Value added tax

The value added tax in Slovakia is provided for by the Act No. 227/2007 Coll. on the Value added tax and its later amendments, which has been formed based on the Sixth Council Directive 77/388/EEC and other EU legal acts. The standard VAT rate is 20% and the reduced rate is 10%. The reduced rate applies to e.g.: books, some pharmaceutical products, some medical aids, some groceries like bread, meat, milk.

 

Some facts on the VAT:

Domestic business entities are obliged to register for VAT if their turnover reaches 49,790 € (effective since 1st July 2009) for the previous consecutive 12 calendar months. The application for obligatory registration must be filed with the tax authorities by the 20th of the calendar month following that in which the turnover threshold is reached. Shall an entity or individual acquire goods from another EU member state, with the total value of 13,941.45 € or more, they are also obliged for registration, and they shall do so before exceeding this limit;

Foreign business entities are obliged to register prior to starting their business activities, which are a subject of VAT. However, several exceptions have been made here, in which the obligation to pay VAT is transferred to a domestic purchaser and thus the registration is not necessary. In case of long-distance sales, the entity is obliged to register for VAT when the total value of the goods supplied exceeds 35,000 € in a calendar year;

VAT refund for foreign business entities is regulated by §§ 55a-g, §§56-58. A foreign entity, which is not registered for VAT in Slovakia, can claim a refund of Slovak VAT paid on movables and services supplied by a VAT payer within the territory of the country and in case that the goods was imported to Slovakia. Some other conditions mentioned in the section 2 of the §56 have to fullfilled,e.g. a foreign entity is identified for the VAT in the country of residence; during the period for which the VAT refund request was filed it did not have any registered office, branch or establishment; during the period for which the VAT refund was filed it did not sell any goods or provide any services in Slovakia, with the exception of such supplies, in which the person obliged to pay tax is the recipient in system of reverse charge, etc. Tax is deductible based on the same rules as in case of domestic business entities

A foreign entity may file a request provided that the requested tax per calendar year exceeds 50 €. Shall the requested tax exceeds or equals 400 €, the foreign entity may request a tax refund prior to the end of the year.

 

VAT credit entitlement does not exist mainly in case of:

purchasing goods or services for entertainment and catering;

providing some exempt supplies (e.g. financial services, insurance services, healthcare services, educational services, supply and rental of real estate).

 

Deadlines

VAT returns must be filed within 25 days from the end of the taxable period. The same applies to any VAT liabilities incurred.

VAT tax returns must be filed on monthly basis. In case the taxable person’s turnover for the previous 12 month does not exceed 100 000 €, the tax returns is to be filed on quarterly basis. However, the entity may opt for monthly filing as well.

In case of excess input VAT occurrence, this is refunded by tax authorities within 30 days from the deadline for the following VAT return. Shall this next refund incur a tax obligation, the VAT credit from the previous period is carried forward and is offset against a VAT liability incurred.