Slovakia

New VAT law Streamlining a cumbersome VAT process is often a central objective when drafting VAT laws. We have seen this recently in both Greece and Italy, who are offering re-filled VAT returns.    Slovakia is introducing a new VAT law, which similarly aims to simplify the VAT process for taxpayers.  This will take effect from 1 April 2023 and will aim to make the VAT process more accessible and equitable for all taxpayers.    Slovakia is a compliant territory for Tungsten and we will monitor any further e-invoicing changes in the country.  

Minor delay to Test EFA operation Last month we communicated details of the Test EFA Operation in Slovakia in respect of e-invoicing in the country, which was due to start in December 2022.  The Slovak tax authorities have announced a slight delay- this is now due to commence this month, in January 2023.  

Reduced VAT rates for restaurant and catering services The Slovak government has approved the temporary reduction of VAT for specific restaurant and catering services, effective 1 January 2023 to 31 March 2023.  The reduced rate applied will fall from 20% to 10%.   Slovakia is a compliant territory for Tungsten Network and we currently support both rates as part of our solution.  

Revised timeline for e-invoicing implementation  E-invoicing momentum has been accelerating in Slovakia, despite several postponements to the start of the proposed e-invoicing mandate. Originally, the Electronic Invoicing Information System (IS) EFA test operation was scheduled for the beginning of September this year. This date has now been postponed to December 2022.   The revised timeline for the staged implementation of the e-invoicing process is now in line with the following:  

• December 2022: the IS EFA test operation will begin. The pilot programme of e-invoicing should be available for all those who issue invoices to the Ministry of Finance of the Slovak Republic or to its organisation DataCentum. 
• April 2023: the first phase of the mandatory e-invoicing system will be launched and will be available for B2G transactions. The pilot programme of e-invoicing will extend its scope and should be available for all those who invoice the other budgetary organisations of the Ministry of Finance of the Slovak Republic. This will include the Financial Administration of the Slovak Republic. 
• January 2025: E-invoicing obligations at both B2B and B2C level are expected to commence, further to several postponements.  

The dates have not been fully finalised and are therefore potentially subject to change. Slovakia is a compliant territory for Tungsten and we are closely following e-invoicing developments in the country.  

B2G e-invoicing mandate delay We have previously communicated on the B2G e-invoicing mandate in Slovakia, where e-invoicing has been gaining significant momentum. Slovakia has announced a slight delay to its B2G e-invoicing mandate, which is now expected to start in April 2023 as opposed to January 2023.

E-invoicing public test operation We recently communicated that the e-invoicing mandate was delayed in Slovakia. However, that has not prevented the Slovakian Tax Authorities from establishing a framework to ensure the proposed upcoming e-invoicing roll-out is smooth, efficient and automated, resulting in a more user-friendly and less cumbersome tax solution for taxpayers. To this effect, the Slovakian authorities have initiated a public testing phase for the proposed e-invoicing solution. Entities and individuals subject to the testing phase will work with an online application or integration through OpenAPI set up by the tax authority. It is hoped that the public interaction with the e-invoicing model and its systems will provide valuable insights and underline any necessary required enhancements before the roll-out of the mandate. It also serves to underscore the growing tendency across Europe to involve the general public as an integral part of e-invoicing development process.

Draft bill to implement EU VAT legislation Slovakia is involved in a draft consultation for the implementation of EU legislation on the VAT Act, with reference to Draft Bill No. 309/2022. This is due to come into effect on 1^st January 2023. This as a recurring trend across Europe, where countries adopt EU legislation into their own Directives. This adoption offers advantages- offering greater standardisation and consistency with the EU VAT principles and regulations and aligning policies with other EU countries which have enacted similar legislation into their own domestic laws. The public consultation covers the following:

• Change the VAT registration threshold to EUR 49,790.
• Regulate processes for VAT registration exemptions and cancellations
• Exempt VAT for EU-purchased or imported goods and services if made accessible free of charge
• Revise the VAT deduction requirement regulations for non-payment of VAT
• VAT requirements for refund
• Payment service providers’ recordkeeping duties for cross-border payments.

Feedback for the consultation is requested by 20 June 2022.

E-invoicing implementation plans delayed Slovakia has now delayed plans to implement e-invoicing in the country. The new revised timeframes are as follows:

• June 2022: a test phase
• January 2023: first phase for B2G, G2G and G2B transactions

The second phase is also expected to start in 2023 and will be extended to also include B2B and B2C transactions.

