Proposed changes in VAT taxation to be effective from 2021

Sept. 23, 2020 Slovakia

On 26 August 2020 SK Government approved the proposal of the amendment to the Act No. 222/2004 Coll. on VAT. The amendment transposes European law as regards certain value added tax obligations for supplies of services and distance sales of goods, into local tax legislation.

Proposed changes should come into force from January 2021 (for bad debt relief rule) and from July 2021 (for e-commerce changes).
Proposed Amendment focuses mainly on the following areas:

  • VAT bad debt relief /correction of the tax base

New rule introduces possibility to reduce the taxable amount by the supplier in case of total or partial non-payment after the supply of goods or services takes place and the receivable becomes irrecoverable. Debtor will be obliged to correct VAT deduction based on the received corrective invoice.
The situations when the application of the new rule is possible, i.e. when the receivable is treated as irrecoverable, are exactly prescribed in the VAT law, such as receivable in distraint proceeding, debtor in bankruptcy or insolvency proceedings, debtor dissolved without legal successor, debt in inheritance proceeding or receivable overdue more than 12 months with its value not higher than EUR 300.

  • E-commerce

New rules for the taxation of distance deliveries of goods and certain supplies of services to non-taxable persons with the aim to simplify the VAT rules for e-commerce.
Following changes are introduced:

  • definition of distance deliveries of goods within the EU and distance sales of goods imported from third countries,
  • place of supply of distance sales of goods =the place, where the dispatch of goods ends,
  • special place of delivery for distance sales of goods and certain digital services supplied to non-taxable persons, if EU turnover for calendar year (current and previous) does not exceed EUR 10 000 for the distance supply of goods or supply of services, the place of delivery will be the place, where the dispatch of goods starts or where the service supplier has its registered seat;
  • voluntary special VAT schemes for:
    - taxable persons not established in the EU supplying services to non-taxable persons within the territory of EU (currently possible for digital services provided to non-taxable persons only),
    - taxable persons making distance sales of goods within the territory of EU,
    - distance sale of goods imported from third countries in consignments of an intrinsic value not exceeding EUR 150 (Import One Stop Shop),
    - or supplies of goods within Slovakia made by electronic interfaces facilitating those supplies.

Such suppliers will have option to apply the special VAT regime, through which only one VAT return for all EU deliveries will be submitted, i.e. one EU VAT return will be filed in the Member state of identification, instead of current obligation for VAT registration, VAT reporting in each EU member state in which the certain threshold were exceeded.

Other changes:
- cancellation of VAT exemption for imports of consignments not exceeding EUR 22,
- more options for proving the export of goods outside the EU.

Any other details concerning changes in VAT taxation in Slovakia will be provided by our tax experts.

Michaela Bobeková
Tax Manager
ASB Slovakia

Zuzana Kolárová
Managing Director
ASB Slovakia