Amendment to the Slovak VAT Act

On 1 October 2015, an amendment to the VAT Act No. 222/2004 Coll., as amended, was approved by the Slovak Parliament.
Its final version awaits the approval of the President.

The amendment introduces several changes that will come into two stages.


Changes effective from 1 January 2016

Cash accounting scheme

A VAT “cash-accounting” scheme is being incorporated into the Slovak VAT Act for VAT payers with limited turnovers. A taxpayer whose annual turnover does not exceed EUR 100,000 (originally proposed EUR 75,000), may opt for the scheme, under which they declare output VAT only after receipt of customer payments. The same applies to input VAT deduction, which can be claimed only after the taxpayer has paid for a supply. The change will also significantly impact a larger group of taxpayers, if they enter into business transactions as customers of taxpayers optiong into the scheme.


Extension of the scope of goods subject to reduced 10% VAT rate

The range of goods subject to the reduced (10%) VAT rate was extended. This applies for particular food products such as meat, fish, milk and bread. This change was incorporated into annex No. 7 of the Slovak VAT Act. It includes the codes of foods to which the reduced rate applies.


Introduction of reverse-charge mechanism for construction services

The reverse-charge mechanism should also apply to supplies of construction under a contract of work (or similar type of contract) and on the supply of goods with installation or assembly if the assembly or installation as a whole represents a construction service.

The main aim of this change is to limit the financial problems of companies operating in the construction industry, resulting from the insolvency or poor payment discipline of their customers, and to eliminate VAT fraud in the construction sector.

The reverse-charge mechanism also applies to cases where the recipient of the construction services mainly performs transactions not subject to VAT, but is already registered for VAT purposes for some particular reasons (i.e., legal entities incorporated for non-business purposes and public authorities). These recipients will pay VAT on construction services purchased, regardless of whether they are used for taxable activities or not.


Extended reverse charge for supplies of goods by foreign persons

The scope of reverse-charge mechanism for goods is being extended to all goods supplied by non-established taxpayers in Slovakia. As we have already informed you, locally established taxable customers should start to apply a reverse-charge on goods from non-established suppliers in Slovakia. Distance selling will be the only exception


Changes effective from 1 April 2016

Taxpayers will be obliged to separately report simplified invoices if the total amount of deductible VAT from simplified invoices for the tax period is EUR 3,000 or more.

These invoices are reported in the VAT Control Statement in section B3 in aggregate amounts. This (simplified) regulation, as opposed to the previously accepted reporting of the aggregate value of simplified invoices (instead of each single invoice), is a reaction to occurrences of tax evasion revealed by the tax authorities.

Currently, it is not clear how a simplified invoice exceeding the threshold will be reported (in section B2 or in section B3 after its adjustments which will enable reporting of the invoices item by item). Taxpayers should prepare for changes in information systems.