Global

Details

  • Service: Tax, Global Indirect Tax
  • Type: Regulatory update
  • Date: 6/1/2013

Slovakia: VAT essentials 

Essential information regarding VAT as it applies in Slovakia.


Scope and Rates

What supplies are liable to VAT?


VAT is due on any supply of goods or services made in Slovakia, where it is a taxable supply made by a taxable person acting as such in the course or furtherance of a business carried on by said person. Supply includes all forms of supply. It is not restricted to the provision of goods and services by way of sale but can equally apply to other forms of transaction.


Supply also includes supplies of goods without consideration, supplies for private consumption or consumption by employees, supplies other than for business purposes, promotional items of unit value greater than EUR 16.60, and the transfer of own assets to another European Union (EU) Member State. Supplies of business samples for propagation are not considered to be supply.


What is the standard rate of VAT?


The standard rate of VAT is 20 percent.


Are there any reduced rates, zero rates, or exemptions?


There is a reduced rate of VAT amounting to 10 percent. This rate is applicable to certain pharmaceuticals and healthcare products and to books.


There is an extensive list of zero rated supplies (VAT exempt with entitlement for input VAT deduction), including:


  • exports
  • international transportation
  • sale of goods, upon purchase of which VAT could not have been recovered.

The list of exempt supplies includes:


  • postal services
  • health and welfare
  • education and training
  • services provided for Members
  • services related to sport
  • culture
  • collection of funds
  • radio and television broadcasting
  • financial services
  • insurance services
  • sale/rent of land and real estate
  • sale of postal valuables and stamps
  • lotteries, betting and other games of chance.

Note: it is not possible to recover VAT incurred in making exempt supplies.


What are the other local indirect taxes beside VAT?


Excise taxes on beer, wine, alcohol, tobacco and tobacco products, mineral oil, electricity, coal and natural gas.

top

Registration

Who is required to register for Slovak VAT?


Slovak Entities


If a business established in Slovakia makes taxable supplies in Slovakia over the VAT registration threshold of EUR 49,790, it will be required to register and account for Slovak VAT. If the trade is below the registration threshold, the person can still choose to register for VAT on a voluntary basis.


Non-Slovak Entities


If a taxable person not established in Slovakia commences economic activities that are subject to tax in Slovakia, it is required to register and account for VAT with the Tax Office Bratislava prior to commencement of such activities. However, this does not apply in certain situations, e.g. if the taxable person supplies only services or goods with installation or assembly and the customer is a person liable to pay tax for these supplies.


If a taxable person is established outside Slovakia and sells and delivers goods from another EU Member State to customers (non-taxable persons) in Slovakia (distance sale), where the value of those sales exceeds a threshold of EUR 35,000, the taxable person is required to register and account for VAT in Slovakia.


If a taxable person is established outside the EU and supplies electronically services to customers in the Slovak Republic who are not taxable persons, then the place of supply is in principle in the Slovak Republic. It will then have to register for Slovak VAT.


Are there penalties for not registering or late registration?


Failure to register for VAT purposes may result in a penalty of up to EUR 20,000.


Is voluntary VAT registration possible for an overseas company?


Voluntary VAT registration of non-established persons is not stipulated by the Slovak VAT Act. However, the VAT Act stipulates that a foreign company is obliged to register for VAT purposes before starting any activity which is subject to Slovak VAT (with certain exceptions). Therefore, we are of the opinion that a company can register for VAT purposes voluntarily in view of its future taxable activities in Slovakia.


Are there any simplifications that could avoid the need for an overseas company to register for VAT?


If a foreign business makes supplies of goods or services in Slovakia, then it is required to register and account for Slovak VAT. However, it is possible to avoid registering and accounting for Slovak VAT when making certain supplies.


In the following examples the obligation to account for VAT due is shifted to a customer provided that the customer is registered for VAT in Slovakia.


Triangulation


If an intermediate supplier supplies goods to a Slovak buyer of goods which he purchases from a business in an EU Member State other than his own and the goods are delivered from there to Slovakia, VAT due can be accounted for by the Slovak customer if certain conditions are met.


Call-off Stock


Simplification procedures have been introduced with effect from 1 January 2005.


