Slovakia VAT, GST, and Sales Tax Guide

Slovak Republic

Bratislava

811 02 Bratislava

Slovak Republic

Indirect tax contacts

Juraj Ontko +421 (2) 3333-9110 juraj.ontko@sk.ey.com

Jana Ontkovičová +421 (2) 3333-9113 jana.ontkovicova@sk.ey.com

Stanislava Kockova +421 (2) 3333-9150 stanislava.kockova@sk.ey.com

Alica Michalickova Demitrovicova +421 (2) 3333-9226 alica.demitrovicova@sk.ey.com

Kristina Vavakova +421 (2) 3333-9140 kristina.vavakova@sk.ey.com

A. At a glance

Name of the tax

Value-added tax (VAT)

Local name Daň z pridanej hodnoty (DPH)

Date introduced 1 January 1993

Trading bloc membership European Union (EU)

Administered by Ministry of Finance (www.finance.gov.sk) Financial Directorate (www.financnasprava.sk)

VAT rates

Standard 20%

Reduced 10%

Other Zero-rated and exempt

VAT number format SK0123456789 (digits can be from 0-9)

VAT return periods

Monthly (Quarterly period may be requested by certain taxpayers with turnover below EUR100,000)

Thresholds

Registration

Established EUR49,790

Non-established None

Distance sales EUR10,000

Intra-Community acquisitions EUR14,000

Electronically supplied services

EUR10,000

Recovery of VAT by non-established businesses Yes (subject to conditions)

B. Scope of the tax

VAT applies to the following transactions:

• The supply of goods for consideration in the Slovak Republic by a taxable person acting as such

• The supply of services for consideration in the Slovak Republic by a taxable person acting as such

• The acquisition of goods from another European Union (EU) Member State by a taxable person for consideration (see the chapter on the EU)

• The importation of goods, regardless of the status of the importer

VAT also applies to the following transactions:

• The supply of goods or services by the taxpayer for its private use or for the private use of its staff, and of goods supplied free of charge or supplied for any purpose other than that of the taxpayer’s business, if the input tax is wholly or partly deductible

• The transfer of goods owned by a taxable person from the Slovak Republic to another EU Member State (or vice versa) effected by the taxable person or on the taxable person’s account, for the purposes of the taxable person’s business (exceptions apply, see the chapter on the EU)

• The use of tangible assets in the possession of the taxpayer for its private use, for the private use of the taxpayer’s staff or for any purpose other than that of its business, if the VAT on such assets is wholly or partly deductible

Quick Fixes. Pending introduction of a “definitive” system for the VAT treatment of intra-Com munity supplies of goods to taxable persons, the EU has adopted Quick Fixes for intra-Commu nity trade in goods For an overview of the Quick Fixes rules, see the chapter on the EU.

VAT Quick Fixes rules were introduced in the Slovak VAT Act as of 1 January 2020 and cover the following areas:

• Implementation of call-off stock rules: i.e., call-off stock simplification providing a single uniform VAT regime applicable for the delivery of goods to an already known customer in another Member State who will be acquiring the goods at a later stage.

The call-off stock simplification can be used for the maximum period of 12 consecutive months. In case the customer does not pick up the goods from the stock within this period, the supplier needs to register for VAT in the country of arrival and report intra-Community acquisition of goods here; there are some exceptions applicable allowing for the simplifica tion beyond the 12-month period.

Supplier should include VAT ID of the customer, together with the value of the goods in its EC Sales List filed in the country of dispatch.

Supplier and customer should report the respective transaction in their VAT records. The call-off stock simplification can be operated also in case of VAT registration of the supplier in the Member State of arrival, providing the supplier does not have its seat or fixed establishment in that country.

• VAT number as a substantive condition for applying the exemption for intra-Community sup plies of goods: customer’s VAT ID assigned by the Member State different from the Member State of dispatch becomes a substantive requirement for exemption of intra-EU supplies of goods.

• Documentary evidence of intra-EU supplies of goods: there is a rebuttable presumption for the evidence of the transport to another EU Member State if the supplier can provide two noncontradictory pieces of evidence that are independently prepared and issued by different parties.

• Chain transactions simplification: for chain transactions, the intra-Community supply will be ascribed to the supply made to the intermediary operator who arranges or has the intra-Com munity transport arranged. If the intermediary operator has communicated to its supplier the VAT number issued to it by the Member State from which the goods are dispatched or transported, the intra-Community supply will be ascribed to the supply made by the intermediary operator.

There were no derogations implemented in the Slovak Republic in comparison to the wording in the EU Directive/EU regulation.

Effective use and enjoyment. To avoid instances of nontaxation or double taxation, EU Member States can apply use and enjoyment rules that allow a service that is “used and enjoyed” in the EU to be taxed or prevent a service that is “used and enjoyed” outside the EU from being taxed. If a service is taxed in the EU under the use and enjoyment provisions, a non-EU supplier of the service may be required to register for VAT in every Member State where it has customers that are not taxable persons. For the information regarding the rules relating to VAT registration, see the chapters on the respective countries of the EU.

In the Slovak Republic, no services are subject to the “use and enjoyment” provisions.

Transfer of a going concern. A transfer of a going concern (TOGC) is considered outside the scope of VAT. The VAT rules in the Slovak Republic require the transferor and the transferee to be VAT registered to fall outside the scope. In the Slovak Republic, the legislation requires the transferee to register for VAT. But a TOGC is not relieved from taxation if the transferee is involved in (mostly) exempt business – the general taxation rules would then apply.

The Slovak VAT legislation is currently in line with the EU VAT Directive TOGC provisions and with the European case law. TOGC regime may be applied on different types of agreements.

C. Who is liable

A taxable person is any business entity or individual that independently performs any economic activity regardless of the purpose and results of such activity.

The VAT registration threshold for taxable persons that have their seat, place of business or a fixed establishment in the Slovak Republic (Slovak taxable persons) is a turnover of EUR49,790 measured in a maximum period of 12 consecutive calendar months. A Slovak taxable person of which the turnover equals or exceeds the registration threshold must file a VAT registration application by the 20th day of the month following the month in which the threshold is reached.

For the above purposes, turnover includes the value of supplies of goods and services, made in the Slovak Republic (excluding tax). The value of supplies that are exempt from VAT without input deduction (see Section D) is generally excluded from turnover for the above purposes. However, the value of insurance and financial services is included if these services are not provided as ancillary to the main taxable supply. The value of the occasional sale of tangible property (except inventory) and intangible property is excluded from the definition of taxable turnover.

Exemption from registration. As mentioned above, foreign businesses are not obliged to be regis tered for VAT purposes in the Slovak Republic if they are represented by an import VAT repre sentative or intra-Community acquisition VAT representative and if they do not perform any other transactions subject to VAT reporting in the Slovak Republic than the listed ones.

Slovak established persons (i.e., persons having their seat, place of business or a fixed establishment in the Slovak Republic) of which turnover in the preceding 12 consecutive calendar months did not exceed EUR49,790 are not obliged to register for VAT in the Slovak Republic.

A taxable person that plans to supply an immovable property is obliged to register for VAT before making a supply of the immovable property (or before receipt of payment pertaining to such a supply) by which it would exceed the mandatory registration threshold, unless the supply is exempt from VAT.

A taxable person not registered for VAT or nontaxable legal person acquiring goods from anoth er EU Member State is not obliged to register for VAT purposes in the Slovak Republic if the value of intra-Community acquisitions (excluding VAT) does not exceed EUR14,000 in a calen dar year. On the other hand, if a taxable person not registered for VAT in the Slovak Republic

purchases services from other EU Member State subject to the reverse-charge mechanism, with a place of supply in the Slovak Republic, while being considered as a person liable to VAT, it is obliged to register for VAT purposes in the Slovak Republic before the actual purchase of the services. Similarly, the Slovak established person not registered for VAT purposes in the Slovak Republic is obliged to register for VAT before it supplies services to another EU Member State if these have the place of supply in another EU Member State and the purchaser is considered a person liable to pay VAT.

As of 1 July 2021, the provision on the distance selling model were replaced by the One-Stop Shop (OSS), applicable also for intra-EU distance sales of goods, where the registration thresh old of EUR10,000 applies.

Voluntary registration and small businesses. Taxable persons with any value of turnover or acqui sitions may register voluntarily. Voluntary VAT registration is administratively complex and subject to detailed scrutiny from the Slovak tax authorities due to antifraud measures.

Group registration. VAT grouping allows financially, economically and organizationally linked domestic taxable persons (including fixed establishments of foreign entities) to form a single taxable person. The VAT group is assigned a single VAT identification number. Supplies between the members of the VAT group are outside the scope of VAT. However, records of such supplies must be maintained for VAT purposes.

All members of a VAT group in the Slovak Republic are jointly and severally liable for VAT debts and VAT penalties.

The Slovak VAT group registration becomes effective on 1 January if the group VAT registration application is filed by 31 October of the preceding calendar year.

There is no minimum time period for the duration of a VAT group. An exit from the VAT group is possible at any time – the exit of a VAT group member from the VAT group is effective within 30 days after filing the request for exit from the VAT group.

One taxable person may be a member of one VAT group only. A Slovak VAT group can include only taxable persons with their seat, place of business or a fixed establishment in the Slovak Republic.

