VAT, GST and Sales Tax in Slovakia

Summary

Name of the tax Value-added tax (VAT)
Local name Daň z pridanej hodnoty (DPIT)
Date introduced 1-Jan-93
Trading bloc membership European Union (EU) Member State
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
VAT return periods Monthly (Quarterly period may be requested by some taxpayers with turnover below EUR100,000)
Thresholds
Registration For non-established persons, registration required before taxable activity commences. For established persons, turnover of EUR49,790 in a maximum period of 12 consecutive calendar months.
Intra-Community
acquisitions EUR14,000 in a calendar year
Distance sales EUR35,000 in a calendar year
Recovery of VAT by non-established businesses Yes, if VAT is paid on local sales, or if export supplies or intra-Community supplies are performed; otherwise follow Council Directive 2008/9/EC for VAT refund procedure

Scope of the tax

VAT applies to the following transactions:

  • The supply of goods effected for consideration in the Slovak Republic by a taxable person acting as such
  • The supply of services effected for consideration in the Slovak Republic by a taxable person acting as such
  • The acquisition of goods from another EU Member State for consideration (see the chapter on the EU)
  • The importation of goods

VAT also applies to the following transactions:

  • The supply of goods or services by the VAT payer 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 VAT payer’s business, if the input VAT is wholly or partly deductible
  • The relocation 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 VAT payer for the payer’s private use, for the private use of the payer’s staff or for any purpose other than that of the payer’s business, if the VAT on such assets is wholly or partly deductible

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 whose 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 revenues (income), excluding tax, from all supplies of goods and services (both tax­able and zero-rated) made in the Slovak Republic. Revenue (income) generated from supplies that are exempt from VAT without input deduction (see Section D) is generally excluded from turnover for the above purposes. However, revenue (income) from insurance and financial services is included if these ser­vices are not provided as ancillary to the main taxable supply. Revenue (income) from the occasional sale of tangible property (except inventory) and intangible property is excluded from the definition of taxable turnover.

Voluntary registration. Taxable persons with any value of turn­over or acquisitions may register voluntarily. Voluntary VAT registration is administratively complex and subject to detailed scrutiny from the Slovak tax authorities due to the recently intro­duced anti-fraud measures.

Intra-Community acquisitions. 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 a value of EUR14,000 of goods acquired in a calendar year. This type of VAT registration does not confer on the person the status of a VAT payer (that is, no input VAT 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.

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.

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.

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 fixed establishment of a foreign entity in the Slovak Republic is a permanent place of business that has both human and techni­cal resources necessary for performing the business activities of the foreign entity. The registration of a branch in the Slovak Commercial Register does not automatically make the branch meet the fixed establishment criteria.

A non-established business must register for VAT in the Slovak Republic before it begins to perform 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 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

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 VAT payer from the date shown in the certificate on tax registration.

There are no procedural fees related to submission of VAT regis­tration application in Slovakia.

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

Import VAT representative. A non-established business may appoint a VAT representative for the purposes of making impor­tations 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 non-established business. The non-established business must appoint the repre­sentative using a power of attorney. The VAT representative must submit tax returns on a calendar quarterly basis as well as monthly or quarterly EU Sales Lists on behalf of the importers. The importer of goods is not required to register for VAT pur­poses in the Slovak Republic.

Reverse-charge services. A Slovak taxable person must apply VAT with respect to services provided 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 using the reverse-charge mechanism; the recipient of the service must account for VAT on the service, but is also entitled to recover the self-assessed VAT if certain condi­tions are met (see Sections D and F).

A Slovak taxable person is generally not required to apply the reverse charge if the service provider 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 supplied by 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 non-established service provider is registered for VAT in the Slovak Republic. If these services are provided to persons in their non-business 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 services 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 VAT payer must apply the reverse charge:

  • 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
  • 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, if the tax base in the invoice is EUR5,000 or more
  • 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, if the tax base in the invoice is EUR5,000 or more
  • Supply of mobile phones that are made or adapted for use in conjunction with a licensed network 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

Beginning on 1 January 2017, the reverse charge will also apply to the importation of goods into the Slovak Republic if certain conditions stipulated by law are met.