Supply and Install


If a person supplies goods and installs or assembles them in the Slovak Republic, the customer (if established in Slovakia) should account for any VAT due, in effect, as an acquisition. The supplier can avoid VAT registration in Slovakia if he is not otherwise required to register in the Slovak Republic.


Reverse Charge Services


These services are covered in more detail in section of International Supplies of Goods and Services. These provisions are subject to particular requirements and so one should check carefully whether complies with them.


Does an overseas company need to appoint a fiscal representative?


General representation is possible and common in Slovakia as regards foreign companies mainly due to local legislation specifics and language barrier.


Specific VAT representative where transactions made by one taxable person are reported by a representative only exists with respect to imports of goods from non-EU countries for direct dispatch or transport to another EU Member State in order to apply for VAT exemption.

top

VAT grouping

Is VAT grouping possible?


Yes. VAT grouping is allowed in Slovakia with effect from 1 January 2010. A VAT group is defined as a group of taxable persons with the seat, place of business or establishment in the territory of Slovakia which are connected financially, economically and organizationally. Members of a VAT group act as one taxable person under one assigned VAT ID number.


Further, a kind of VAT "grouping" is possible in a specific case of a consortium performing its activity on a basis of a cooperation agreement.


Can an overseas company be included in a VAT group?


No. As mentioned above, VAT grouping is allowed for taxable persons with the seat, place of business or establishment in the territory of Slovakia. A Slovak fixed establishment of a taxable person established outside Slovakia can in principle be included in the VAT group.

top

Returns

How frequently are VAT returns submitted?


VAT payers are required to submit VAT returns on a monthly basis. However, taxpayers who are VAT registered for at least 12 calendar months and whose turnover for 12 preceding calendar months did not exceed EUR 100,000 may submit VAT returns on a quarterly basis.


A penalty for failing to submit the VAT return on time amounts to a minimum of EUR 30 and a maximum of EUR 16,000.


If VAT return is not filed even after formal request of the Tax Authorities, a penalty of up to EUR 32,000 may be imposed. A minimum penalty is EUR 60.


Are there any other returns that need to be submitted?


European Sales List (Recapitulative Statements)


If VAT payer supplies goods which are shipped from Slovakia to a VAT registered businesses in another EU Member State and the supply is zero rated (see section "International Supplies of Goods and Services") / transfers his own goods between Slovakia and another EU member state / acts as an intermediary in a triangular transaction between VAT registered traders in other EU Member States or supplies services with the place of taxable supply in another EU Member State under the "general B2B" rule, he is required to complete Recapitulative Statement.


Recapitulative Statement is to be completed by electronic means on a calendar quarter/monthly basis. The period (month/quarter) depends on the volume of supplied goods in previous periods.


Intrastat Declarations


VAT payers with a value of dispatches or arrivals of goods to or from another EU Member State, which exceed the threshold (EUR 200,000 for arrivals or EUR 400,000 for dispatches per calendar year - thresholds valid for the year 2013) must complete a standard form of declaration each month.


Penalties are stipulated by the Act on State Statistics and can amount up to EUR 3,320.


If a business receives a purchase invoice in foreign currency, which exchange rate should be used for VAT reporting purposes? (e.g. central bank’s exchange rate applicable on the date of the invoice)


Where the payment on supply of goods, services or acquisition of goods within Slovakia from another EU Member State is requested in a foreign currency (other than EUR), it should be converted, for the purposes of determining the taxable amount, to EUR.


For the conversion, a reference exchange rate determined and announced by the European Central Bank (or by the National Bank of Slovakia for certain exchange rates) on the day preceding the tax point date should be used.


Alternatively a monthly exchange rate according to customs regulations valid at the tax point date, can be used; this should be announced to the Tax Authorities in writing prior to its first utilization and the use of the monthly customs foreign exchange rate should be binding during the whole calendar year.

top

VAT recovery

Can a business recover VAT if it is not registered?


Yes.


If a company is established in another EU Member State then it can submit an electronic claim under EU Directive 2008/9/EC. A non-EU business can recover the VAT under the principles of the 13th EU VAT Directive.


