Návrh novely zákona o DPH

Amendment to the Value Added Tax Act

An amendment to the Value Added Tax Act (“the Amendment”) has recently undergone the procedure for comments from relevant stakeholders. After the current wording is approved, the Amendment will bring several important changes for taxpayers.

The primary aim of the Amendment is to transpose Council Directive (EU) 2020/285 of 18 February 2020, amending Directive 2006/112/EC on the common system of value added tax and as regards a special scheme for small enterprises, and Regulation (EU) No 904/2010 as regards the administrative cooperation and exchange of information for the purpose of monitoring the correct application of the special scheme for small enterprises (“Small Enterprise Directive”).

Different effective dates were proposed for individual provisions of the VAT Act, which were 31 March 2024, 1 July 2024 and 1 January 2025.

Below is a summary of the main changes arising from the new VAT legislation:

Special scheme for small enterprises

Following the transposition of the Small Enterprises Directive, the Amendment to the VAT Act introduces a new system of VAT exemption in EU territory for domestic and foreign small enterprises, which will take effect from 1 January 2025. The aim of the Amendment is to introduce simplified rules to reduce the administrative burden for small enterprises and to unify the treatment for the VAT exemption of economic activity in Slovakia for both domestic and foreign persons.

In this context, the Amendment introduces as thresholds annual turnovers of EUR 50,000 in Slovakia and EUR 100,000 in the EU. Domestic taxable persons (small enterprises) will be able to supply VAT exempt goods and services in other Member States without the obligation to register for VAT in them if their annual EU turnover and that set by the Member State concerned remain below these thresholds. For these purposes, small enterprises will be assigned a special VAT number with the suffix EX. The same regime will apply in Slovakia for foreign taxable persons if they do not exceed the annual EU turnover and annual turnover set for Slovakia.

VAT registration of domestic taxable persons

The Amendment introduces changes to the rules for VAT registration of domestic taxable persons.

The period for which turnover is calculated for the purposes of mandatory VAT registration is proposed to be changed to a calendar year and the turnover threshold rounded up to EUR 50,000.

The deadline for filing a VAT registration application will be reduced to five days. A taxable person will become a VAT payer beginning from the day when the event triggering the VAT registration obligation occurs (previously a taxpayer became a VAT payer based on a decision issued by the tax authority).

The conditions of voluntary registration remain unchanged.

Individual provisions will become effective on 1 July 2024, except for the change in definition of turnover, which is proposed to take effect from 1 January 2025.

VAT registration of foreign taxable persons

With effect from 1 July 2024, the provisions regulating the VAT registration obligation of foreign taxable persons will also be changed. A foreign person will become a VAT payer by carrying out a taxable transaction subject to VAT and which obliges the person to register for VAT (previously a foreign person became a VAT payer based on a decision issued by the tax authority). In addition, a foreign taxable person will not be obliged to submit a VAT registration application before carrying out a taxable activity but will, according to the Amendment to the VAT Act, be obliged to submit the application afterwards, without delay, from the day on which they became a VAT payer.

Reverse charge on import of goods

The Amendment also proposes to set conditions and rules for the application of a reverse charge on import of goods from third countries to Slovakia so that this regulation can take effect from 1 July 2024.

The main principle of reverse charge when importing goods is that VAT is not levied by the customs authority, but the taxpayer calculates it by themself, reports it in the VAT return for the VAT period in which the VAT liability arose and at the same time deducts the import VAT in the same VAT return. In practice, this mechanism will eliminate the obligation to pay import VAT for selected entities.

Conditions for applying reverse charge on import:

• The entrepreneur (or declarant acting as an indirect representative) must be a registered VAT payer.
• They must have a valid status of an Approved Economic Operator in Slovakia according to customs regulations (AEO license).

You can read more about this topic in our alert: Legislative proposal introducing reverse-charge mechanism on import vat

Late VAT registration

With effect from 1 July 2024, the provision of the VAT Act regulating late VAT registration is being fundamentally changed.

If the taxpayer has not fulfilled the obligation to submit a VAT registration application according to Article 4 or 5 of the VAT Act or has submitted this application late, they are obliged to submit delayed VAT returns and VAT ledgers in chronological order. VAT filings need to be submitted for each VAT period from the first period for which they did not submit VAT returns and VAT ledgers within the statutory deadline.

The current legislation allowed a taxable person to submit one “historical” VAT return in which they reported all these transactions.

This change will significantly increase the administrative burden on tax subjects in the case of late VAT registration. In addition, late filing of VAT returns is subject to penalties.

Leasing

As of 1 July 2024, the Amendment to the VAT Act will change the current VAT treatment of the handover of goods based on leasing (or other similar) contracts that do not clearly state that the transfer of ownership to these goods will occur upon payment of the last installment at the latest.

The new regulation will apply to leasing contracts with a negotiated option to purchase the goods handed over to the lessee, if at the time of its conclusion the use of the purchase option represents the only economically rational choice for the lessee. Such a delivery will constitute a delivery of goods whereby it is necessary to pay VAT on the entire lease value at the beginning when the goods are handed over. Until now, these transactions were considered as supply of a service, where VAT was applied on individual installments throughout the lease period.

In this context, leasing companies in particular should thoroughly analyze the terms and conditions of leasing contracts, based on which they hand over the object of the lease to the lessee and reevaluate the applied VAT regime.

VAT deduction based on a document other than an invoice

The proposed Amendment introduces the possibility of VAT deduction on intra-community acquisition of goods from another Member State also based on a document other than an invoice if the invoice is not available before the deadline for submission of a VAT return.

The VAT payer will be able to demonstrate the right for deduction with other relevant documents covering the business relationship with the supplier, but they must prove the actual acquisition of the goods as well as the amount of tax liability. In such a situation, it will be necessary to include data from this document in the VAT ledger.

Other changes

Below are some other selected proposed changes:

• An additional five-day period – in the event that the VAT payer does not have a VAT number assigned by the deadline for fulfilling certain VAT obligations (issuing an invoice, submitting a VAT return, submitting a VAT ledger), they have an additional five-day period from the date when the official VAT registration decision is delivered to them, to fulfill these obligations.
• Unpaid liabilities – it is specified that the obligation to return VAT for unpaid liabilities arises in the tax period in which the 101st day after the due date occurs.
• Change in the place of supply of services – the rules for determining the place of supply of specific services delivered to a non-taxable person (cultural, artistic, sports, scientific, educational, entertainment and other similar services) are changed, if these are made available online or otherwise virtually.
• Simplified invoices – the level at which a document issued by a cash register is considered a simplified invoice is reduced from EUR 1,000 or EUR 1,600 to EUR 400.
• Theft - it is proposed to extend the obligation to return deducted VAT in case of theft to any illegal removal of goods.
• Services provided to members – the application of VAT exemption provided by a legal entity is proposed to be narrowed only to cases where all members of this legal entity exclusively carry out VAT-exempt services due to public interest or an activity that is not subject to tax.

Comments on the draft Amendment are currently being evaluated. We will inform you of the next steps in the process as they occur.

Should you wish to learn more about the above-mentioned topics or discuss their impact on your business, please do not hesitate to contact us.