Slovakia – Increase of Registration Threshold

As the implementation date of the new EU-wide SME scheme approaches, EU Member States are urging the regulation of VAT registration thresholds. One country that recently did this is Slovakia, which adopted the law amending the Act on Value Added Tax (VAT).

Regulatory Framework

Under the new rules set in the amending Law, domestic businesses must register for VAT when their turnover, excluding tax, exceeds EUR 50,000 in the previous calendar year or their current turnover exceeds the threshold of EUR 62,500. Failure to register within five working days of exceeding the threshold could result in penalties.

Foreign businesses established in other EU Member States must register for VAT when they make taxable supplies to consumers in Slovakia or receive payment before the delivery of goods or services. A foreign business must apply for tax registration to the Bratislava Tax Office within five working days of making a taxable supply. 

The Bratislava Tax Office will register and assign them a tax identification number and issue a decision on tax registration within ten days of the application's receipt. If foreign businesses already have a tax identification number for applying for a special arrangement, the tax office will assign the same tax identification number. 

However, new regulations state that foreign small businesses can benefit from the special regulation of the application of tax exemption in cases when:

• In the current calendar year, their tax-free value of goods and services included in the annual domestic turnover does not exceed EUR 62,500, and in the previous calendar year, it did not exceed EUR 50,000 and

• In the current calendar year, the value without tax of goods and services included in the annual turnover in the Union does not exceed EUR 100,000, and it also did not exceed EUR 100,000 in the previous calendar year and

• The Member State of establishment is another Member State.

Conclusion

Slovakia's recent amendment to the VAT law, aligning with the upcoming EU-wide SME scheme, introduces new thresholds for VAT registration for domestic and foreign businesses. The law stipulates clear registration thresholds and deadlines, emphasizing the importance of timely compliance to avoid penalties. 

Source: The Law amending Act no. 222/2004