Holding companies. In the Slovak Republic, a holding company can be a member of a VAT group if it fulfills the general criteria of being a taxable person performing economic activities, as only a taxable person may become a member of a VAT group. The assessment if a holding company fulfills the required criteria qualifying for taxable person requires a detailed validation of activities performed by the holding company. The Slovak tax authorities did not issue any method ological guidance on this matter.

Please note that a pure/passive holding company does not typically perform economic activities and therefore should not be considered as taxable person. Therefore, a pure/holding company cannot be member of a VAT group.

Cost-sharing exemption. The VAT cost-sharing exemption (in accordance with VAT Directive 2006/112/EEC Article 132(1)(f)) has not been implemented in the Slovak Republic.

Fixed establishment. A fixed establishment (FE) for the purpose of the Slovak VAT law is defined as a permanent place of business that has the human and material equipment necessary for the performance of business activities in the Slovak Republic. The Slovak tax authorities follow the interpretation of an FE as stipulated by Council Implementing Regulation (EU) No 282/2011. The registration of a branch in the Slovak Commercial Register does not automatically make the branch meet the fixed establishment criteria.

Non-established businesses. A “non-established business” is a foreign business that has no seat, place of business, fixed establishment, residence or habitual abode in the Slovak Republic.

A non-established business must register for VAT in the Slovak Republic before it begins to per form activities that are within the scope of Slovak VAT, except for the importation of goods. Performance of only the following supplies of goods or services in the country does not trigger the registration obligation:

• Certain zero-rated transport services and zero-rated services ancillary to transport services

• Goods and services subject to the reverse charge by the recipient

• Goods transported to other EU Member States if the goods have previously been imported from a non-EU country and the foreign person has appointed an import VAT representative in the Slovak Republic

• Goods transported to other EU Member States or to non-EU countries if the goods have previ ously been supplied to the Slovak Republic from another EU Member State and the foreign person has appointed an intra-Community acquisition VAT representative in the Slovak Republic

• Goods supplied within a triangular transaction if the non-established business acts as middle party to the transaction (see the chapter on the EU)

• Gas and electricity supplies if the recipient of the goods is required to pay VAT

• Goods and services subject to a VAT exemption without the right for input tax deduction

• Certain types of goods supplied in certain types of custom warehouses defined by the VAT Act

• Supply of goods and provision of services with the place of supply (consumption) in the Slovak Republic applying the OSS simplification scheme

The Slovak tax authorities are obligated to register the non-established person as a taxpayer, to issue a certificate on tax registration to that person, and to allocate the tax identification number immediately, no later than within seven days of the date of delivery of the application for tax registration. The non-established person shall become a taxpayer from the date shown in the certificate on tax registration. From 1 January 2022, the Slovak tax authorities will not be obliged to issue a certificate confirming tax registration. Instead, the allocated tax identification number will be announced by the Slovak tax authorities to the taxpayer. At the time of preparing this chapter, this change was proposed in the amendment to the Slovak VAT Act, but has not yet been approved. There are no procedural fees related to submission of VAT registration application in the Slovak Republic.

VAT registration is carried out at the following designated office: Tax Authority Bratislava (Daňový úrad Bratislava) Ševčenkova 32 P.O. Box 154 850 00 Bratislava Slovak Republic

In theory it is possible to file the VAT registration electronically for non-established businesses (using the advanced electronic signature). However, in practice this can be complex and not often undertaken. However, if the non-established taxable person has a representative for tax proceedings (tax advisor or legal attorney, etc.), the electronic communication, including the electronic VAT registration application, becomes an obligation. But in this case, it is the representative act ing based on the power of attorney who will be filing the registration electronically on behalf of the non-established business.

The VAT registration threshold for Slovak taxable persons and for Slovak nontaxable legal persons that acquire goods in the Slovak Republic from other EU Member States is EUR14,000 of goods acquired in a calendar year. This type of VAT registration does not confer on the person the status of a taxpayer (that is, no input tax deduction is possible). It only serves the purpose of

allowing the person to pay the VAT due on the goods acquired. Registration is required before achieving the threshold.

Tax representatives. The concept of a fiscal representative has not been introduced into the Slovak VAT Act. Nevertheless, foreign or Slovak entities can appoint a representative to act on their behalf in front of the Slovak tax authorities in all tax matters, including VAT registration or compliance process, based on a power of attorney.

A non-established business may appoint a VAT representative for the purposes of making impor tations of goods that are to be treated as exempt from VAT on the basis of their subsequent intra-Community supply (that is, a zero-rated resale to another EU Member State) by the nonestablished business. The non-established business must appoint the representative using a power of attorney. The VAT representative must submit tax returns on a monthly basis as well as monthly EU Sales Lists on behalf of the importers. The importer of goods is not required to register for VAT purposes in the Slovak Republic.

A non-established business may appoint a VAT representative for the purposes of making intraCommunity acquisitions of goods in the Slovak Republic (i.e., acquisition of goods from another EU Member State) provided that these goods are intended to be subsequently supplied to another EU Member State or non-EU country or sold distance selling (with the place of supply in another EU Member State). The VAT representative should be appointed using a power of attorney. The VAT representative is obliged to submit VAT returns, VAT ledgers and EU sales lists on behalf of the represented person on a monthly basis. The person represented by the VAT representative is not required to register for VAT purposes in the Slovak Republic provided that it does not perform any transactions subject to VAT reporting in the Slovak Republic (other than those described above). A VAT representative can represent more than one non-established busi ness.

Reverse charge services. A Slovak taxable person must apply VAT with respect to services pro vided from another EU Member State or a non-EU country if the following conditions are satisfied:

• The services are taxable and the place of supply of the services is in the Slovak Republic

• The supplier is not the person liable to pay the VAT

VAT is accounted for by the reverse-charge mechanism; the recipient of the service must account for VAT on the service, but it is also entitled to recover the self-assessed VAT if certain conditions are met.

A Slovak taxable person is generally not required to apply the reverse charge if the service pro vider is established for VAT purposes in the Slovak Republic (in that case, the service provider must account for the Slovak VAT due). However, the reverse charge applies if a taxable person or an entity that is not a taxable person and that is identified for VAT, as a result of intra-Community acquisitions, receives services from a non-established person from another EU Member State or a non-EU country and if the place of supply is in the Slovak Republic as a result of the recipient’s seat, place of business or fixed establishment (if the service is attributable to the fixed establishment). In such circumstances, the reverse charge applies regardless of whether the nonestablished service provider is registered for VAT in the Slovak Republic. If these services are provided to persons in their nonbusiness capacity or to private individuals, the country where the supplier is established is considered to be the place of supply for the services.

The person liable to VAT with respect to goods (except in the case of distance selling) and ser vices supplied by non-established businesses (from EU and non-EU countries) to taxable persons established in the Slovak Republic is the recipient of the goods and services, regardless of whether the supplier (foreign person) is registered for VAT in the Slovak Republic.

Domestic reverse charge. A Slovak VAT payer that purchases the following goods from another Slovak taxable person must apply the domestic reverse charge to the following supplies:

• Gold in the form of raw material, semi-finished product or investment gold

• Metal waste and scrap metal

• Greenhouse gas emission allowances

• Immovable property where the option to tax was elected by the supplier

• Supply of goods following the cession of a reservation of ownership to an assignee and the exercising of this right by the assignee

• Supply of immovable property within enforcement or bankruptcy proceedings

• Supply of construction services, supply of construction under a contract of work (or similar type of contract) if it falls under Section F (Constructions or construction works) of the Statistical Classification of Products, and the supply of goods with installation or assembly, if the assembly or installation falls under Section F of the Statistical Classification of Products; in cases when it is not clear whether the construction service falls under Section F, but the supplier reasonably concludes that this service should be subject to the local reverse charge and includes the sentence on the invoice that the “application of reverse charge” applies, the cus tomer is liable to pay the VAT due

• Supply of goods falling within Chapters 10 (cereals) and 12 (oil seeds and oleaginous fruits, miscellaneous grains, seeds and fruit, industrial or medicinal plants, straw and fodder) of the Common Customs Tariff, which are not commonly intended for final consumption in an unchanged state; it does not apply to the sales of goods where a simplified tax invoice (cash register bill) is issued

• Supply of goods falling within Chapter 72 (iron and steel) and Items 7301 (sheet piling of iron or steel, whether or not drilled, punched or made from assembled elements, welded angles, shapes and sections of iron or steel), 7308 (structures and parts of structures of iron or steel, plates, rods, angles, shapes, sections tubes and the like, prepared for use in structures of iron or steel) and 7314 (cloth, grill, netting and fencing, of iron or steel wire, expanded metal of iron or steel) of the Common Customs Tariff; it does not apply to the sales of goods where a simpli fied tax invoice (cash register bill) is issued

• Supply of mobile phones that are made or adapted for use in conjunction with a licensed net work and work on specified frequencies, if the tax base in the invoice is EUR5,000 or more

• Supply of integrated circuits such as microprocessors and central processing units in a state prior to integration into end-user products, if the tax base in the invoice is EUR5,000 or more

Digital economy. Specific VAT rules apply to cross-border supplies of goods and services sold via the internet (e-commerce) in all EU Member States with effect from 1 July 2021. These new rules apply to all direct sales to nontaxable persons (in practice, these are mostly private individuals), but we refer to these rules as e-commerce VAT rules because most of these transactions are con ducted via the internet. In general, the place of supply is in the country of consumption, i.e., where the goods are shipped to or where the buyer of the goods or services resides, subject to any “use and enjoyment” provisions that may override this rule (see Section B, Effective use and enjoyment subsection above). Therefore:

• For supplies of services made by a nonresident supplier to a business customer (B2B), the busi ness customer is responsible for accounting for the VAT due, using the reverse charge.

