03. 12. 2018
VAT Act Amendment

Effective from 1 January 2019, 1 October 2019 and 1 January 2020

The Amendment of the Act no. 222/2004 Coll. on value added tax as amended (hereinafter the “Amendment on VAT Act”) has been approved the Slovak Parliament. From the amendment we select the most important changes:

 ·                     Cancellation of the institute of tax security

 ·                     Vouchers

The new VAT rules shall apply to the goods and services supplied for vouchers. A voucher shall mean an instrument which is connected with the obligation to accept it as consideration or its part for the delivery of the goods or for the supply of the service and on which or in documentation related is identified the goods or service to be supplied or the identity of potential suppliers including conditions of use of this tool. The amendment of the Act distinguishes between one-purpose vouchers and multipurpose vouchers. In the case of a one-purpose voucher, the tax becomes chargeable when it is issued. Any further transfer of such a voucher shall also be taxable. In the case of multipurpose vouchers, tax liability arises at the moment of the supply of goods/services.

·                     Supply and lease of the real estate

The Amendment of the Act regulates the application of VAT exemption in case of the delivery of the building, part of the building and of the building site on which the building stands (hereinafter the "Construction") and the taxation of the rental of immovable property. Exemption from VAT in case of supply of Construction based a 5-year period shall be considered  in addition to the first building approval or the first use of the building, even of the building approval, (i) where the change of purpose of the use of the building has been authorized, if the costs of construction works were at least 40% of the value of the Buildings before the construction works started and (ii) after reconstruction of the Construction, where the construction works represent at least 40% of the value of the construction before commencing the works. Applying the VAT exemption will be possible when the 5 years lapsed from the building approval relating to the change of purpose of the use of the constructions or the reconstruction.

The VAT payer in case of supply of immovable property which is defined for the living will not be allowed applying the option to tax the supply of such property. Similarly, the restriction of the right of an option to tax also applies to the rental of property defined for living (apartment, residential premises).

·                     Free charge delivery

A provision on the free charge deliveries of goods is adjusted to make it clear that the chargeable event in case of the free charge delivery occurs only if the VAT payer has deducted the input VAT from these goods, providing that only the costs relating to that part of the goods which was delivered shall be considered.

·                     Change in evidence

The current evidence is extended by evidence of (i) goods delivered in a third country, by the provision of a service with a place of supply in another Member State which is VAT exempt or (ii) which is subject to the transfer of tax liability according to paragraph 16 section 1-4, 10 and 11 of the VAT Act (real estates, short-term lease of vehicles, cultural, artistic, sport and other activities, restaurant services, etc.) or (iii) in case of delivery of goods with installation in other Member State, if the transport has started in Slovakia.

·                     Persons required to issue an invoice

Introduces an obligation for foreign persons not established in the EU and not having a fixed establishment in EU involved in the supply of goods/services to draw up invoice under the Slovak VAT Act if they carry out supplies of goods/services with a place of delivery in the territory of the country.

·                     Digital services for non-taxable persons

The place of delivery of telecommunication services, radio and television broadcasting services and electronic services for non-taxable persons is the place where the recipient of services is established. If the statutory conditions are met (e.g. fulfilment of the annual turnover, conditions of establishment of the service provider), the place of delivery shall be determined based on the Member State of establishment of the service provider.

·                     Local reverse charge in case of delivery of agricultural products and metal goods

From the local reverse charge mechanism there is excluded the delivery of agricultural products and metal goods, where the simplified invoice has been issued.

·                     New definition of turnover for VAT purposes

The former terms "income and revenues" are replaced by terms "value of supplied goods and services without VAT", meaning that, in the turnover will be included the value of the supplied goods and services at the time of delivery. Under the new definition, payments received prior to the delivery of the goods or service will not be included in the turnover.

·                     Exemption from tax on taxable transactions related to international transactions

Introduces the exemption from tax supply of crude oil and oil from industrial minerals in the custom warehouse and in the special warehouse as well as the supply of services performed in these warehouses provided that its provision relates to the above mentioned goods. Special warehouse is defined as spatially restricted place in the territory of Slovakia in which within the business activities the above mentioned goods are stored, received and dispatched. This legal treatment allows commercial relevant trading with stocked crude oil, diesel fuel and petrol.

The Amendment is effective from 1 January 2019, with exclusion of provisions related to vouchers which are to be effective from 1 October 2019 and provisions related to international transactions which to be effective from 1 January 2020.




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