Compulsory VAT registration in Slovakia – conditions and procedure.

According to the Slovak VAT Act, domestic taxable persons are obliged to register as payers of value added tax “VAT” pursuant to §4, §7 and §7 (a) of Act No. 222/2004 Coll. (hereinafter referred to as the “VAT Act”) – the so-called compulsory registration for VAT.

In this article we will discuss in more detail:

• a short definition of voluntary VAT registration.
• what is compulsory VAT registration according to §4?
• what conditions do you have to fulfil to be obliged to register for VAT in Slovakia?
• we will define a taxable person for the purposes of compulsory VAT registration in Slovakia.
• we will give various examples of overrunning turnover for the purposes of compulsory VAT registration in Slovakia.
• definition of turnover and compulsory VAT registration?
• how long does the registration process take and what is its procedure?

 

A few words on voluntary VAT registration without exceeding the turnover.

If you have not exceeded the turnover for compulsory VAT registration of €49,790 and you would still like to become VAT registered, the law allows you to apply for registration for VAT under section 4(2) of the VAT Act. In human language, you have the right to apply for registration for the tax even if you have not exceeded the turnover for compulsory registration. However, this does not mean that you are legally entitled to be registered for VAT. You must first meet the legal conditions for voluntary registration.

We have written an extensive article on voluntary registration, which you can read here: Voluntary VAT registration. Conditions and procedure.

 

Compulsory VAT registration after exceeding the turnover.

According to Section 4 of the VAT Act, there are two types of VAT registration. (i) The first is the so-called compulsory VAT registration after exceeding the turnover, and (ii) the second is the so-called voluntary VAT registration without exceeding the turnover.

The obligation to apply for VAT registration in Slovakia arises under Section 4(1) of the VAT Act if you are a domestic taxable person and you have achieved a turnover of €49,790 or more in the last 12 consecutive calendar months at most.

It is necessary that you have a registered office or a permanent establishment in the Slovak Republic. If you are a natural person and you do not meet this condition, it is sufficient if you are resident or ordinarily resident in the SR. If you meet the above conditions, you are obliged to register for VAT by the 20th day of the calendar month following the month in which your turnover was achieved.

 

What are the cumulative conditions for the obligation to register for VAT?

Compulsory registration for VAT occurs if the following conditions are met cumulatively (simultaneously):

• you must be a taxable person: an important condition for becoming obliged to register for VAT is that you meet the definition of a taxable person as defined in Section 3 of the VAT Act. For the purposes of the VAT Act, a taxable person is any person who independently carries out any economic activity, regardless of the purpose and results of that activity. For the purposes of the VAT Act, the term economic activity shall mean, in particular, a continuous activity from which income is earned and which includes the activities of manufacturers, traders and service suppliers.
• you must achieve turnover: the most important condition for becoming liable to VAT registration is the achievement of a turnover of €49,790 in no more than the last 12 consecutive calendar months.
• you must have your registered office, place of business or establishment in the country or be domiciled or habitually resident in the country: the country is defined as the territory of the Slovak Republic.

In the next part of this article, we will discuss each condition separately and give practical examples.

 

Definition of a taxable person for the purpose of VAT registration?

A taxable person for the purposes of the VAT Act is a natural or legal person who independently carries out any economic activity (in other words, a “business”), regardless of the purpose or results of that activity.

An economic activity (business) is therefore any activity from which income is earned and which includes the activities of manufacturers, traders and suppliers of services, including mining, construction and agricultural activities, activities carried out as a liberal profession (e.g. a doctor, lawyer, tax adviser or expert), intellectual creative activities and sporting activities.

The use of tangible and intangible assets for the purpose of generating income from those assets is also considered to be an economic activity, and therefore also an entrepreneurial activity. This includes, for example, the rental of immovable property, machinery, etc. (tangible assets) or the rental of computer software (intangible assets).

Employees are also not taxable persons, as employment is not considered to be the pursuit of an independent activity. Employees are obliged to follow instructions or orders, thus creating a state of superiority and subordination. This means that they do not fulfill the condition of independence.

 

Examples of exceeding the turnover for the purpose of triggering the VAT registration obligation.

As we have said, the most important condition for triggering compulsory VAT registration is the achievement of a turnover of €49,790 in the last 12 consecutive calendar months at most. Therefore, it follows that a taxable person who achieves this turnover even for a period shorter than the last 12 months (for example, achieves this turnover already in the last 6 calendar months) is obliged to register for VAT – the so-called compulsory registration for VAT.

