VAT registration in Slovakia: Amendments to the VAT Act

With the amendment of the Slovakian VAT Act, the government is introducing several measures to improve VAT collection. These include the obligation to report bank accounts, changes to the VAT guarantee and introduction of split VAT payment, as well as new rules for the refunding of excess input tax deductions. The changes will be introduced in stages.

Notification of Bank Accounts

The amendment introduces the obligation for existing and newly registered VAT payers to notify the Slovak Financial Directorate (SFD) of any bank account held with a payment service provider or foreign payment service provider to be used for business activities subject to VAT in the Slovak Republic. Between 15 and 30 November 2021, businesses will have to report each account electronically using a form to be published on the SFD website. Any change, addition or deletion of a reported bank account must also be notified. The reporting obligation applies to all taxpayers, with the exception of payment service provider accounts used for the processing of payment transactions. Incorrect, false, or incomplete information will carry a penalty of up EUR 10,000.

Changes to the VAT Guarantee and Introduction of Split Payment of VAT

The amendment to the VAT Act extends the grounds on which the customer is liable for the supplier’s VAT shown on the invoice. However, the customer can avoid a possible VAT guarantee by transferring the VAT shown on the supplier’s invoice directly to the bank account held for the supplier by the tax authorities. In doing so, the VAT payment must be marked as if the supplier had paid it. The customer would then pay the supplier’s invoice without VAT.

We can support you in implementing the new VAT regulations in Slovakia

Ľubomír Alezár, Partner, ECOVIS LA Partners Tax, s.r.o., Bratislava, Slovak Republic

In practice, situations may arise where both the supplier and the customer pay the VAT, or the supplier requires the customer to pay the full amount of the invoice. If the VAT amount is paid to the tax authority by both the customer and the supplier, the VAT amount paid to the customer will be considered a tax overpayment by the supplier. It is therefore necessary to include the possibility of split payment of VAT in commercial contracts with suppliers.

Changes to the Refund of Excess Input Tax Deductions

Together with the obligation to report bank accounts used for economic activities to the SFD, the conditions for refunding excess input tax deduction will also change from 1 January 2022. The tax authorities will now only refund excess input tax deductions to the bank accounts that the taxpayer has notified to the SFD. If the taxpayer does not notify the SFD of its bank account, the tax authorities will postpone the refund of the excess input tax deduction until this obligation is fulfilled.

Cancellation of VAT Registration Certificates

From 1 January 2022, VAT registration certificates (registration cards) for domestic and foreign taxpayers will be replaced by tax registration notices. Persons registered for VAT will thus no longer be obliged to return the registration certificate to the tax authorities in the case of changes to the registered data or the cancellation of the VAT registration. The same applies to group registration. The aim of this amendment is to help reduce the administrative burden.

However, VAT registration certificates issued before 31 December 2021 must still be returned to the tax authorities within 10 days of the cancellation of registration.

For further information please contact:

Ľubomír Alezár, Partner, ECOVIS LA Partners Tax, s.r.o., Bratislava, Slovak Republic
Email: lubomir.alezar@ecovis.sk

Branislav Laurinc, Partner, ECOVIS LA Partners Tax, s.r.o., Bratislava, Slovak Republic
Email: branislav.laurinc@ecovis.sk