Slovakia – Government to Implement Notable Changes to VAT Rates

Recently, we witnessed many announcements of changes in VAT rates in EU countries. Some are already in effect, like in Finland or Portugal; others will come into effect starting next year, like in Estonia, and some are scheduled for 2026, such as one related to the applicable VAT rate on short-term rentals in the Netherlands.

Among all the implemented and announced changes, the Slovak government has also announced that it plans to implement specific changes to VAT rates.

Changes to VAT Rates and Its Impact

The Slovak Prime Minister, Robert Fico, announced the government's plan to amend the VAT law and to change applicable VAT rates. The most significant changes include increasing the standard VAT rate and introducing a new reduced VAT rate.

If the amendments to the VAT law are adopted, starting on January 1, 2025, the standard VAT rate will increase from 20% to 23%, putting the Slovak standard VAT rate next to some of the highest in the European Union. In addition, a new reduced VAT rate of 19% will apply to essential foodstuffs and medicine, thus eliminating the current 10% reduced rate.

The second reduced rate of 5% should remain in place, but it will apply to different supplies, such as hotel accommodation services.

This change in the VAT rate will affect both businesses and citizens, from the increase in prices of goods and services to the decrease in citizens' purchasing power and ability. 

Nevertheless, the final decision on these changes has yet to be made. However, it is almost certain that some changes will be made and that the government will not give up on this rather unpopular measure to secure more revenue and increase the state budget.

Conclusion

The final decision on VAT rates is still being determined, but businesses should still prepare for inevitable changes. In addition to staying updated with further developments, companies operating in the Slovak market should take precautionary steps to adjust their systems and prices to new rules and regulations.

Source: EasyTax, Central European Times, Spectator, 1stopVAT