) 904/2010, and thus primarily to reduce the administrative burden for small enterprises. The Amendment has undergone an inter-ministerial comment procedure and the evaluation of the comments is currently underway. Individual provisions of the Amendment are to become effective on 31 March 2024, some selected provisions on 1 July 2024 and 1 January 2025.

In this edition of the newsletter, we will present the most important changes to be introduced by the Amendment.

• Special arrangements for small enterprises – the possibility to use tax exemption in another EU member state (without the obligation to register) than in the member state in which they are established, is being introduced for small enterprises. Both domestic and foreign small enterprises will be able to supply goods and services exempt from tax in other member states (without the obligation of VAT registration) if their turnover in the current and previous calendar year does not exceed EUR 50,000 domestically (in Slovakia) and EUR 100,000 abroad (within the EU). In order to benefit from this exemption, small enterprises will be assigned an individual identification number with “EX” suffix.
• Registration obligation of local taxable persons – It is proposed to round up the value of turnover for the purposes of compulsory VAT registration from currently EUR 49,790 to EUR 50,000. It is also proposed to change the period for which turnover is calculated to a calendar year (currently turnover is calculated for no more than 12 preceding consecutive calendar months). The taxable person will newly be obliged to submit an application for registration within 5 days, and will become the payer from the date on which the fact on the basis of which that person becomes a taxable person occurs, and not on the basis of a decision issued by the tax office.
• Registration obligation of foreign taxable persons – similarly, it is proposed that a foreign person will become the VAT payer on the date of the taxable transaction which gives rise to the obligation to register, and not on the date specified in the VAT registration decision.
• Delayed VAT registration – it will no longer be possible to report all transactions carried out by the taxable person prior to VAT registration in one so-called extraordinary VAT return, but it will be necessary to file in chronological order tax returns and control statements for each tax period separately, starting from the first tax period for which no tax return has been filed due to failure to comply with this registration obligation. Compared to the current situation, the taxpayer will be penalised for late submission of the tax return and control statement for each tax period.
• Reverse-charge mechanism when importing goods – if certain legal conditions are met, it will be possible to apply reverse-charge when importing goods. The tax on import of goods would not be levied by the customs office, but on the contrary, the tax would be calculated and entered in the tax return by the payer, which would also claim the right to deduct this tax. This procedure will be possible for payers that are registered and established in Slovakia and have the status of an approved economic entity under the customs regulations.
• Deduction of VAT even without an invoice – it is proposed that a taxpayer, which has acquired goods from another EU member state, may claim the right to deduct tax even if it does not have an invoice from the supplier by the deadline for filing the relevant tax return. The payer will also be able to use any other relevant document from the commercial correspondence with the supplier, proving the actual acquisition and the amount of the tax liability, to apply the deduction.
• Supply of goods subject to a lease – the tax treatment of the transfer of goods under a lease agreement, which did not make it clear that the acquisition of ownership takes place at the latest upon payment of the last instalment, is to be changed. According to the new wording of the Act, the handover of goods based on a lease (or other similar) agreement with an agreed option to purchase the goods by the lessee will also be considered as a supply of goods.

• Change of place of supply for selected services – the place of supply of certain services (for example cultural, artistic, sporting, educational or entertainment services), including ancillary services which are broadcast or made virtually available to a non-taxable person, will be where the customer has its registered office or where the customer is residing or habitually residing.

• Overdue liabilities – the Amendment specifies that the payer is obliged to correct the tax deducted on unpaid liabilities only in the tax period in which the 101^st day after the due date occurs.Theft of goods – the concept of “theft” is clarified, and it is proposed to extend the taxpayer’s obligation to pay tax in the amount of the deducted tax also on the illegal theft or illegal appropriation of goods.

• Simplified invoice – for documents issued by the e-cash register client or a fuel dispenser, the document will be treated as a simplified invoice if the price of the goods or services, including tax, does not exceed EUR 400.