As Slovakia gears up for 2025, significant amendments to its VAT Act are set to transform the landscape for businesses operating within and across its borders. These changes, effective from January 2025, introduce a host of new regulations designed to streamline processes, provide greater flexibility, and align with broader EU directives. Here’s a detailed look at what’s coming and how it might impact you.
No More Pre-Registration for Foreign Taxable Persons
One of the most notable changes is the removal of the obligation for foreign taxable persons to register for VAT purposes before conducting taxable transactions. This amendment allows foreign entities to register immediately upon executing a taxable transaction rather than beforehand. This change aims to simplify the entry process for foreign businesses, reducing administrative burdens and encouraging more seamless cross-border trade.
VAT Deductions Without Invoices for IC Acquisitions
Another significant amendment allows for VAT deductions from intra-community acquisitions without the need for an invoice. This change facilitates quicker and more efficient VAT recovery processes, benefiting businesses engaged in intra-EU trade by reducing the paperwork and waiting times typically associated with VAT deductions.
New Rules for Lease Agreements
Under the new law, the transfer of a leased item under a lease agreement with a purchase option will be treated as a supply of goods if exercising the purchase option is the only economically rational choice for the lessee. VAT will be payable in full at the beginning of the lease, rather than in installments over the lease period. This regulation simplifies VAT accounting and ensures clarity in tax obligations from the onset of the lease agreement.
Tax Exemptions for Small Businesses
Starting in January 2025, Slovakia will introduce tax exemptions for small businesses in line with EU legislation. The national turnover threshold for these exemptions will be EUR 62,500, with an EU turnover threshold set at EUR 100,000. This move is expected to support small enterprises by reducing their tax liabilities and promoting economic growth.
Simplified Invoices Threshold Reduction
The threshold for simplified invoices will be reduced from EUR 1,000 to EUR 400 (excluding VAT). This adjustment aims to streamline invoicing processes, making it easier for businesses to comply with VAT requirements for smaller transactions.
Virtual Events and B2B Rule
For virtual events, such as online educational sessions provided to taxable persons, the place of supply will be determined based on the basic Business-to-Business (B2B) rule. This change clarifies the VAT obligations for digital services, aligning with the growing trend of virtual engagements and digital commerce.
Reverse-Charge Mechanism on Imports
Effective from July 2025, a reverse-charge mechanism will be applied to the import of goods under specific conditions:
- Goods are released into free circulation or temporarily admitted with partial relief from import duty.
- The VAT payer holds a valid VAT ID number.
- The VAT payer has been granted an Advanced Economic Operator (AEO) license.
This regulation will initially apply to resident VAT payers and extend to foreign VAT payers registered for VAT from January 2026. The reverse-charge mechanism simplifies VAT collection on imports, reducing the cash flow burden on importers.
These comprehensive amendments to Slovakia’s VAT laws are poised to enhance efficiency, support small businesses, and align the country’s tax system with broader EU standards. Businesses operating in or with Slovakia should prepare for these changes to ensure compliance and take advantage of the new regulations. Stay informed and consult with tax professionals to navigate these updates effectively.