Joint and several liability. Since 1 October 2012, joint and several liability of the customer for output VAT is stated on invoices from the supplier. This relates to the value of VAT that the supplier did not pay to the tax authorities when the customer knew, could have known or should have known that the supplier would not remit the VAT. The Slovak VAT Act lists the situations when the cus­tomer is deemed to have this knowledge: (i) the consideration for the supplied goods or services differs from the fair market value without any business reason, (ii) the customer continued doing business with a supplier that was listed in the register of non­compliant companies published by the Financial Directorate or (iii) the supplier and the customer meet the specific related par­ties definition. In these cases, upon a notice issued by the Slovak tax authorities, the customer is assessed the amount of the sup­plier’s unpaid or underpaid VAT. The customer’s excess VAT can be used to cover the underpayment.

Tax authorities monitor VAT payers who do not fulfill their VAT obligations and have been publishing a list of such persons on the web portal of the Financial Directorate since February 2013. More than 4,000 VAT payers were on the list in November 2014 out of a total of approximately 200,000 VAT payers.

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.

In addition, as already mentioned above there is a concept of a representative for import of goods, which relieves potential importers (non-established persons) from administrative burden of VAT registration only due to performance of VAT exempt intra-Community supply of goods following their import to Slovakia.

Registration procedures. The following documents should be submitted to Tax Authority Bratislava 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 which does not need to be notarized but which if executed in any language other than the Slovak or Czech languages, must be accompanied by official translation thereof.

The documents may be delivered by the applicant for registration in the form of attachments to the application for registration or they may be submitted for review directly at the Tax Authority Bratislava. The documents may be delivered in hardcopy. Nevertheless, in a case where the foreign entity appoints a tax advisor or advocate for this purpose, the documents must be submitted electronically (tax advisors and tax advocates are obliged to communicate with Slovak Tax Authorities only by electronic means).

Late-registration penalties. The penalty for non-fulfillment of the registration obligation can amount from EUR60 to EUR20,000. In principle, the Slovak VAT legislation does not allow a retroac­tive registration of a taxable person. However, with effect from 1 April 2009, a mechanism for reconciling VAT in the event of a late VAT registration has been introduced into the Slovak VAT legislation. A domestic or non-established person who 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.

Digital economy. Effective 1 January 2015, the place of supply of telecommunications, broadcasting and electronically provided services to nontaxable persons (B2C) is where the customer is established.

Mini One-Stop Shop. On 1 January 2015, the place of supply of broadcasting, telecommunications and electronic services ren­dered to nontaxable customers by providers established in the EU changed from the place where the supplier of the services is established to the place where the customer is established, has his permanent address or usually resides.

In this regard, the “One-Stop Shop” (which allows non-EU tax­able persons supplying electronic services to consumers in the EU to register for VAT in one EU country, regardless of the num­ber of other EU countries to which they are supplying the ser­vices) will be extended also to the EU suppliers, except if they are established in the Member State of the place of supply.

If a VAT payer applies for the Mini One-Stop Shop, the VAT return filing and VAT payment in respect of the local countries will be made in one Member State, but the VAT payer will still need to comply with the VAT rules and relating tax rules appli­cable in the Member State of the place of supply.

Deregistration. VAT payers that terminate their taxable activities in the Slovak Republic 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).

VAT rates

The 20% standard VAT rate applies.

On 1 January 2007, the Slovak Republic introduced a reduced rate of 10% on selected pharmaceutical products and medical aids. Since 1 January 2008, the reduced rate has also applied to specific books, brochures and leaflets and books for children. From 1 January 2016, the reduced rate was extended and now applies to certain food products such as meat, fish, milk and bread. The standard VAT rate applies to all other supplies of goods or services, unless a specific measure in the VAT law pro­vides for the zero rate or an exemption.