Under both of these provisions there are strict time limits for making claims. Claims must be submitted within 6 months following the end of the calendar year in which the VAT was charged or paid for non-EU business and within 9 months for EU business. Alternatively, for EU business a shorter period is allowed if at least 3 calendar months are involved and VAT incurred during this period amounts to at least EUR 400. The Tax Authorities should make their decision on whether the claim is to be paid for EU business within 4 months of receipt of the application / should additional information be requested, up to 8 months and for non-EU business within 6 months.


The form for refund of VAT for non-EU foreign entities can be accessed on the website of Financial Directorate of the Slovak Republic (vzor žiadosti o vrátenie DPH zahraničnej osobe).


The EU business should file the VAT refund request via electronic means with the tax authorities in its home country.


Does your country apply reciprocity rules for reclaims submitted by non-established businesses?


Yes. To VAT payers established outside the EU the reciprocity rule applies with respect to the VAT refund on goods / services purchased including Slovak VAT.


In the Slovak Republic, under the reciprocity principle, VAT is fully refunded to traders established in Norway, Switzerland, Liechtenstein, Canada, Japan and Bosnia and Herzegovina and partially in Croatia, Turkey, Serbia and Armenia.


Are there any items that businesses cannot recover VAT on?


Yes. There are certain items that businesses cannot recover VAT on. For example:


  • business entertainment: VAT is generally not recoverable on the purchase of goods and services for the purposes of business and staff entertainment and amusement
  • VAT from invoices received on behalf of another taxpayer

In general

  • non-business (including private) activities
  • exempt supplies with no entitlement to recover input VAT: where VAT relates to both taxable and exempt supplies, an apportionment is needed (see section Scope and Rates)
  • special schemes - Tour Operators' Margin Scheme, Margin schemes for second hand goods.

top

International Supplies of Goods and Services

How are exports of goods and services treated?


Goods


Sale of goods to a customer who is registered for VAT in another EU Member State and the sale involves the dispatch/transport of those goods from Slovakia (either by the supplier or the customer) to another EU Member State, then this can be VAT exempt as an intra-EU dispatch. The supplier must obtain his customer's VAT number and quote it on his invoice. He should also obtain evidence of the goods' removal from Slovakia/confirmation of the receipt of the goods by the customer (if the transportation of the goods is arranged for by the supplier/customer)..


Sale of goods to a customer who is not registered for VAT in another EU Member State, is not VAT exempt and should bear Slovak VAT. If such sales of the goods dispatched or transported by the supplier or on his account exceed a certain threshold for that Member State, he may have to register in the Member State under what is known as the Distance Selling Scheme.


Export of goods to a customer (business or private) outside of the EU is exempt from VAT but, as for intra community sales, the supplier should make sure that he keeps proof of dispatch/delivery (customs declaration proving export from the EU territory and document on transportation) to support the VAT exemption.


Services

The following services have the place of supply outside Slovakia and thus do not fall under Slovak VAT:


  • general business-to-business (B2B) services supplied to a taxable person not established in Slovakia

Exceptions (B2B and B2C):


  • services connected with immovable property – if the immovable property is located outside Slovakia
  • short-term hiring of a means of transport – if the means of transport were actually put at the disposal outside Slovakia
  • admission to cultural, artistic, sporting, scientific, educational, entertainment (and similar) services – if this event took place outside Slovakia
  • supply of passenger transport service – if the transportation took place outside Slovakia (also partly)
  • restaurant or catering services - if these were provided on board during passenger transportation within the EU (and the transportation started outside Slovakia), if not on board, if these were provided outside Slovakia.

Exceptions (B2C):


  • hiring of a means of transport other than the short-term hiring – if the place of seat, domicile or habitual residence of the recipient is outside Slovakia
  • hiring of a pleasure boat – if the place where the pleasure boat is physically handed over to the customer is outside Slovakia, provided that the supplier has its seat or establishment at that place
  • cultural, artistic, sporting, scientific, educational, entertainment (and similar) services – if these took place outside Slovakia
  • transport of goods between EU Member States - if the place of departure of the transport of goods is outside Slovakia
  • transport of goods, other than above - if the transport takes place outside Slovakia;
  • ancillary transport services, such as loading, unloading, handling and similar activities, and services consisting of the valuations of and work on movable tangible property - if such services are physically carried out outside Slovakia
  • service consisting of the mediation of goods or services by a person acting in the name and for the account of another person - if the place of supply or acquisition of goods or services that are subject to mediation is outside Slovakia

