Government draft amendment to the Value Added Tax Act
In the previous edition of our Newsletter, we had already informed you about the forthcoming amendment to Act No. 222/2004 Coll., on Value Added Tax (hereinafter referred to as the “Amendment”), which was submitted by the Government of the SR to the National Council of the Slovak Republic on 4 October 2024. The main objective of the Amendment is to combat tax evasion and to eliminate legislative loopholes/gaps that allow harmful tax practices.
Here are some of the most important changes:
- extension of the cases to which the obligation or right to correct the deducted tax will apply;
- clarification of the definition of “fixed assets” for the purposes of the tax deduction adjustment, which can only be long-term assets (not inventories). This change will also affect the proportional deduction of input VAT on the acquisition of fixed assets used also for purposes other than business;
- extension of the concept of “fixed assets” to include intangible fixed assets;
- change to the rules on the treatment of tax deductions for fixed assets;
- introduction of a new concept of co-called “primary use”, which means the first actual use of goods and services by the payer for the supply of goods and services in respect of which the right of tax deduction has arisen. This concept will serve as a new criterion for the start of the period for adjusting the deducted tax, while also affecting the mechanism for correcting the deducted tax;
- change in the definition of the tax base for gratuitous supply of goods – according to the newly proposed wording, the tax base will be the purchase price of the goods or similar goods at the time of their supply, or the cost of creating the relevant goods.
The Amendment will still be discussed by the relevant committees of the National Council of the Slovak Republic. According to the draft, individual provisions of the Amendment are to become effective on 1 January 2025, and some selected provisions between 30 June 2025 and 1 July 2025.