• For supplies of goods made by a nonresident supplier to a business customer (B2B), where the goods are transported from another EU Member State, the business purchasing the goods is responsible for accounting for the VAT due, as an intra-Community acquisition. If the goods come from outside the EU, the purchaser may have to report an importation of goods.

• For supplies of goods or services made by a nonresident supplier to a final consumer (B2C), the supplier is generally responsible for charging and accounting for the VAT due at the rate applicable in the customer’s country (unless the supplier’s sales fall beneath the distance selling threshold of EUR10,000 with effect from 1 July 2021). This VAT can be reported using a single VAT registration, using a “One-Stop-Shop” mechanism.

For more details about intra-EU distance sales, see the chapter on the EU.

Effective 1 July 2021, an e-commerce supplier may have a choice of how to account for VAT on its B2C supplies.

Local VAT registration. A nonresident supplier may choose to register for VAT in each Member State and account for VAT on all supplies made and recover input tax in accordance with local rules (see the Non-established businesses subsection above). Non-EU businesses may be required to appoint a fiscal representative for accounting for the VAT due on these transactions.

In the Slovak Republic, taxpayers that want to register for application of the OSS should submit to the Slovak tax authorities the registration form for OSS. There are separate application forms designated for OSS, different from the “standard” VAT registrations. If the tax authorities allow the use of a special OSS scheme, the taxpayers who are not already registered for VAT purposes will obtain the confirmation together with the notification of identification number for OSS purposes.

The tax authorities can cancel the registration for OSS for the following:

• Based on the request for cancelation of registration from a taxpayer that has decided not to apply the OSS or when the taxpayer has stopped carrying out the activity covered by the OSS

• The taxpayer does not fulfill the conditions for the application of the OSS in the Member State of identification, e.g., change of registered office

Or

• The taxable person repeatedly breaks the conditions for the application of OSS, e.g., does not submit tax returns with OSS

One-Stop Shop. Effective 1 July 2021, a supplier can choose to account for the VAT due under the EU One-Stop Shop (OSS), which can be used for intra-EU cross-border supplies of goods and all cross-border supplies of services made to final consumers in the EU. Unlike the previous Mini One-Stop-Shop (MOSS) scheme that applied until 30 June 2021, the OSS is not limited to cross-border supplies of electronic services, telecommunication services and broadcasting services.

The OSS is an electronic portal that allows businesses to:

• Register for VAT electronically in a single Member State for all intra-EU distance sales of goods and for B2C supplies of services

• Declare and pay VAT due on all supplies of goods and services in a single electronic quarterly return

The OSS can be used by businesses established in the EU and outside the EU. If a supplier or a deemed supplier registers for the OSS, it must declare and pay VAT for all supplies (goods as well as services) that fall under the OSS.

In the Slovak Republic, the OSS registration process is the same as described above in the Local VAT registration subsection

For more details about the operation of the OSS, see the chapter on the EU.

Import One-Stop Shop. Effective 1 July 2021, the Import One-Stop-Shop (IOSS) scheme applies for B2C distance sales of goods from outside the EU.

Effective 1 July 2021, VAT is due on all commercial goods imported into the EU regardless of their value. The actual supply is subject to VAT in the country where the goods are imported (the country of destination). The IOSS facilitates the declaration and payment of VAT due on the sale of low-value goods (i.e., consignments valued at less than EUR150 per consignment). It allows suppliers selling low-value goods dispatched or transported from a non-EU country to customers

LOVAK R EPUBLI C

in the EU to collect, declare and pay the VAT due. If the IOSS is used, the importation into the EU is exempt from VAT. For more details about the IOSS, see the chapter on the EU.

The use of the IOSS special scheme is not mandatory. If VAT is not collected via the IOSS scheme, the importation of goods into the EU is subject to import VAT in the country of final destination, and the Member State can decide freely who is liable to pay the import VAT, which could be the customer or the seller (or an electronic interface).

In the Slovak Republic, the IOSS registration process is the same as described above in the Local VAT registration subsection.

Postal services and couriers scheme. If the IOSS is not used and the customer is liable for the import VAT due on the supply (and importation) of consignments with a small intrinsic value (i.e., less than EUR150), the VAT can be collected using the special scheme for postal services and couriers.

In the Slovak Republic there are no additional specific local rules that apply.

For more details about the special scheme for postal services and couriers, see the chapter on the EU.

Online marketplaces and platforms. Under the new EU VAT e-commerce rules, effective 1 July 2021, taxable persons that “facilitate” certain B2C sales of goods are deemed to have purchased and then supplied those goods themselves. This means that the single supply from the “underly ing” supplier to the final consumer is split into two deemed supplies:

• A supply from the supplier to the facilitator (deemed B2B supply).

• A supply from the facilitator to the final customer (deemed B2C supply). Any intermediation service provided by the facilitator is disregarded for VAT purposes.

This provision does not cover all sales facilitated via the facilitator. It only covers distance sales of goods imported from non-EU jurisdictions in consignments with an intrinsic value not exceed ing EUR150. The jurisdiction of residence of the supplier using the facilitator is irrelevant. The supply to the facilitating platform is VAT exempt and the supplies made by that platform follow the e-commerce VAT rules as described above. In addition, the provision also covers sales within the EU, if the supplier is not established within the EU. This applies to both local ship ments within one Member State, as well as intra-Community shipments. In both cases, the final customer must be a nontaxable person.

In the Slovak Republic there are no additional specific local rules that apply.

For more details about the rules for online marketplaces, see the chapter on the EU.

Vouchers. The Slovak Republic has adopted the Council Directive (EU) 2016/1065, for the application of VAT on vouchers. A voucher is defined as an instrument in physical or electronic form and is associated with the entitlement of the holder to receive specific goods or services and the commitment of the supplier to accept such voucher as consideration for the delivered goods or services.

For the VAT purposes, it is necessary to distinguish between so-called “single-purpose” (SPV) and “multipurpose” (MPV) vouchers. For SPV, the place of supply of goods or services and the VAT rate are known already at the time of issuance. For MPV, at least one of these facts is unknown.

The sale of a SPV by a taxpayer acting in their own name is regarded as a supply of goods or services against consideration. The supplier charges VAT upon sale of the SPV, while the VAT will not be charged upon the actual supply of goods/services when SPV is redeemed. The sale of

MPV will not be subject to VAT. Only the provision of goods or service itself in return for a MPV will be subject to taxation.

Registration procedures. The following documents should be submitted to Slovak tax authorities by the non-established person for the purposes of VAT registration:

• A completed application for VAT registration

• An original extract from the Commercial Register or a notarized copy thereof

• An official translation of the extract from the Commercial Register into the Slovak language (not required for the Czech language)

• If the person has appointed a representative, a power of attorney does not need to be notarized, but if the power of attorney is executed in any language other than the Slovak or Czech languages, it must be accompanied by official translation thereof

The VAT application form, together with the required documents, must be filed electronically to the tax authorities.

Deregistration. Taxable persons that cease to conduct economic activities (i.e., activities subject to VAT in the Slovak Republic, as well as in another EU Member State) are obliged to file an application to deregister. The Slovak tax authorities may deregister a VAT-registered person in response to an application or at their own discretion if the VAT-registered person repeatedly fails to comply with administrative duties (e.g., filing of VAT returns, VAT ledgers, payment of VAT or tax audit-related duties).

Changes to VAT registration details. The taxable person is obliged to notify the tax administration electronically of any changes with regard to its tax registration details (for example, a change of business name, address, organization’s number, name of the managing director). The deadline for filing the announcement of changes is 30 days from the day the changes occurred.

Split payment. In the Slovak Republic, a split-payment mechanism is being introduced (due 1 January 2022) with the aim to mitigate the risk of several and joint liability for unpaid VAT by the supplier. The customer will be able to remit the amount of VAT from the invoice directly to the individual bank account of the supplier held by the tax authorities. By paying the VAT directly to the individual bank account of the supplier, the risk of being held liable for VAT unpaid by the supplier to the tax authorities should be mitigated. The payment order should be made in the same way as if placed by the suppliers themselves. Note that at the time of preparing this chapter, the new reporting obligation is a proposed amendment to the Slovak VAT Act and has not yet been approved.

D. Rates

The term “taxable supplies” refers to supplies of goods and services that are liable to a rate of VAT, including the zero-rate.

The VAT rates are:

• Standard rate: 20%

• Reduced rate: 10%

• Zero-rate: 0%

The standard rate of VAT applies to all supplies of goods or services unless a specific measure provides for a reduced rate, the zero-rate or an exemption.

Examples of goods and services taxable at 0%

• Exported goods

• Intra-Community supplies of goods

• Services related to the export of goods

• International transport of persons

• Financial and insurance services provided to a customer that is not established in the EU

Examples of goods and services taxable at 10%

• Selected pharmaceutical products and medical aids

• Specific newspapers, periodicals, books, brochures and leaflets, and books for children

• Certain food products such as meat, fish, milk and bread, certain types of vegetables

• Accommodation services

• Certain goods and services related to social welfare

The term “exempt supplies” refers to supplies of goods and services that are not liable to VAT and that do not qualify for input tax deduction.

