In the wake of a number of major crises in recent decades and inadequate budgetary policies, the Slovak government has decided to present around a hundred measures to provide a responsible and effective fiscal response to the increase in public debt (which has doubled in 20 years). This restructuring will be based on a number of levers, in particular a reduction in public operating expenditure and an increase in government revenue via indirect taxes. To this end, an amendment to law no.222/2004 coll. on VAT has been proposed, the main consequences of which will be as follows:
- Special scheme for small businesses: introduction of national thresholds of €50K annual national turnover and €100K annual EU turnover, below which taxable persons will be issued with a special VAT number (ending with EX) enabling them to supply goods & services throughout the EU on a tax-exempt basis. The scheme will also apply to foreign companies;
- Introduction of the reverse charge system for import VAT from July 2024, provided that the company is registered for SK VAT and holds AEO approval in accordance with customs legislation, thereby avoiding a cash outflow;
- Transposition of the amending directive defining the place of supply of services for certain activities supplied electronically to non-taxable customers (2022/542 article 1 points 1 and 2) from 1 January 2025;
- Reclassification of leasing contracts with exercise of the purchase option as deliveries of goods from July 2024 where exercise of the purchase option is the only economically rational choice when the leasing contract is entered into;
- A foreign taxable person without a permanent establishment in Slovakia would become a taxpayer by carrying out a taxable transaction subject to tax in Slovakia. The tax authorities will provide him with a Slovak VAT number immediately and obligatorily following his request;
- If a taxable person applies late for VAT registration, they will be required to submit individual tax returns and control statements for each month of the period for which they should have been registered, rather than a single return covering all transactions. Each return will give rise to a right to deduct VAT, but penalties may be imposed;
- The obligation to refund VAT deducted on theft will be extended to all fraudulent acquisitions;
- Etc.
In view of the legislative process, the period of application of these measures will be around July 2024, with the exception of the special regime applicable to small businesses, which is scheduled for January 2025.
- An increase of 2 percentage points in the standard rate of VAT on goods and services from 20% to 22%;
- Abolition of reduced VAT rate on foodstuffs, accommodation, books, music and newspapers.
If you would like to be kept informed of developments in this bill and its impact on your tax obligations in Slovakia, please contact our tax experts.
Source: slov-lex.sk (in Slovak)