Below listed services, including the adoption of an obligation to refrain from their pursuit or exercise, in whole or in part – are taxable at the place of the recipient if the later has a seat, domicile or habitual residence outside the EU:


  • transfers and assignments of copyrights, patents, licenses, trademarks, and similar rights
  • advertizing services
  • services of consultants, engineers, technicians, lawyers, accountants, auditors, translators, interpreters, and other similar services, as well as data processing and the supplying of information
  • banking, financial, and insurance transactions including reinsurance, excluding lease of safe-deposit boxes
  • the supply of staff
  • the hiring out of movable tangible property with the exception of all means of transport and wagons and carriers
  • granting of access to a natural gas system located in the territory of the EU, to a network connected to such a system, an electricity grid, heating networks, cooling networks, transport or distribution by means of the above systems or networks and the supply of other directly related services
  • telecommunication services
  • radio and television broadcasting services
  • electronically supplied services

How are goods dealt with on importation?


When goods are imported into Slovakia from outside the EU, import VAT and customs duty may be due. In general, this has to be paid or secured before the goods will be released from Customs' control.


How are services which are brought in from abroad treated for VAT purposes?


If a company buys certain services from outside Slovakia, it will be required to apply Slovak VAT via a reverse charge mechanism.


Under the reverse charge mechanism the recipient is required to account for a notional amount of VAT as output tax on its VAT return covering the period in which the service was supplied and it recovers this VAT as input tax on the same return provided it maintains a record of the VAT relating to the acquisition of the reverse-chargeable service.


If the company is able to recover all of its VAT, the reverse charge has no cost effect and is a VAT compliance matter only. However, if it is partly exempt, there is likely to be a VAT cost depending on the level of recovery allowed under the partial exemption method.


The reverse charge applies to general B2B services purchased by taxable person established in Slovakia from non-Slovak-established suppliers.


Moreover, the following supplies performed by non-Slovak-established suppliers in Slovakia are subject to the reverse charge in Slovakia if the customer is a taxable person having the seat, place of business, fixed establishment or residency in Slovakia:


  • services connected with immovable property – if the immovable property is located in Slovakia
  • • short-term hiring of a means of transport – if the means of transport were actually put at the disposal in Slovakia
  • admission to cultural, artistic, sporting, scientific, educational, entertainment (and similar) services – if this event took place in Slovakia
  • supply of passenger transport service – if the transportation took place in Slovakia (also partly),
  • restaurant or catering services - if these were provided on board during passenger transportation within the EU (and the transportation started in Slovakia), if not on board, if these were provided in Slovakia.

top

Invoices

Is a business required to issue tax invoices?


A VAT payer is obliged to issue an invoice in respect of a:


  • supply of goods or services with the place of supply in Slovakia to another taxable person or to a legal entity that is not a taxable person
  • supply of goods or services with the place of supply in another EU Member State where the person liable to pay the tax is the recipient of the goods or services, even if the supply of goods and services is exempt from VAT
  • supply of goods or services to a taxable person with the place of supply outside the EU
  • supply of goods via distance sale with the place of supply in Slovakia
  • intra-community supply of goods exempt from VAT
  • receipt of payment prior to the supply of goods (except for intra-community supply of goods)
  • receipt of payment prior to the supply of services.

What do businesses have to show on a tax invoice?


A tax invoice should contain the following data:


  • the name, address, and VAT number of the supplier, under which the supply was made,
  • the name, address, and VAT number of the customer, under which the supply was received,
  • a serial invoice number
  • an amount and type of the goods or scope and nature of services supplied
  • the date of issue of the invoice
  • the date of the supply or receipt of payment, if it is possible to identify this date and if it differs from the date of issue of the invoice
  • the tax base for each VAT rate, unit price without VAT and discounts not included in the unit price
  • the rate of VAT used or information on exemption (if applicable)
  • the amount of VAT in EUR (except for Margin scheme applied to second hand goods)
  • the following statement “vyhotovenie faktúry odberateľom” if the invoice is issued by the recipient of the goods or services
  • the following statement “prenesenie daňovej povinnosti” if the person liable to pay VAT is the recipient of the goods or services
  • characteristics of the new means of transport
  • the following statement “úprava zdaňovania prirážky – cestovné kancelárie“ should the Margin scheme for travel agents be applied
  • the following statement “úprava zdaňovania prirážky – použitý tovar”, “úprava zdaňovania prirážky – umelecké diela” or “úprava zdaňovania prirážky – zberateľské predmety a starožitnosti” should the Margin scheme for second hand goods be applied.