Examples of exempt supplies of goods and services

• Postal services

• Health care (except for supplies of pharmaceuticals and health aids)

• Public radio and television broadcasting (except for broadcasting of commercials and spon sored programs)

• Education

• Financial services

• Services related to sports and physical education

• Cultural services

• Social welfare

• Lotteries and similar games

• Transfer and lease of real estate (options to tax available for both except of residential real estate)

• Insurance and reinsurance services (including public social and health insurance)

• Services provided by a legal person to its members (if certain conditions are met)

Option to tax for exempt supplies. The transfer of immovable property, wholly or partly, carried out five years after the date of the first official approval of use or five years after the first day of the actual usage, or five years after major reconstruction with or without the change in the purpose of using that property is VAT exempt. The taxpayer may opt to tax the transfer of the immovable property, except for the transfer of residential real estate.

Similarly, the lease of immovable property is VAT exempt. Again, the taxpayer that leases nonresidential real estate to a taxable person may opt to tax the lease.

E. Time of supply

The time when VAT becomes due is called the “chargeability of tax” or “tax point.” In the Slovak Republic, VAT generally becomes chargeable on the date on which goods are supplied or services are performed.

Under the general rule, the tax point for goods or services is the date of the supply of the goods or services or the date of the receipt of the payment, whichever is earlier. The date of supply of goods is the date of acquisition of the right to dispose of the goods as owner.

Deposits and prepayments. There are no special time of supply rules in the Slovak Republic for deposits and prepayments. As such, the general time of supply rules apply (as outlined above).

Continuous supplies of services. If goods or services are supplied in parts or repeatedly, the goods or services are considered to be supplied at the latest on the last day of the period to which the payment for the goods or services relates.

If a payment for partial or repeated supplies of goods or services is agreed to for a period exceed ing 12 calendar months, the tax point arises on the last day of the 12th month, until the supply of goods or services is finished.

A special rule applies if the following circumstances exist:

• A service is supplied partially or repeatedly during a period exceeding 12 calendar months and the agreed payment is for a period exceeding 12 calendar months

• The service is supplied to a taxable person acting as such

• The place of supply is in the Slovak Republic

• The person required to pay VAT is the recipient of the service

In the circumstances mentioned above, the tax point arises on 31 December of each calendar year, until the supply of such service is finished.

Specific rules also apply to partial or repeated intra-Community supplies of goods, partial or repeated supplies of gas, water, heat and electricity that are supplied along with leases of immov able property, and of electronic communication networks and electronic communication servic es.

Goods sent on approval for sale or return. There are no special time of supply rules in the Slovak Republic for supplies of goods sent on approval for sale or return. As such, the general time of supply rules apply (as outlined above).

Reverse-charge services. For reverse-charge services received by a Slovak taxable person, VAT becomes due on the date of supply of the service.

Leased assets. The delivery of goods based on a lease agreement under which ownership to the subject matter of the lease agreement is acquired, at the latest, upon the payment of the last installment is considered a supply of goods.

A lease transaction with purchase option agreed generally remains to be regarded as a supply of services.

The lease of real estate or its part is VAT exempt, except for:

• The provision of accommodation services (if for less than three months)

• Lease of land for the purpose of parking of vehicles

• Lease of permanently installed equipment and machinery

• Lease of safes

A taxpayer that leases a nonresidential real estate to a taxable person may opt to tax the lease.

Imported goods. The tax point for imported goods is when the customs authority accepts the customs declaration for the release of the goods into a customs regime triggering the payment of VAT. If this is not applicable, the tax point is when the liability to customs duties (including import VAT) arises in a different manner.

Please note that postponed import VAT accounting (i.e., VAT deferral upon importation) has not been implemented into the Slovak VAT law.

Intra-Community acquisitions. For intra-Community acquisitions, the tax point is either the date of the issuance of the invoice or the 15th day of the calendar month following the month in which the goods are acquired, whichever is earlier.

Intra-Community supplies of goods. The tax point for goods that are supplied to another EU Member State and that meet the conditions for exemption from VAT in the Slovak Republic is either the

date of the issuance of the invoice or the 15th day of the calendar month following the month in which the goods are supplied, whichever is earlier.

Distance sales. There are no special time of supply rules in the Slovak Republic for supplies of distance sales. As such, the general time of supply rules apply (as outlined above).

The date is the supply of the goods or the date of the receipt of the payment, whichever is earlier. The date of supply of goods is the date of acquisition of the right to dispose of the goods as the owner.

As of 1 July 2021, only for the taxable persons who facilitate the supply of goods within the ter ritory of the EU, the tax point will arise on the day when the payment is received.

Immovable property. The tax point for a transfer of real estate is the date on which the transfer of the property is registered in the Real Estate Cadastre or the date on which the property is made available for use to the purchaser, whichever is earlier. The tax point for the supply of a newly constructed building is the date of the handing over of the building.

F. Recovery of VAT by taxable persons

A taxpayer may recover input tax, which is the VAT charged on goods and services received if it is directly attributable to the taxable person’s own supplies for which a deduction entitlement exists (mostly taxable and zero-rated supplies).

Input tax may generally be recovered by deducting it from output tax, which is VAT due on the supplies made. A taxpayer is entitled to deduct input tax if the tax point for the supply in question has arisen with respect to the output and the taxpayer holds a valid VAT invoice or import document.

The time limit for a taxable person to reclaim input tax in the Slovak Republic is five years. However, the taxpayer may deduct input tax in any VAT period after the VAT period in which the right to deduct arose up to the end of the calendar year (the financial year, if applicable). The taxpayer must possess the required documents (e.g., invoice, import declaration and other docu ments) by the time of the deadline for submission of the VAT return for that period. If the documents are not available until the end of the calendar (or financial) year, the deduction must be made for the period in which the documents are received. If the taxpayer finds out later that there is an invoice with VAT that was not claimed by the last VAT return in the respective calendar (or financial) year, it is still possible to claim this input tax via filing the supplementary VAT return. Taxpayers can go back and submit supplementary VAT returns up to five years (see the Correcting errors in previous returns subsection below).

Taxpayers submitting a supplementary VAT return due to belated receipts of invoices for intraCommunity acquisitions of goods are entitled to deduct the respective VAT in this supplemen tary return if they have the related invoice at their disposal as of the filing date.

Taxpayers are required to correct the amount of deducted VAT within 30 days from the date the tax base was to be corrected by the supplier, even if the corrective invoice is absent.

A taxpayer is entitled to interest on excess VAT if the payment of excess VAT was later than six months after the deadline for its usual refund. The interest is calculated as a percentage of the final amount of excess VAT (as confirmed by the tax inspectors), for the period starting six months after the deadline for its usual refund, until its actual refund. The interest rate applicable should equal twice the European Central Bank rate, valid on the first day of the calendar year for which the interest is calculated, with a minimum applicable annual rate of 1.5%.

Nondeductible input tax. A taxpayer may not recover the following input tax:

• VAT that relates to activities that are not business activities

• VAT that relates to transactions regarded as exempt supplies

• VAT incurred on items of expenditure for which recovery is specifically excluded (for example, input tax related to meals and entertainment)

Input tax on goods that are used for both business and for nonbusiness purposes is generally deductible. However, output tax must be paid on the nonbusiness use.

For fixed tangible assets intended to be used for both business and nonbusiness purposes, the taxpayer may opt not to deduct a portion of the input tax that reflects the nonbusiness use of these assets. As a result, the use of these assets for nonbusiness purposes is not subject to VAT.

The above option applies only to movable tangible assets with an acquisition price exceeding EUR3,319.39 (without VAT) and a useful life over one year. For immovable assets, the taxpayer needs to determine the proportion of use of the immovable asset for its business and nonbusiness purposes and deduct the input tax only to the extent of the business use (for further details, see the subsection on Capital goods below).

For services received by a taxable person that are intended to be used for both business and nonbusiness purposes, the taxpayer may not deduct VAT relating to nonbusiness use. However, if the taxpayer does not expect to use the services for nonbusiness purposes, it may deduct input tax relating to the entire consideration for the services. If the services are subsequently used for nonbusiness purposes, the taxpayer must account for output tax (VAT on sales) on the portion of the consideration that is attributable to the nonbusiness use of the services.

The following lists provide some examples of items of expenditure for which input tax is not deductible and examples of items for which input tax is deductible if the expenditure is related to a taxable business use.

Examples of items for which input tax is nondeductible

• Business entertainment

• The part of input tax on the acquisition of goods and services that represents its nonbusiness use, if the taxpayer elects not to apply output tax on this nonbusiness use

Examples of items for which input tax is deductible (if related to a taxable business use)

• Purchase, lease or hire of vans and trucks

• Taxis

• Hotel accommodation

• Fuel used for business purposes

• Business use of mobile telephones

• Business gifts that are worth less than EUR17 each (not taxed on output)

• Commercial samples of goods for advertising purposes (not taxed on output)

• Parking

Partial exemption. For goods and services that are partially used for the provision of exempt sup plies, only the portion of VAT related to taxable supplies may be deducted. For these purposes, taxable supplies include zero-rated supplies, and supplies that are specifically excluded from the application of VAT and that are entitled to input tax deduction.

The deductible proportion is calculated based on the total revenue (or income) generated from taxable supplies made (those for which the input tax is deductible), divided by the total revenue (or income) from all supplies made. All values are exclusive of VAT. Because the terms “reve nue” and “income” are not defined for VAT purposes, they should probably be understood in terms of their definitions for accounting purposes. “Revenue” is the term used for double-entry bookkeeping, while “income” is the term used for single-entry bookkeeping.