 

Example of turnover for a period of less than 12 calendar months:

SetupMART LLC did extremely well and was “bothered” 24/7 by clients and achieved a turnover of 111,111 € (and therefore more than 49,790 €) for the period from 01.01.2023 to 01.04.2024 And thus the turnover has already been achieved in 3 months of business, which is less than 12 months. And despite the fact that she has already achieved turnover in 3 months of business, she is obliged to register for VAT.

This example shows that the period for which the turnover is assessed is not from 01.01.2023 to 31.12.2023, i.e. strictly 12 months. 12 months is just a period of time determining the maximum period of time for which the turnover is assessed. It is a maximum limitation but not a minimum limitation. This means that if the turnover threshold is reached in the first three months of business (even in one day – one invoice:) the company is obliged to register for VAT.

 

Example of achieving turnover when crossing two calendar years:

SetupMART LLC was again hilarious 🙂 and in the month 12/2023 it achieved a turnover of 33.333 € from services supplied. In the month 01/2024, the interest of clients was again extreme 🙂 and achieved a turnover of 44.444 €. So, in total, for the period of two consecutive months (regardless of the fact that it was a transition between 2023 and 2024), it achieved a turnover of €77,777 and thus became liable for VAT registration.

This example shows that the time period of the last 12 months is not limited by the calendar year boundaries, but months crossing year boundaries are also taken into account, as in our successful example 🙂

 

Definition of turnover for the purpose of VAT registration.

The turnover for the purposes of the obligation to register for VAT is the value of goods and services supplied in the domestic territory, excluding exempt goods and services, without tax.

Exempt goods and services which are not included in turnover are:

• postal services
• the provision of health care
• social assistance services
• educational services and training services
• services supplied to members of political parties and movements, churches and religious societies, civic associations and professional chambers, etc.
• services related to sport or physical education (subject to certain conditions)
• cultural services (state institutions only)
• public television and public radio services
• sale of postal stationery and stamps
• operation of lotteries and other similar games
• insurance and financial services if provided as ancillary services
• occasional supply of tangible and intangible assets other than inventories

 

The definition of turnover states that only goods and services supplied domestically are included in turnover.

Only the value of goods and services supplied domestically are included in turnover for the purpose of assessing the obligation to register for VAT. Domestic territory means the territory of the Slovak Republic.

Example: if SetupMART LLC, as a non-VAT payer, supplies its services (tax consultancy, registration offices or sale of ready-made companies) to the European Union countries, these services will not be included in the turnover for the purpose of compulsory VAT registration, since the place of supply of these services is not domestic – the territory of the Slovak Republic, but the place of supply is the EU countries.

 

Example of supply of goods transported from the Slovak Republic to a foreign country:

If our company SetupMART LLC sells goods, for example surfboards, to Finland, this would be a supply of goods connected with transport from the domestic country (SR) to a foreign country (FINLAND). In this case, the place of supply is determined by where the goods are located at the time where the transport begins. As the surfboard would be shipped to Finland (abroad) from Slovakia (domestic), the sales of surfboards would be included in the turnover for VAT registration purposes.

 

What is the procedure and where is the application for VAT registration submitted?

If you are a taxable person and you have fulfilled all the conditions we have explained in this article, you are obliged to apply for VAT registration at the tax office no later than the twentieth day of the month following the month in which you have achieved the specified turnover.

Compulsory VAT registration requires an application on the portal of the Tax Administration. If you are an entrepreneur, the application can only be submitted electronically. In the catalogue of electronic forms in the Register section, you can fill in ‘Application for registration, notification of changes, application for cancellation of registration for income tax, value added tax and insurance tax’. You will send the duly completed application to the tax office, which will assess the application. Ideally, you should also attach documents to the application to prove that you meet the conditions for compulsory VAT registration. That is, if you provide all the documents proving that you carry out economic activity in the amount of the required turnover and that you are a taxable person (bank statements, bank account agreement, issued invoices, etc.).

The tax office will check your application and may ask for additional documents to check whether you were not obliged to register for VAT earlier. If the tax office assesses from the documents supplied that you have fulfilled the conditions for compulsory VAT registration, it will register you as a taxable person within 21 days from the date of your application and issue you with a certificate of registration for tax and assign you a tax identification number (VAT ID).

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