Can businesses issue invoices electronically?


Yes, provided the taxpayer agrees to do so with his customer. Pursuant to the Slovak VAT Act , an electronic invoice is an invoice that contains the prescribed data and has been issued and received in any electronic format.


Is it possible to operate self-billing?


Yes.


Can a business issue VAT invoices denominated in a foreign currency?


Yes, an invoice may be issued in a foreign currency; however, should this relate to domestic (Slovak) sale of goods or services, also the amount of VAT in EUR must be stated in the invoice.

top

Transfers of Business

Is there a relief from VAT for the sale of a business as a going concern?


Yes, the transfer of a business/part of business as a going concern and contribution in kind of business/part of business are not taxable provided that the purchaser is registered for VAT and other conditions are met. Please note; however, that there are certain exceptions.

top

Options to Tax

Are there any options to tax transactions?


There is an option to tax the sale and rent of immovable property.


Generally, the sale of a building or part of a building is exempt from VAT after expiration of five years from the date of the final inspection of the real estate on the basis of which the property is put to use or from the date of the first use of the building. However, a VAT payer may opt to tax the sale. Rent of real estate is generally exempt; however, the lessor may opt to tax the property if the lessee is a taxable person.

top

Head Office and Branch transactions

How are transactions between head office and branch treated?


Supply of goods between a head office and a branch located in different EU Member States are treated as supplies between two independent VAT payers for Slovak VAT purposes. Supply of services between the head office and the branch are out of the scope of VAT.

top

Bad Debt

Are businesses able to claim relief for bad debts?


There are no provisions for VAT relief from bad debts in Slovak legislation.

top

Anti-Avoidance

Is there a general anti-avoidance provision under VAT law?


The general anti-avoidance rule of substance over form applies.


Further, the Slovak VAT Act contains provisions which stipulate that should the sale of goods / services to persons having close relation to the VAT payer be performed for the consideration which is lower than the open market value and the recipient of the supply is not a VAT payer or is a VAT payer who does not have a full right for input VAT deduction in respect of such goods or services, the open market value rather than the selling price should be treated as the VAT base.


Moreover, the Slovak VAT Act contains provisions as regards joint liability for VAT on the part of a customer in cases where the supplier has failed to pay the VAT. The customer will be liable for the VAT unpaid by the supplier if the customer knew or ought to or could have known based on sufficient reasons that the VAT in question will not be paid by the supplier. These are the cases where:


  • consideration for the supply is too high or too low without any economic grounds to support this, or
  • the customer continued to do business with the supplier after the supplier was included in the list of „unreliable“ VAT payers (taxable persons who repeatedly failed to comply with administrative obligations, such as filing of VAT returns, payment of VAT, obligations in relation to tax audits, or were unavailable at the address of their seat or establishment) maintained by the Slovak Financial Directorate in its web portal, or
  • at the time the VAT liability arose the supplier and the customer were personally connected via either a statutory body position or ownership ties.

top

Penalty Regime

What is the penalty and interest regime like?


Failure to register or late VAT registration, late or underpayment of VAT, late filing of VAT returns or late payment of VAT

top

Tax authorities

Tax audits


How often do tax audits take place?


Not specified by legislation.


Are there audits done electronically in your country (e-audit)? If so, what system is in use?


Yes, however not as a rule.


Advance rulings and decisions from the tax authority


Is it possible to apply for formal or informal advance rulings from the (indirect) tax authority?


Yes.


Are rulings and decisions issued by the tax authorities publicly available in your country?


No.

top

Miscellaneous

In your country, are there unique specific indirect tax rules (regimes) that differ from standard indirect tax rules in other jurisdictions?


No.


Are there indirect tax incentives available in your country (e.g. reduced rates, tax holidays)?


No.

 

Share this

Share this

Meet the team

KPMG’s Global Indirect Tax team members are based around the world.

Country VAT/GST essentials