The following taxable supplies are excluded from the calculation of the deductible proportion:

• Incidental financial services exempt from VAT

• The sale of an enterprise or part of an enterprise (transfer of going concern)

• The sale of business assets (capital goods) excluding inventory

• Incidental real estate transactions (transfer or leasing of immovable property)

The deductible proportion is calculated for the entire calendar (or financial) year and is rounded up to the nearest whole percentage. During the current calendar (or financial) year, the deductible proportion calculated for the preceding year is used. If no percentage exists for the preceding year, the taxpayer may use a percentage agreed to with the tax authorities.

Approval from the tax authorities is not required to use the partial exemption standard method in the Slovak Republic. Special methods are not allowed in the Slovak Republic.

Capital goods. With respect to the purchase of immovable property to be used for both business and nonbusiness purposes, the input tax is deductible only to the extent that the property is used for business purposes. If the nonbusiness use of the immovable property changes over a period of 20 years, a special Capital Goods Adjustment Scheme applies. This rule applies to immovable property acquired on or after 1 January 2011.

The previously valid 10-year period for the adjustment of deducted input tax relating to immov able property is extended to 20 years. Under transitional provisions, the 10-year period applies to immovable property that was subject to the adjustment of input tax deduction in the period from 2004 to 2010, regardless of when the property was acquired. Consequently, the extended 20-year period also applies to immovable property acquired before 1 January 2011 that was not subject to adjustment of the VAT deduction in the period from 2004 to 2010. Taxpayers must retain documentation relating to affected immovable property for a period of 20 years.

Adjustments of deducted input tax relating to capital goods must also be preserved by the legal successor of the entity dissolved without liquidation, such as in cases of reorganizations such as mergers or de-mergers.

Deducted input tax relating to movable capital goods must be adjusted if the proportion between business and nonbusiness use changes over a period of five years after the capital goods were acquired.

In the Slovak Republic, the capital goods adjustment applies to the following services and cir cumstances:

• In case of services performed on movable assets with a purchase price of EUR3,319.39 or more, and a useful life of more than one year, the obligation for input tax adjustment needs to be analyzed for five years.

• In case of services performed on buildings, building plots, flats and nonresidential premises, the obligation for input tax adjustment needs to be analyzed for 20 years.

Refunds. If the amount of deductible VAT in a VAT period exceeds the amount of output tax in that tax period, the taxpayer may offset the difference against a VAT liability in the following tax period. The remaining difference between the amount of deductible VAT and output tax that can not be offset is refunded to a taxpayer by the tax authorities within 30 days after the date of the submission of a VAT return for the following tax period.

Taxpayer may request the refund of excess VAT in a shorter period, which is 30 days after the deadline for submission of the VAT return for the VAT period in which excess VAT was reported, if the following conditions are met:

• The taxpayer is a monthly taxpayer

• The taxpayer was registered for VAT purposes for at least 12 months before the month in which the excess VAT was reported

• The taxpayer is not liable for underpayments exceeding EUR1,000 of other taxes, customs duties and mandatory social and health insurance over the six-month period preceding the month in which the excess VAT was reported

If in the period for refund of excess VAT, the tax authorities deliver an appeal (letter) prompting the removal of defects in the submitted VAT return, the period for refund of excess VAT is interrupted from the day of delivery until the day on which the defects are removed. If the taxpayer generates or increases an amount of excess VAT through the filing of a supplementary VAT return, the tax authorities must refund the respective amount within 30 days after the submission of the supplementary VAT return.

If the tax authorities carry out a tax audit to verify the taxpayer’s entitlement to a refund, the refund must be repaid within 10 days after the tax authorities complete the tax audit.

If the excess VAT is refunded in a shorter period (mentioned above) based on a VAT return con taining incorrect data, the tax authorities impose a penalty amounting up to 1.3% per month of the excess VAT refunded.

Pre-registration costs. The taxpayer may deduct tax related to goods and to services purchased before the day the person became the taxpayer if such purchases were not included in tax expenses in calendar years preceding the calendar year in which the person became a taxpayer, except for stock. As regards property acquired before the VAT registration, the taxpayer will decrease VAT for property that is depreciated by a proportional part of the VAT corresponding to the depreciation. The taxpayer shall not be entitled to deduct the VAT if the goods and services are not used for the supplies of goods and services as the taxpayer.

Bad debts. The write off of bad debts (i.e., bad debt relief) of unrecoverable VAT is possible in certain situations in the Slovak Republic.

The options when a bad debt relief (refund of the VAT) may be claimed are exhaustively defined in the law:

• Unpaid receivable is claimed through enforcement proceedings and was not satisfied within 12 months from the beginning of the enforcement proceedings

• Customer is in the bankruptcy procedure (certain conditions apply)

• Customer is in the debt relief procedure (certain conditions apply)

• The customer ceased to exist without a successor

• The customer died (certain conditions apply)

• Any receivable with value under EUR300 (incl. VAT) overdue for more than 12 months (certain conditions apply)

The bad debt relief should not be applied in cases where the taxpayer performs supply of goods or services to the customer with a specific relationship (i.e., statutory or subsidiary persons), or in cases where the supply took place after the customer applied for bankruptcy procedure or the supplier knew or could/should have known that the customer will not pay for the supply.

The right to claim the bad debt relief by the VAT payer lapses after three years from filing the VAT return for the period in which the supply of goods or services took place, unless a court proceeding, bankruptcy proceeding, enforcement proceedings, etc., are being held.

In cases of the bad debt relief of VAT, a corrective document must be issued by the supplier and provided to the customer. The customer is obliged to make a correction of the deducted VAT in its VAT return. If a supplier corrected the tax base and subsequently any payment from the customer is received, the supplier is obliged to adjust the tax base and VAT liability accordingly.

Noneconomic activities. Input tax incurred on purchases that are used for noneconomic activities is not recoverable in the Slovak Republic.

G. Recovery of VAT by non-established businesses

The Slovak Republic refunds VAT incurred by businesses that are not established nor registered for VAT in the Slovak Republic.

EU businesses. For businesses established in the EU, refunds are made under the terms of the EU Directive 2008/9/EC. The VAT refund procedure under the EU Directive 2008/9 may be used only if the business did not perform any taxable supplies in the Slovak Republic during the refund period (excluding supplies covered by the reverse charge where the customer is liable to pay VAT; some other minor exceptions apply). For full details, see the chapter on the EU.

Please find below specific rules for the Slovak Republic:

• The EU business shall claim a refund by submitting the refund application in electronic form via the electronic portal in the Member State in which it has its registered office, place of busi ness, establishment, residence or habitual abode.

• The application for a refund shall be submitted no later than 30 September of the calendar year following the period for which the refund is claimed when the value of VAT exceeds the amount of EUR50.

• If the value of VAT exceeds the amount of EUR400, the application may be filed for any period of at least three calendar months.

• The Bratislava Tax Office shall immediately notify the applicant by electronic means of the date of receipt of the application for a tax refund. If the tax base on the invoice or import document is EUR1,000 or more or in the fuel purchase invoice EUR250 or more, the applicant shall submit a copy of the invoice or import document by electronic means together with the application for a refund.

Non-EU businesses. For businesses established outside the EU, refunds are made under the terms of the EU 13th Directive. For full details, see the chapter on the EU.

The Slovak Republic applies the principle of reciprocity; that means the country where the claim ant is established must also provide VAT refunds to Slovak businesses. There is no list of coun tries made publicly available by the Slovak tax authorities to which Slovak tax authorities will refund the VAT. However, the foreign business may request the information from the Slovak tax authorities whether non-EU business is eligible for VAT refund in the Slovak Republic (whether the reciprocity exists between the Slovak Republic and the country of its establishment).

Please find below specific rules for the Slovak Republic:

• Non-EU business applicants must file the refund request using the form issued by the Slovak tax authorities (Žiadosť o vrátenie dane z pridanej hodnoty zahraničnej osobe podľa § 56 až 58 zákona č. 222/2004 Z. z).

• The refund application must be submitted in the Slovak or English language. The application form is submitted in paper form to the tax office Tax Office Bratislava I:

Daňový úrad Bratislava

Radlinského 37 811 07 Bratislava

• Requests must be filed with Tax Authorities Bratislava by 30 June of the year following the year in which the VAT was incurred or the import VAT was paid.

The request must be filed together with the following documents:

• The original invoices or import documents (for imports, documents evidencing payment of the tax must also be included).

• A certificate of status issued by the applicant’s local tax authorities confirming that the applicant is registered for VAT in the country where it is established or has its permanent address.

• An annual claim may be filed if the total VAT incurred exceeds EUR50 for the calendar year. A foreign person from a third country may also file a VAT refund application for half a calen dar year if the total VAT requested exceeds EUR1,000. If such a request was filed for the first half-year, the amount of VAT requested in the second half should exceed EUR50. The tax authorities must decide on the application for the refund within six months after the date the request is filed.

Late payment interest. If the tax authorities do not refund the VAT within the deadline, the VAT refund applicant (established in another EU Member State) is entitled to a late payment interest. The interest is calculated as three times the basic interest rate of the European Central Bank valid on the last day of the period from which the VAT amount should be refunded. If this interest rate does not reach 10%, the annual interest rate of 10% will be applied. Interest is calculated for each day of delay.

This is applicable only for VAT refund applicants established in another EU Member State. In the Slovak Republic, interest is not paid on late refunds to non-established businesses outside of the EU.