Mandatory ‘real-time’ e-invoicing expected in 2024 Many European countries are reviewing their plans for e-invoicing implementation and Slovakia is no exception. Despite e-invoicing expected to take hold in the country some way away yet- in 2024- the Ministry of Finance is setting out some clear timeframes to accomplish this. Some key dates are summarised below:

• 2021: Ministry of Finance introduces a law regarding sending invoice structured data to the Financial Directorate; public consultation with stakeholders commences
• 2022: Law expected to finalise
• 2023: Law effective from this date
• 1 January 2024: obligation to use e-invoicing expected

The passing of the year between the ‘effective date’ and the obligation to use e-invoicing indicates that the Slovakian tax authorities acknowledge the difficulties that can be expected in the transition from paper to e-invoicing. This time should allow Slovakian taxpayers to familiarise themselves with the technical specifications, e-invoicing process and finer detail relating to e-invoicing. Small businesses will get further assistance via a free online application ‘Virtual invoice’. This aims to reduce administrative burdens and offer a more simplified process to smaller businesses. This includes the ability to issue an invoice via a mobile phone and send this to the national e-invoice system.

Proposal for real-time reporting of invoice data from 2023

Real-time reporting of invoice data is gaining momentum in Slovakia. As with many countries, the underlying push for this appears to be related to the need to reduce tax fraud and improve the efficiency of tax collection, and to overhaul the current SAF-T system, which can incur time delays. With the proposed system, data would be required to be reported in real-time before the invoice is sent to the customer.

A draft Act is due to be submitted for feedback shortly relating to invoicing and reporting data. The new law would include an obligation to report structured invoice data to the Financial Administration (FA) on a real-time basis, drawing some parallels with countries such as Hungary adopting a similar approach. The proposed date for implementation is 2023.

Slovakia aims to capture most taxpayers within the proposed changes with only minor exceptions, irrespective of their VAT registration status.

Company accounting software or a free online application would assist in the reporting procedure. As a brief overview, the FA would verify this data and send a QR code to the supplier, which should be added to the invoice.

But it is not only suppliers who are affected. Customers would also be affected. Customers would need to send data from received invoices before VAT deduction. Any breaches of the law could be significant, resulting in fines up €10,000.

Slovakia starts a consultation process for e-invoicing

The Ministry of Finance in Slovakia will soon start a consultation process regarding e-invoicing. As a result of this, the government aims to:

• Simplify the current VAT declaration system;
• Reduce fraud;
• Reduce the administrative burden for businesses.

Public law entities and solution providers in the IT sectors will be contacted during the consultations to draw up a draft legislative text with their input.

Public consultation e-Invoicing B2B

Slovakia’s e-invoicing initiative is currently in the process of consultations by the authorities of the Slovak Financial Directorate. Based on the authorities’ preliminary statements about e-invoicing, Slovakia is planning to introduce real-time invoice reporting (RTIR) which should be mandatory for all transactions over time. The aim of this initiative is to reduce administrative burdens on the side of tax subjects (e.g. to reduce obligatory VAT reporting) and to obtain real-time invoicing data on the side of tax authorities and use it for tax control purposes.
Mandatory e-invoicing will be introduced gradually. The first phase will (probably during 2021) cover G2G and B2G transactions. In a later stage, (the expectation is in 2022) for B2B and B2C transactions will come under the legislation.
As we have seen in other countries, applying mandatory e-invoicing into practice requires a significant amount of new regulation and legislation.

Slovakia announces an e-invoicing/real-time reporting system

In a recent press release the Slovakian Tax authorities pointed at a new draft law on sending data to the Financial Administration. Please follow the link here for the full text.

The intention of the draft law is to introduce the obligation for all business entities to issue an invoice for each business transaction within a certain period of time. At the same time, invoice pre-clearance is also foreseen: the obligation to send specific invoice data to the Financial Administration before the final version of the invoice is prepared and sent to the buyer. Taxpayers can fulfil their invoice reporting obligations in various ways: using an e-invoicing service provider; directly from their accounting software/ERP using a certified communication method or using a free government portal. There will also be reporting obligations on the buyer.

Currently there is no more information or technical details available. We will continue to monitor Slovakia’s progress and report these in our upcoming e-invoicing updates.