Reduced VAT rate of 10%

In the previous issue of our Newsletter, we informed you about the amendment to the Value Added Tax Act, in which the introduction of a reduced VAT rate of 10% for the selected services listed below was approved for a transitional period (until 31 March 2023). On 22 December 2022, the National Council of the Slovak Republic approved another amendment to the VAT Act, which will permanently allow the continued application of the reduced VAT rate for the abovementioned services, with effect from 1 April 2023.

The services, to which the reduced VAT rate can be applied after 31 March 2023, are listed in Annex No. 7a of the VAT Act, namely:

• passenger transport services by cable cars, funiculars and ski-lifts,
• services for the purpose of performing sport in indoor and outdoor sports facilities (including admission to fitness centres), and admission to swimming pools,
• restaurant and catering services,
• accommodation services.

Providers of restaurant and catering services in particular should be cautious when applying the reduced VAT rate, as its application is more complicated from a VAT point of view. For the correct application of the reduced rate, it is important that the restaurant and catering services are sufficiently accompanied by ancillary services enabling the food or drink provided to be consumed on the spot. An example of an ancillary service is the provision of a space for eating, the provision of service, toilets or changing rooms. It follows from the above that if a customer orders and consumes food in a restaurant, the reduced rate applies. However, the purchase of takeaway food or the delivery of food is subject to the standard VAT rate of 20%, as it is considered as a supply of goods from the VAT perspective.