H. Invoicing

VAT invoices. A registered taxpayer must issue a VAT invoice for:

• Supply of goods or services having a place of supply in the Slovak Republic rendered to a tax able person or to a nontaxable legal person

• Supply of goods or services with a place of supply in another EU Member State (if a person liable to VAT is the recipient), even if the supply is exempt from VAT

• Supply of goods or services to a taxable person with a place of supply in a non-EU country

• Supply of goods in the form of distance selling with a place of supply in the Slovak Republic

• Intra-Community supply of goods

• Advance payments for goods and services

• Supply of radio, television broadcasting and electronic services with a place of supply in another Member State to a nontaxable legal person under certain conditions

Taxable persons providing services with a place of supply outside the Slovak Republic are obliged to issue VAT invoices at the time the service is being completed or a down payment for that service being received.

The obligation to issue a VAT invoice does not apply to supplies of goods and services with a place of supply in the Slovak Republic that are exempt from VAT with no right of VAT deduction and to supplies of insurance and financial services with a place of supply in EU countries other than the Slovak Republic or in non-EU countries.

The invoice must be drawn no later than 15 days after the date the tax was chargeable, usually (1) the date of supply of goods or services or (2) the date on which the advance payment is received, or no later than 15 days from the end of the calendar month in which the payment was received if it concerns the provision of reverse-charge service.

For intra-Community supplies and services supplied with a place of supply outside the Slovak Republic, the invoice must be drawn no later than 15 days from the end of the month in which the supply of goods or services took place. In cases of corrective invoices, the deadline of 15 days counts from the end of the calendar month in which the facts prompting the correction occurred.

An invoice issued by a member of a VAT group must mention identification details of the group member and the VAT number of the group.

It is necessary to hold a VAT invoice to support a claim for input tax deduction (with the excep tion of reverse-charge services received from abroad and purchases from abroad of reversecharge goods supplied with installation or assembly).

Credit notes. If the tax base is corrected as a result of a decrease or increase in the price, the cancellation of all or part of a supply or the return of the goods, the taxpayer must issue a cor rective invoice, credit note or debit note. Each document or notification correcting the original invoice should contain a reference to the serial number of the original invoice and the data subject to change. The corrective document (credit note/debit note) must contain the sequential number of the original invoice and all the other data that are being changed. A credit note can, for example, refer to invoice no. 100–130, but it cannot refer to a time period (e.g., invoices issued in October). There must be a specific reference to the invoice number(s), so global credit notes are not allowed to be issued. If the amount of VAT is subject to change on the credit note, there does not have to be any specific comment that the customer should repay it back to the treasury.

Electronic invoicing. Slovak VAT law permits electronic invoicing in line with EU Directive 2010/45/EU (see the chapter on the EU).

Electronic invoicing is allowed in the Slovak Republic, but not mandatory. The law allows the sending or accessing of invoices electronically, subject to approval by the recipient of services/ goods. An electronic format is not specifically determined, but any method chosen needs to pro vide for authenticity, legibility and integrity of the document content from its issuing until the end of the obligatory archiving period. Actual payment of an electronically issued invoice is interpreted as approval to its electronic issuance.

The electronic invoice must contain all the compulsory items as the paper invoice. Where electronic invoices are sent or made available to the same recipient in a batch, the details common to the individual invoices may be mentioned only once where, for each invoice, all the information is accessible.

Simplified VAT invoices. A document produced by an electronic cash register for goods and ser vices can serve as a simplified invoice only if the price of the goods or services, including VAT, does not exceed EUR1,000 for cash payments and EUR1,600 for noncash payments. Documentation does not need to be produced by the electronic cash register for supplies of goods or services worth EUR100 and less. A simplified invoice does not need to include the unit price and information on the recipient.

Self-billing. Self-billing is allowed in the Slovak Republic. Taxpayers may arrange for invoices to be issued by the customer (self-billing) or another person (third-party billing); such invoices must be issued in the name of and on behalf of the taxpayer supplying the goods or services.

Self-billing is subject to a written agreement on the issuance of invoices between the taxpayer and the customer (as per the Slovak VAT Act). An agreement needs to set out the conditions to be fulfilled for the supplier to accept invoices issued by the customer. The taxpayer who supplies the goods or services remains responsible for the accuracy of the information on the invoices and the timeliness of their issuance, even if an invoice is issued by a customer or via another person.

Proof of exports and intra-Community supplies. Goods exported outside the EU or supplied to a taxable person in another EU Member State are zero-rated for a taxpayer that sells upon meeting the conditions specified in the VAT legislation. A taxpayer that exports goods or supplies goods to other EU Member States is generally entitled to recover the related input tax.

To qualify as zero-rated, exports must prove by evidence confirming that goods were exported abroad. A taxpayer must substantiate the export of the goods with the transport document and:

• A certified electronic customs declaration, indicating the date, confirmed by the customs office, for the release of the goods into the customs regime of export with the confirmation of exit of the goods from the EU territory, with the VAT payer required to hold the electronic customs declaration.

• Other proofs, pursuant to a special regulation in case of customs declarations on exportation of goods is provided in verbal form, or an act regarded as customs declaration on exportation goods is performed.

To qualify for zero-rating, an intra-Community supply of goods must be supported by the follow ing documents:

• Copy of the invoice

• Proof of dispatch if transport is arranged by the supplier or customer through one of the autho rized postal service companies, or by a copy of a transportation document in which the receipt of goods in another EU Member State is confirmed by the customer or by a person empowered by the customer where the transport is arranged through a third party or, if such documentation unavailable, receipt of goods proven by alternative evidence

• If transport is arranged by the supplier or customer using their own means of transport, the sup plier’s documentation confirming receipt of the goods by the customer or by a person empow ered by the customer, which must include:

Identification of the customer, description of the supplied goods and their amount, place and date when the goods were taken over by the customer (if transport performed by the sup plier); place and date when transport was finished (if transport performed by the customer)

Name and surname of the driver providing the transport and the driver’s signature and the registration number of the vehicle used in the transport

• Other documentation, particularly the contract on delivery of the goods, delivery note, payment confirmation on the purchase of goods, confirmation of payment for transportation service

If the transport is arranged by the customer (or on his behalf), the taxpayer must have the docu ments under bullet two above (proof of dispatch, etc.) and bullet three (transport arranged by customer or supplier, etc.) available within six months after the end of the calendar month in which the supply of goods occurred (as per the Slovak VAT Act). If this is not met, the taxpayer shall apply output tax in the tax period in which the six-month period elapsed.

Foreign currency invoices. If the payment for a supply is requested in foreign currency, the total VAT must be converted into the domestic currency, which is the euro (EUR), using the exchange rate published by the European Central Bank on the date preceding the date of the tax point. Alternatively, the taxpayer can opt for a customs foreign exchange rate valid on the date of the tax point to be used over a calendar month. This option may not be revoked during the entire calendar year. For imports, the customs foreign-exchange rate rules apply.

Supplies to nontaxable persons. Under the Slovak VAT Act, a taxpayer is not obliged to issue an invoice for supply of goods and services in the Slovak Republic to a nontaxable person (B2C). An invoice must be issued for supplies to a legal person who is not a taxable person.

Transactions between related parties. If the supplier of the goods or services is supplying goods and services to a customer with a special relationship for a consideration lower than the free market value, and the customer (recipient) is not a VAT payer or is a VAT payer who is not entitled to full input tax deduction from these goods and services, the tax base is free market value.

The free-market value is the amount that the recipient would have to pay to acquire the goods or services in question at the same commercial stage as the supply of goods or services from an independent supplier of goods or services at the time of delivery under the conditions of fair competition.

If a comparable supply of goods or services cannot be identified, the free-market value is:

• On delivery of the goods, an amount that is not lower than the purchase price of the goods in question or similar goods and, if the purchase price does not exist, the costs of creating the goods at the time of delivery

• On delivery of the service, an amount not less than the cost of that service

The persons with a special relationship to the supplier are as follows: statutory body of the com pany, members of supervisory board, direct or indirect owners of the customer and its statutory bodies, employees, relatives, etc.

Records. The taxpayer is obligated to keep detailed records for each tax period on the supplied goods and services and received goods and services; separate records should be kept on delivery of goods and services to another Member State, on acquisition of goods from another Member State and on import of goods.

The records shall contain the information essential for correct computation of the tax. For the purpose of tax deduction, the taxpayer shall keep the records separately for the goods and services with the input tax deduction and for the goods and services with no input tax deduction and with partial input tax deduction. The taxpayer shall keep records also on any payments received prior to the delivery of goods and services and any payments provided prior to the deliv ery of goods and services. A member of a VAT group has to keep records on the delivery of the goods and provision of the services to another member of the group.

Separate records must be kept on:

• Supply of goods free of charge

• Temporary transfer of goods to another Member State

• Provision of services free of charge, private use of services

• Provision of services to the EU and outside of the EU, including those that are tax exempt

• Supply of goods with installation and assembly in the EU

• Goods transferred and received within call-off stock arrangements (including records on return of goods, replacement of the designated customer)

• Other records according to Section 70 of the Slovak VAT Act

All the above persons are required, when retaining invoices, to guarantee the authenticity of the origin, the integrity of the content and the legibility of invoices throughout the retention period. These documents must be retained for 10 years following the year in which the sale or purchase took place. Under Section 76 of the VAT Act, taxpayers are required to retain copies of invoices for a period of 10 years following the year to which they relate. Under Section 35 of the Accounting Act (Act No 431/2002), as amended, the retention period for documents is five years following the year to which they relate.