In the event of a change of VAT rates, taxpayers must use the VAT rates valid on the date on which the tax point arises.

If supplies are classified as zero-rated, no VAT is due, but the supplier may deduct related input tax.

Examples of zero-rated supplies of goods and services

  • 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

The term “exempt supplies” refers to supplies of goods and ser­vices that are not liable to tax. Exempt supplies do not give rise to a right of input tax deduction (see Section F).

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 sponsored 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)
  • 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 is VAT exempt. However, the VAT payer may opt to tax the transfer.

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

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.

Continuous supplies of goods and 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 exceeding 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 immovable property, and of electronic communication networks and elec­tronic communication services.

Intra-Community supplies and acquisitions 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.

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.

Reverse-charge services received. For reverse-charge services received by a Slovak taxable person, VAT becomes due on the date of supply of the service. Different rules apply to reverse-charge services supplied in parts or repeatedly (see Continuous supplies of goods and services).

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.

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.

Cash accounting. The cash accounting scheme is implemented with effect from 1 January 2016 and is available only to domestic VAT payers, who must meet the following criteria:

  • The VAT payer’s annual turnover did not exceed EUR100,000.
  • The VAT payer is not in bankruptcy and has not entered liquidation.

Under the cash accounting scheme, the chargeable event (tax point) is shifted to arise only after the receipt of payment for the goods or services supplied and from the amount received from the customer. General tax point rules do not apply in such a case. The same applies on the input VAT deduction right, which arises only after payment of an invoice (if paid partially, only on the amount of payment).

The invoice issued by a VAT payer who has opted for the scheme should include the legible statement “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 VAT payer running the scheme has the right to deduct input VAT 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.

Prepayments. No prepayments related to VAT are paid in the Slovak Republic.

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 is regarded as a supply of services.

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

  • The provision of accommodation in hotels, motels, guest houses, camps or private properties
  • Lease of land for the purpose of parking of vehicles
  • Lease of permanently installed equipment and machinery
  • Lease of safes

Recovery of VAT by taxable persons

A VAT payer is entitled to 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 VAT may generally be recovered by deducting it from output VAT, which is VAT due on the supplies made. A VAT payer is entitled to deduct input VAT if the tax point for the supply in question has arisen with respect to the output and the VAT payer holds a valid VAT invoice or import document. The VAT payer may deduct input VAT 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 VAT payer must possess the required documents (invoice, import declaration and other documents) 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 (financial) year, the deduction must be made for the period in which the documents are received.

As of 1 January 2014, VAT payers submitting a supplementary VAT return due to belated receipts of invoices for intra-Commu­nity acquisitions of goods are entitled to deduct the respective VAT in this supplementary return if they have the related invoice at their disposal as of the filing date.

Furthermore, as of 1 January 2014, VAT payers are required to correct the amount of deducted VAT within 30 days from the date the VAT base was to be corrected by the supplier, even if the cor­rective invoice is absent.

For supplies of reverse-charge services and for goods supplied with assembly and installation by a foreign taxable person, it is not necessary for the Slovak recipient to hold an invoice, but inclusion of VAT in the recipient’s VAT records is a pre-condition for deducting.

For imported goods, VAT must have been paid to the customs authority or, effective from 1 January 2017, included in the VAT records to be eligible for deduction.

Effective from 1 October 2012, non-established taxable persons registered for VAT in the Slovak Republic cannot claim input VAT deduction on a VAT return if they only perform reverse-charge supplies in the Slovak Republic (even local reverse-charge supplies). Instead, a VAT refund procedure needs to be followed. This does not apply if supplies such as exports and intra-Commu­nity supplies of goods are performed, in which case the deduction of Slovak input VAT incurred can be made through the regular VAT return filed.

