The Upcoming Era of Electronic Invoicing in Slovakia: A Strategic Move Against Tax Evasion
Transforming VAT Reporting: How Slovakia Plans to Leverage Real-Time Data for a Transparent Economy
In an ambitious step toward enhancing tax compliance and aligning with European Union (EU) directives, the Slovak Ministry of Finance has introduced a draft law proposing mandatory electronic invoicing and real-time data reporting. This legislative move aims to modernize the country’s tax system while tackling persistent issues like tax evasion.
A Shift Toward Digital VAT Compliance
The proposed amendment to Act No. 222/2004 on Value Added Tax (VAT) signifies a pivotal moment in Slovakia’s journey toward a fully digital tax environment. Under this draft law, starting January 1, 2027, all VAT payers will be required to:
- Issue and Receive Invoices Electronically: Ensure that all invoices for domestic transactions comply with a standardized electronic format.
- Submit Real-Time Data: Electronically report data from issued and received invoices to tax authorities, thereby eliminating processing delays and reducing administrative inefficiencies.
This comprehensive digital transformation will replace the current dual-option system, which allows for both paper and electronic invoices. Notably, paper invoices have been criticized for enabling tax evasion and delaying tax administration processes.
Why Now? The Case for Mandatory e-Invoicing
Slovakia’s decision reflects the pressing need to combat tax evasion, which the current VAT framework has been unable to adequately address. Fraudulent practices, including the re-entry of individuals previously involved in evasion schemes, remain a critical issue. By implementing electronic invoicing, the government aims to enhance transparency, streamline tax reporting, and ultimately safeguard public revenue.
Public Participation: A Collaborative Legislative Effort
The Ministry of Finance has emphasized the importance of public involvement in shaping this groundbreaking policy. Stakeholders and citizens are invited to provide comments or suggestions on the draft law until January 31, 2025. The commenting phase will formally begin in the second quarter of 2025, allowing ample time for dialogue and refinement of the proposed legislation.
By adopting these changes, Slovakia not only adheres to the EU’s vision for VAT in the digital age but also sets the stage for a more transparent and efficient economic landscape.