Following the EU Invoicing Directive, the Slovak VAT Act provides that tax documents in paper form and in electronic form have equal status. The Slovak VAT Act also stipulates the require ments for the invoice, whether in paper or in electronic form, which must be secured from the time of issue until the end of the period for retention of the invoice. These requirements are the authenticity of origin (assurance of the identity of the supplier or the issuer of the tax document), the integrity of content (content of the tax document was not altered) and the legibility of a tax document (it is possible to read the tax document directly or by using a technical device). The tax document may be converted from paper form into electronic form and vice versa for retention purposes.

In general, the documents relating to VAT must be kept in the Slovak Republic. However, a tax able person may ask the Ministry for interior affairs to allow the export of the records abroad for a certain period of time. A separate request must be filed on regular/annual basis.

Record retention period. Generally, an invoice should be archived for 10 years for VAT purposes. However, if the invoice pertains to certain capital goods, it should be archived until the end of the period for the adjustment of VAT deductions (e.g., 20 years for the adjustment of deducted input tax relating to immovable property).

Electronic archiving. The documents obtained in paper form can be kept and archived electronically under the presumption that the taxable person can ensure (by technical means) the

authenticity of the origin, the integrity of the content and the legibility during the whole archiving period. The documents obtained electronically can be archived only electronically. The taxable person that stores invoices and other documents by electronic means is obliged to enable the tax authority, for auditing purposes, to access, download and use such invoices, upon request.

I. Returns and payment

Periodic returns. The general tax period is a calendar month. In special cases, a period of a cal endar quarter may be applicable.

Slovak VAT returns must be submitted by the 25th day after the end of the tax period. The VAT returns (as well as other VAT filings, such as VAT ledger, EC sales listing) are filed electronically via e-portal of the Slovak tax authorities in XML format.

Periodic payments. Payment of VAT liability in full is due by the same date as the return submis sion deadline, i.e., by the 25th day after the end of the tax period.

The payment must be made via bank transfer to a specific unique IBAN number assigned to the taxable person with a specific variable symbol identifying the tax and the tax period. The dead line for the payment is met when the payment is debited from the bank account number of the taxable person on the due date.

Electronic filing. Electronic filing is mandatory in the Slovak Republic for all taxable persons. VAT returns and all documents for the tax authorities must be submitted electronically by VAT payers, using either advanced electronic signature or other means of electronic filing agreed with the tax authorities.

The taxpayer must complete its VAT return in the standard electronic form issued by the Ministry of Finance. All taxpayers are obliged to communicate only electronically with the Slovak tax authorities. In order to do so, the taxpayer should either use the advanced electronic signature or the taxpayer concludes an agreement on electronic filing with the Slovak tax authority in writing.

Payments on account. Payments on account are not required in the Slovak Republic.

Special schemes. Secondhand goods, works of art, collectors’ items and antiques. A special scheme is to be applied for every sale of works of art, collectors’ items, antiques and secondhand goods, which have been delivered to the trader in the territory of the European Union, if the goods have been acquired by it from:

• A person who is not identified for tax purposes in the Slovak Republic or in another Member State

• A person who is identified for tax in the Slovak Republic or in another Member State and the supply of goods has been exempt

• Another trader if it applies the special scheme in the Slovak Republic or in another Member State

The tax base is the positive difference between the selling price and the purchase price less the tax. Separate VAT records are to be kept for the transactions falling under the special scheme. VAT cannot be stated on the invoices (or any other document) when applying the special VAT scheme.

Input tax deduction is restricted when applying the special VAT scheme. If the trader opts for standard taxation when selling these products, input tax on the purchase (as well as import) may be deducted. The special scheme has to be applied for at least two successive calendar years.

The trader may also use a special scheme for the sale of:

• Works of art, collectors’ items and antiques imported from third countries

• Works of art supplied to them by the author of the work of art or their legal successor

C

The invoice issued by the trader applying the special scheme must contain following wording:

• “úprava zdaňovania prirážky – použitý tovar” – “adjustment of the surcharge taxation – secondhand goods”

• “úprava zdaňovania prirážky – umelecké diela” – “adjustment of the surcharge taxation – works of art”

• “úprava zdaňovania prirážky – zberateľské predmety a starožitnosti” – “adjustment of the surcharge taxation – collectors’ items and antiques”

Investment gold. The scheme is applied to gold in the form of bars or bricks and gold coins, both subject to certain specifications.

The supply of investment gold, the acquisition of investment gold from another Member State, the import of investment gold and other certain gold-related transactions specified within the Slovak VAT Act are exempt from VAT. Intermediation of a supply of investment gold in the name and on behalf of another person is exempt from tax.

A taxpayer who produces investment gold or converts gold into investment gold may opt to tax the supply of investment gold if supplied to another taxpayer. Intermediation of the supply of investment gold in the name and on behalf of another person may also be taxed if the taxpayer has decided to tax the supply of investment gold. The input tax deduction is subject to certain limitations for the taxpayer under this special scheme.

Travel agents. The range of entities required to apply the special scheme for travel agents includes those that procure goods and services for the purpose of a journey/travel from other taxable persons (“accommodation and travel services”) and those that act in their own name toward custom ers, whether they are taxable or nontaxable persons.

The special scheme for travel agents does not apply only to travel agencies and travel agents in the traditional sense, but to all taxpayers who procure travel services, such as accommodation and transport, in their own name. The taxpayers applying the special VAT scheme for travel agents should follow all specific rules stipulated by the Slovak legislation for this special scheme (e.g., the taxpayers applying the special scheme should not deduct input tax from the acquired goods and services linked to the accommodation and travel services, the recipients of these ser vices should not be able to deduct the input tax from purchased accommodation and travel ser vices; since the issued invoices for the accommodation and travel services will not show any VAT, the taxpayers should track and keep separate VAT records with respect to the special scheme).

Cash accounting. The cash accounting scheme is available only to domestic taxpayers, who must meet the following criteria:

• The taxpayer’s annual turnover did not exceed EUR100,000

• The taxpayer is not in bankruptcy and has not entered into liquidation

Under the cash accounting scheme, the chargeable event (tax point) is only after the receipt of payment for the goods or services supplied and for the amount received from the customer. As it regards the assigned receivables, the tax point of such receivables should be the day of their assignment. General tax point rules do not apply in such a case. The same applies on the input tax deduction right, which arises only after payment of an invoice (if paid partially, only on the amount of payment).

The invoice issued by a taxpayer who has opted for the scheme should include the legible state ment “cash accounting scheme.” If this information is not stated on the invoice, the VAT liability arises in accordance with standard rules for the determination of the tax point under the Slovak VAT Act. A customer of a taxpayer running the scheme has the right to deduct input tax on the day of payment for the supply (up to the paid amount).

The list of taxpayers who have opted for the cash accounting scheme will be maintained and published on the webpage of the Financial Directorate of the Slovak Republic.

Taxpayers may voluntarily quit the cash accounting scheme only at the end of the respective calendar year; however, if they exceed the turnover of EUR100,000, if they become a member of a VAT group, or if their business ceases to exist, they are required to quit the scheme as of the following VAT period.

Annual returns. Annual returns are not required in the Slovak Republic.

Supplementary filings. VAT ledger. Taxpayers are obliged to submit a detailed VAT ledger report as a separate filing along with the VAT return. The obligation arises for each VAT period, except when zero returns are filed or for re-exports of imported goods. The report should include the information for every invoice received or issued by the taxpayer, including corrective invoices and down-payment invoices, but excluding invoices for exports, zero-rated and exempt supplies. Simplified invoices are to be reported in aggregate values for the tax period. The exception applies only to simplified invoices received by the taxpayer if the total amount of deductible VAT from these invoices exceeds a threshold of EUR3,000 for a tax period. Such documents have to be reported in the VAT ledger separately and not in an aggregate amount. Information will need to be compiled by the taxpayer electronically and filed by means of the electronic filing portal provided by the Slovak Financial Directorate.

The deadline for submission of the VAT ledger is 25 days after the end of the relevant tax period. The deadline is not tied to the date of the VAT return filing.

Bank account reporting. From 15 November 2021, a new reporting obligation is required in the Slovak Republic. VAT payers registered as of 15 November 2021 will be obliged to register each of their own bank accounts held in a domestic or foreign bank, which they use for business activities within the scope of the Slovak VAT, with the Financial Directorate, no later than 30 November 2021. It will also be necessary to disclose to the tax authorities any changes to bank accounts, for example, details of a new bank account should be notified before it is used for business purposes. In the case of not fulfilling the reporting obligation, the VAT payers can be imposed a penalty of up to EUR10,000. The VAT payers, who, for example, use cash-pooling, may register a bank account owned by another person. However, it will also be necessary to identify the actual owner who will be then jointly and severally liable for the VAT stated on the invoice. The notification of the bank account will be submitted electronically via special form, which should be available on the web portal of the Financial Administration and already prefilled for registered VAT payers.

The list of registered VAT payers’ accounts will be published and updated on the website of the Finance Directorate. These registered bank accounts will further be used to mitigate the risk of a VAT payer (as a customer) being held liable for the VAT unpaid by its supplier. If the consider ation for the supply of goods/services, where the VAT payer claims the input tax deduction is paid on a bank account of the supplier, which is different from the one(s) announced to the Slovak tax authorities (and published on the official list of bank accounts), the VAT payer can be held liable for the unpaid VAT on a previous level in the transaction chain.