Nondeductible input tax. A VAT payer may not recover the follow­ing input VAT:

  • VAT that relates to activities that are not business activities
  • VAT that relates to transactions regarded as VAT-exempt sup­plies
  • VAT incurred on items of expenditure for which recovery is specifically excluded (for example, input tax related to meals and entertainment)

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 VAT on acquisition of goods and services that represents its nonbusiness use, if the VAT payer elects not to apply output VAT 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 recovery (partial exemption). Input tax on goods that are used for both business and for nonbusiness purposes is generally deductible. However, output VAT must be paid on the nonbusi­ness use.

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

Effective from 1 January 2011, 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 VAT only to the extent of the busi­ness use (for further details, see Capital goods).

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

For goods and services that are partially used for the provision of exempt supplies, 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 VAT 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 “revenue” 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 (financial) year and is rounded up to the nearest whole percent­age. During the current calendar (financial) year, the deductible proportion calculated for the preceding year is used. If no per­centage exists for the preceding year, the VAT payer may use a percentage agreed to with the tax authorities.

Capital goods. Effective 1 January 2011, with respect to the pur­chase of immovable property to be used for both business and nonbusiness purposes, the input VAT 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.

In addition, effective 1 January 2011, the previously valid 10-year period for the adjustment of deducted input VAT relating to immovable 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 VAT 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.

As of 1 January 2014, adjustments of deducted input VAT 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.

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

VAT payers 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 VAT payer is a monthly VAT payer.
  • The VAT payer was registered for VAT purposes for at least 12 months before the month in which the excess VAT was reported.
  • The VAT payer 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.

Effective from 1 January 2012, 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 VAT pay­er’s entitlement to a refund, the refund must be repaid within 10 days after the tax authorities complete the tax audit.

In addition, effective from 1 January 2012, if the excess VAT is refunded in a shorter period (mentioned above) based on a VAT return containing incorrect data, the tax authorities impose a pen­alty amounting up to 1.3% per month of the excess VAT refund­ed.

Preregistration costs. The VAT payer may deduct tax related to goods and (from 1 January 2016) to services purchased before the day the person became the VAT payer if such purchases were not included in tax expenses in calendar years preceding the calendar year in which the person became a VAT payer, except for stock. As regards property acquired before the VAT registration, the VAT payer will decrease VAT for property which is depreci­ated by a proportional part of the VAT corresponding to the depreciation. The VAT payer 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 VAT payer.

Write-off of bad debts. Slovakia did not implement bad debt relief provision.

Noneconomic activities. A taxable person shall be any person who independently carries out any economic activity, whatever the purpose or results of that activity.

According to the Slovak VAT Act an economic activity shall mean any activity, from which an income is accrued and which includes the activities of producers, traders and persons supply­ing services including mining, construction and agricultural activities, activities carried on as a freelance occupation, intel­lectual creative activity and sporting activity. In addition, an economic activity is also considered to be the use of tangible property and intangible property with a view to obtaining income from the property; if the property is the common property of spouses, its use with a view to obtaining income is considered to be economic activity in equal proportion of each spouse, unless the spouses decide otherwise.

The execution of activities based on an employment relation, or other similar relation, when an individual is obliged to adhere to instructions or orders creating a subordination and super ordina­tion from the point of view of conditions of the executed activi­ties and conditions of remuneration, is not considered an independent execution of activities.

Recovery of VAT by non-established businesses

The Slovak Republic refunds VAT incurred by businesses that are neither established nor registered for VAT there.

The rules for VAT refunds in the Slovak Republic are in compli­ance with the general VAT refund rules adopted by Council Directive 2008/9/EC, which is part of the 2008 VAT package adopted by the European Commission (see the chapter on the EU).

In the Slovak Republic, the conditions for refunds are similar for EU businesses and non-EU applicants, except for the electronic request for refund and electronic communication applicable to EU business applicants. Non-EU business applicants must file the refund request using the form issued by the Slovak tax authorities.

