Draft amendment to the VAT Act and to the Act on Tax Administration

Intra-community acquisition of goods

The approved amendment to the VAT Act replaces the current provision stating that acquisition of goods from another Member State intended for immediate delivery to another Member State or to a third country is VAT exempt.

The new provision states that if the acquirer of the goods (a foreign person from another Member State or from a third country) is entitled to a full VAT refund via a specific EU VAT refund application, the acquisition of goods in Slovakia from another Member State is VAT exempt.

The acquirer of the goods is entitled to a VAT refund via a EU VAT refund application stated above if they, for example, supply the acquired goods to domestic taxable persons or to VAT payers, where the VAT liability is shifted to the customer under the reverse-charge mechanism.

Following this change, an obligation to report this exempt intra-community acquisition of goods on a specific line of the VAT return was also introduced. However, these transactions are not subject to reporting in the control statement.

Takeaways

Foreign persons meeting the above conditions will no longer be obliged to self-apply VAT via the reverse-charge mechanism on goods acquired for consideration from another Member State in Slovakia, or upon transfer of their own goods from another Member State to Slovakia, as from 1 January 2020 such transactions will be VAT exempt.

There will also be a change to the reporting of intra-community acquisition of goods in the VAT return.

VAT registration of foreign persons

Compared to the original draft, exemptions from the requirement to register for VAT purposes in Slovakia for foreign persons were broadened. A foreign person only supplying goods and services in Slovakia which are VAT exempt which does not trigger an obligation to file a VAT return (i.e. activities pursuant to § 28 to § 42, for example, provision of postal services, healthcare, cultural services, financial services), will not be obliged to register for VAT purposes in Slovakia pursuant to § 5.

Takeaways

This amendment eliminates the obligation of a foreign person to register for VAT in Slovakia if they only provide VAT exempt activities and there is no obligation to file a VAT return, as they are not liable to pay output VAT, or entitled to deduct input VAT. After this change, the VAT registration obligation for foreign persons will be the same as for persons established in Slovakia providing the above exempted activities.

Electronic submissions

Following the amendment to Act No. 563/2009 Coll. on Tax Administration (The Tax Code), in which the provisions on electronic communication with the Financial Administration were changed, the VAT Act was also amended.

At present, if a taxpayer that is obliged to communicate electronically submits a document by means other than electronically, e.g. in paper form or via the Central Government’s portal (“Ustredny portal verejnej spravy”), such a submission is deemed invalid, i.e. is not considered to have been submitted. The approved amendment to the Act on Tax administration states that in such a case, the tax administrator will first request the taxpayer for a correct submission (i.e. electronically) and only if the taxpayer does not comply with such a request, will their submission be deemed to have not been submitted.

Following this change, a new provision has been added to the VAT Act. This new provision states that a control statement submitted by means other than electronically will automatically be considered to have not been submitted.

Takeaways

The new pro-client measure will only apply to VAT returns. This means that if a control statement is submitted by means other than electronically, it will automatically be deemed as not submitted, as has been the case up to now.