Note that at the time of preparing this chapter, the new reporting obligation is a proposed amend ment to the Slovak VAT Act and has not yet been approved.

Intrastat. A Slovak taxable person that trades with other EU Member States must complete statistical reports, known as Intrastat, if the value of goods dispatched or received exceeds the exemption thresholds. Separate reports are required for intra-Community acquisitions (Intrastat Arrivals) and for intra-Community supplies (Intrastat Dispatches).

Intrastat information is reported each calendar month (the reference period). Each report must be submitted to the local customs authority by the 15th day of the month following the reference period.

The threshold for Intrastat Arrivals for 2021 is EUR200,000. The threshold for Intrastat Dispatches for 2021 is EUR400,000. The thresholds for both Intrastat Arrivals and Dispatches for 2022 are due to increase to EUR2 million. However, at the time of preparing this chapter, this change has not yet been confirmed. If a taxpayer’s turnover for the preceding calendar year did not exceed these thresholds, it was not required to submit an Intrastat report. If the threshold is exceeded, the taxpayer is required to submit Intrastat declarations (so-called complete declarations).

If the taxpayer does not exceed the exemption threshold or if the entity is not a Slovak taxpayer, it is not required to report the intra-Community movement of goods using Intrastat. Eligible taxpayers are required to complete and submit Intrastat declarations, including for those months in which zero movements of goods occur. Intrastat returns must be filed in EUR.

EU Sales Lists. A Slovak taxpayer must submit an EU Sales List (ESL) reporting the following transactions:

• Intra-Community supplies of goods

• Exempt transfers of goods to other EU Member States (see the chapter on the EU)

• Supplies of goods within a triangular transaction if the taxpayer acts as first customer

• Supplies of services with the place of supply in another EU Member State to a taxable person or an entity that is not a taxable person but is identified for VAT, for which the recipient is liable to pay the VAT

• Transfer of goods within call-off stock arrangements, including the case of the change of the recipient of the goods and return of the goods

Services exempt from VAT are not reported in ESLs. ESLs must be submitted on a monthly basis by the 25th day following the end of the respective calendar month. If the value of goods supplied during the calendar quarter does not exceed EUR50,000 and if the value of goods supplied dur ing the preceding four calendar quarters did not exceed EUR50,000, the taxpayer can file quarterly ESLs instead of monthly ESLs by the 25th day following the end of the calendar quarter.

The Slovak law requires submission of the ESLs via electronic means.

Correcting errors in previous returns. When the taxpayer finds out the tax shall be higher, or the input tax shall be lower than stated in the filed tax return, it is obliged to file a supplementary tax return by the end of the month following the month of finding out the discrepancies. The increased tax shall be due within the same deadline. The taxpayer is obliged to file the supplementary tax return if it does not contain correct data concerning the performed and received taxable transactions for the relevant tax period.

The taxpayer may file a supplementary tax return if it finds out that tax should be lower, or the input tax should be higher than reported. Filing of the supplementary VAT return is made elec tronically in a way of voluntary disclosure made by taxpayer.

If the filed VAT ledger of EC Sales List contained any errors, the taxpayer is obligated to file supplementary filings as well.

Digital tax administration. Electronic cash register (eKasa). During the first half of 2019, the amend ment of the Act on use of electronic cash registers introduced the requirement for all cash registers in the Slovak Republic to have a direct online connection to the Slovak Financial Directorate (the system called “eKasa”). With the introduction of eKasa, the hardware is no longer relevant for the use and storage of the information as all information is sent automatically directly to the tax authorities. The amendment also introduces the abolishment of the obligation to print bills in case the bill can be send to the customer via email (upon its agreement).

Real-time invoicing. The Slovak tax authorities recently published a preliminary intention to start legislative proceedings toward enacting so-called “live invoice data reporting.” Based on the information available from the document published by the tax authorities, they intend to impose the following obligations on Slovak businesses, including those not registered for VAT:

• Issuing invoices within a certain time period after the business transaction occurs (other than transactions where cash register bills are issued)

• Reporting the selected invoice data to the tax authorities prior to issuing the invoice online

• The same reporting duty will be imposed symmetrically on the side of the invoice recipient

Reporting will be done electronically through the state-certified communication component, which could be part of the taxpayer’s ERP system (accounting software) or by using a free online government application.

The aim is to provide the tax authorities with a real-time overview of transactions as they are performed by businesses, with the ultimate purpose of fighting and responding more readily to any potentially fraudulent behavior and decreasing the Slovak VAT gap. This initiative may involve simplification of current administrative duties to neutralize the administrative impact of the new measure on businesses (potentially involving simplifying the VAT ledger or abandoning the VAT ledger completely, as the VAT ledger reporting has been evaluated as insufficient to fight fraud). The legislation is due to take effect from 1 January 2023 at the earliest.

Note that at the time of preparing this chapter, the new reporting obligation is a proposed amendment to the Slovak VAT Act and has not yet been approved.

J. Penalties

Penalties for late registration. The penalty for nonfulfillment of a registration obligation can range from EUR60 to EUR20,000. In principle, the Slovak VAT legislation does not allow a retroactive registration of a taxable person. However, a mechanism is in place for reconciling VAT in the event of a late VAT registration. A domestic or non-established person that failed to register for Slovak VAT is able to reconcile their VAT obligations retrospectively in a single VAT return filed for the period before the late VAT registration, covering all transactions in the period during which it should have been registered.

Penalties for late payment and filings. The penalties for noncompliance with the reporting require ments range from EUR30 to EUR3,000. The penalty for the late submission of a tax return (after the statutory deadline) ranges from EUR30 to EUR16,000. If the taxpayer does not submit the tax return by the deadline stipulated by the tax authorities in an appeal, the penalty for late filing ranges from EUR60 to EUR32,000. If the taxpayer commits more than one offense, the tax authority will levy only one aggregate penalty for the offense that has the highest upper limit.

Interest on late payment applies in the following circumstances:

• The VAT liability is not paid before or at the deadline

• The proper amount of the VAT liability or the amount stipulated in a decision of the tax authorities has not been paid

The rate of interest on late payment is calculated as the higher of the annual interest rate of 15% or four times the basic interest rate of the European Central Bank.

For Intrastat, a penalty may be imposed for late submission or for missing or inaccurate declara tions, up to EUR3,320.

For ESLs, if a taxpayer fails to submit an ESL within the statutory deadline, a penalty for non compliance with non-monetary obligations ranging from EUR60 to EUR3,000 applies. In the event of a failure to submit an ESL after receiving a request from the tax authorities, the penalty may be imposed repeatedly. Because the amount of the penalty for noncompliance with nonmonetary obligations depends on the severity, duration and consequences of the breach of obliga tions, the penalty for failing to submit the ESL should generally fall in the lower third of the range.

Penalties for errors. A penalty is imposed if the VAT liability or excess VAT refund declared by the taxpayer in the tax return is different from the amount assessed by the tax authorities. This penalty amounts to 10% per annum or three times the base interest rate of the European Central Bank per annum (whichever is higher). The penalty is calculated on the difference between the value declared in the tax return and VAT assessed by the tax authorities.

An option to submit a supplementary tax return within 15 days of the beginning of the tax audit is allowed. This offers taxpayers the possibility of decreasing the imposed penalty, compared to tax audit determination of the tax assessment to 7% per annum or twice the base interest rate of the European Central Bank per annum (whichever is higher).

If the difference is declared by the taxpayer in a supplementary VAT return, the penalty is calcu lated at 3% per annum or the basic interest rate of the European Central Bank per annum, which ever is higher.

Failure to notify the tax authorities, or late notification regarding changes to a taxable person’s VAT registration details, a penalty for noncompliance ranges from EUR30 to EUR3,000. The actual amount of the penalty levied is at the discretion of the tax administrator. For further details, see the subsection above, Changes to VAT registration details.

Penalties for fraud. Intentional tax evasion (including unlawfully applying for repayment of VAT) may be regarded as a criminal offense, resulting in fines or imprisonment for a term of up to 12 years, depending on the amount of tax evaded and the nature of conduct. Similarly, hindering the tax administration (e.g., submission to the tax authorities of documents that give false or misleading information, failure to comply with a statutory obligation or obligations imposed by the tax authority during a tax audit) may be regarded as a criminal offense, resulting in imprisonment for a term of up to eight years.

The above conduct may give rise to the criminal liability of natural persons (including company directors or other personnel), as well as criminal liability of the company involved (as a legal entity). The Ministry of Finance publishes a list of taxpayers’ names on its website detailing amounts of unpaid tax. The list contains taxpayers’ tax identification numbers and the amount of tax due in descending order.

Personal liability for company officers. Tax criminal offenses under the Slovak Criminal Code require intentional conduct or omission. Under certain circumstances, company directors (or other personnel) can be held personally liable for including incorrect data in VAT declarations and reporting. Potential penalties include imprisonment (as outlined above), monetary penalties and other sanctions under the Slovak Criminal Code.

Statute of limitations. The statute of limitations in the Slovak Republic is five years. Tax author ities can open tax audits and also impose penalties within five years from the end of the year in which the taxpayer was obliged to submit the VAT return, or in which the taxpayer was obliged to pay the tax. However, if there was any tax audit opened within the period of five years that resulted in paying additional tax, the period is calculated again from the end of the year from which the VAT payer obtained the decision about this act. The period can be extended to a max imum of 10 years.