To claim a refund, a foreign business must meet all of the follow­ing requirements:

  • It is a registered VAT payer abroad or a registered payer of a similar general consumption tax.
  • The foreign entity does not have a registered office, fixed estab­lishment or place of business in the Slovak Republic (for non-EU applicants, the territory of the EU is applicable), during the period for which the VAT refund is requested.
  • The input VAT is recoverable under Slovak law.
  • During the period for which the VAT refund is requested, the foreign entity neither sold goods nor provided services in the Slovak Republic, other than the following:
    • Transportation and auxiliary services related to export and import of goods.
    • Services and goods with their assembly and installation, if the Slovak customer was the person liable to pay tax (reverse charge).
    • Electricity and gas if the Slovak customer was the person liable to pay tax.
    • Goods supplied to other EU Member States if such goods were imported in the Slovak Republic as VAT-exempt and if the foreign entity was represented by an import VAT representative (see Section C).
    • Goods supplied within a triangular transaction if the foreign business acts as the middle party in the transaction (see the chapter on the EU).

The Slovak tax authorities reject the application for a refund if the non-EU country in which the applicant’s foreign business is established does not provide refunds to Slovak payers of VAT or similar consumption tax (reciprocity).

Refund application. The refund application for EU applicants must comply with the rules of Council Directive 2008/9/EC. Under the directive, applicants must file the electronic request in the EU Member State in which they have their seat, place of business, fixed establishment, residence or habitual abode.

The non-EU business application must be submitted using the form issued by the Slovak tax authorities, completed in the Slovak or English language.

Requests of non-EU applicants 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 calendar 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.

Invoicing

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

  • Supply of goods or services having a place of supply in the Slovak Republic rendered to a taxable 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

Taxable persons (non-VAT payers) providing services with a place of supply outside of the Slovak Republic are obliged to issue VAT invoices at the moment of the service 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-charged 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 giving rise to the correction occurred.

A document produced by an electronic cash register for goods and services 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.

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 exception of reverse-charge services received from abroad and purchases from abroad of reverse-charge goods supplied with installation or assembly).

The law also allows the sending or accessing of invoices elec­tronically after agreement of the supplier with the customer.

Corrective invoices. 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 VAT payer must issue a corrective 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. Such a document or notification is considered to be a simplified VAT invoice.

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 VAT payer that sells upon meeting the conditions specified in the VAT legislation. A VAT payer that exports goods or supplies goods to other EU Member States is generally entitled to recover the related input VAT.

To qualify as zero-rated, exports must be supported by evidence confirming that goods were exported abroad. A VAT payer must substantiate the export of the goods with the following:

  • Certified electronic customs declaration for the release of the goods into the customs regime of export, with the VAT payer required to hold the electronic customs declaration before the sixth month lapses after the month in which the exemption is claimed
  • A transport document

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

  • Copy of the invoice
  • Proof of dispatch if the transport is arranged by the supplier or the customer through one of the authorized 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 supplier’s documentation confirm­ing receipt of the goods by the customer or by a person empow­ered by the customer, which has to 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 supplier); 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, the VAT payer must have the documents 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. If this is not met, the VAT payer shall apply output VAT 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 euros (EUR), using the exchange rate published by the European Central Bank on the date preceding the date of the tax point. Alter­natively, the VAT payer 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.

VAT returns and payment

Slovak VAT returns must be submitted by the 25th day after the end of the tax period. Since 1 January 2014, VAT returns and all documents for the tax authorities must be submitted electroni­cally, using either advanced electronic signature or other means of electronic filing agreed with the tax authorities. Payment of VAT liability in full is due by the same date.

VAT ledger. As of 1 January 2014, VAT payers 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 VAT payer, 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. Information will need to be compiled by the VAT payer electronically and filed by means of the electronic filing portal provided by the Slovak Financial Directorate.

Effective 1 January 2015, the deadline for submission of the VAT ledger is 25 days after the end of the relevant tax period. The deadline is no longer tied to the date of the VAT return filing.

Special schemes. The Slovak VAT legislation stipulates the fol­lowing special schemes:

  • Special scheme for travel agents
  • Special scheme for call-off stock
  • Special arrangements applicable to second-hand goods, works of art, collectors’ items and antiques
  • Special scheme for investment gold
  • Special arrangements applicable to persons not established in the territory of the European Community supplying the ser­vices electronically

As of 1 January 2015, special schemes apply for EU and Non-EU established businesses providing telecommunications, broadcast­ing or electronic services to nontaxable persons (final consum­ers) located in the EU.

Effective 1 April 2016, taxpayers must report separately simpli­fied invoices if the total amount of deductible VAT from simpli­fied invoices for the tax period is EUR3,000 or more. These invoices are reported in the VAT ledger in aggregate amounts.

Electronic filing and archiving. The VAT payer has to complete the VAT return in the standard electronic form issued by the Ministry of Finance. All VAT payers are obliged to communicate only electronically with the Slovak tax authorities. In order to do so, the VAT payer should either use the advanced electronic signa­ture or the VAT payer concludes an agreement on electronic fil­ing with the Slovak Tax Authority in writing.

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 require­ments for the invoice, whether in paper or in electronic form, which have to 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.

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.

Annual returns. Not applicable (only monthly or quarterly filings).

Penalties

The penalties for noncompliance with the VAT registration range from EUR60 to EUR20,000. The penalties for noncompliance with the reporting requirements 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 rate.

Interest on late payment applies in the following circumstances:

  • The VAT liability is not paid by the deadline.
  • The proper amount of the VAT liability or the amount stipulated in a decision of the tax authorities is not paid.

The rate of interest on late payment is calculated as the higher of the annual interest rate of 15% or four times the interest rate for main refinancing operations (the basic interest rate) of the European Central Bank.

A flat penalty is imposed if the VAT liability or excess VAT refund declared by the VAT payer 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 being introduced from 1 January 2016. 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 VAT payer in a supplementary VAT return, the flat penalty is calculated at 3% per annum or the basic interest rate of the European Central Bank per annum, whichever is higher.

Penalties also apply to late submission of EU reports (see Section K).

Effective 1 January 2016, a new system of penalties for noncom­pliance with tax obligations was introduced. The penalty amount depends on the time passed since the breach of obligation to declare and pay tax (instead of a one-off flat penalty). Minimum (1% of levied tax) and maximum (100% of levied tax) penalties are also introduced.

Intentional tax evasion 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. 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.

For noncompliance (failure to submit, late submission of the VAT ledger, or declaring of incomplete or incorrect information), the tax authority is obliged to impose a penalty. The penalty can be up to EUR10,000 for initial omissions. In cases of repetitive omission, the penalty range extends to up to EUR100,000. Penalties apply to any adjustments reported, regardless of the character of the change.

Effective 1 January 2015, 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.

EU filings

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.

Exemption threshold. For 2015, the exemption threshold is EUR200,000 for Arrivals and EUR400,000 for Dispatches. If a VAT payer’s turnover for the preceding calendar year did not exceed these thresholds, it was not required to submit an Intrastat report.

If the exemption threshold is exceeded, the VAT payer is required to submit Intrastat declarations (so-called complete declarations).

If the VAT payer does not exceed the exemption threshold or if the entity is not a Slovak VAT payer, it is not required to report the intra-Community movement of goods using Intrastat. Eligible VAT payers are required to complete and submit Intrastat decla­rations, including those months in which zero movements of goods occur.

A penalty may be imposed for late submission or for missing or inaccurate declarations, up to EUR3,320.

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

  • Intra-Community supplies of goods
  • VAT-exempt relocations of goods to the EU Member States (see the chapter on the EU)
  • Supplies of goods within a triangular transaction if the VAT payer 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

Services exempt from VAT under the law of the place of supply of the services 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 during the preceding four calendar quarters did not exceed EUR50,000, the VAT payer 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.

Since 1 January 2012, if a VAT payer fails to submit an ESL within the statutory deadline, a penalty for noncompliance 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 non-monetary obligations depends on the severity, duration and consequences of the breach of obligations, the penalty for failing to submit the ESL should generally fall in the lower third of the range.