When the obligation to register for value added tax (VAT) arises

When the obligation to register for value added tax (VAT) arises

When the obligation to register for value added tax (VAT) arises
The amendment to Act no. 222/2004 Coll. on VAT effective from 1 July 2021 brings the changes in the registration obligations of persons performing activities in the country.

The VAT Act distinguishes between different types of registration of persons for VAT purposes. In addition to registration as VAT Payer and as Persons identified for VAT purposes, there are also so called Special Adjustments, which are gaining great importance with the latest amendment.

Any person who is registered in accordance with § 4, § 4a or § 5 is considered to be a Payer, i.e. domestic persons, VAT groups and foreign persons. We deal with registrations according to § 6 in a special article, whereas the amendment of VAT act changes its entire essence.

Registration of a domestic person § 4

All domestic taxable persons whose turnover for the last maximum of 12 consecutive calendar months has exceeded the limit of EUR 49,790 are obliged to register for VAT purposes. A domestic person is considered to be an entity that has its registered office, residence or place of business in Slovakia (e.g. a permanent establishment).

If you meet the above conditions, you are obliged to register as a VAT payer at the tax office no later than the 20th day of the calendar month following the month in which you achieved the specified turnover.

An entity may register for VAT purposes even before it reaches a specified turnover. In this case, it is a voluntary registration.

In addition to the turnover limit, there are other reasons why the subject is obliged to register. These are, for example:

  • acquisition of assets within the payer's acquired business
  • the legal successor of the payer
  • delivery of the building, land, receipt of payment, which will exceed the turnover limit
  • a platform that does not apply special arrangements

VAT registration of group § 4a

The VAT group consists of several taxable persons established in the country, while they must be economically, financially and organizationally interconnected. The advantage of such registration is that several persons use one VAT number and supplies to each other are not subject of value added tax.

The application for registration can be submitted at any time during the year, but the tax administrator will always issue a decision on 1.1. the following year. Also, changes in the group registration can only be made as of 1.1.

Registration of a foreign payer § 5

A foreign person who does not have a registered office, place of business, establishment, residence or usually does not reside in the country is obliged to submit an application for VAT registration before the start of the activity, which is subject to tax, except for the import of goods.

The Act also states in § 5 exceptions when a foreign person does not have to register in the country for VAT purposes.

If a foreign person does not fall under any of the exceptions, he is obliged to submit an application to the Bratislava Tax Office, which will register the person as a payer within seven days from the date of delivery of the application.

In certain cases, the obligation to register also arises for persons who do not carry out an economic activity in accordance with the VAT Act (e.g. non-profit organizations, civic associations etc.). In such cases, the tax administrator does not register persons as payers, but only as persons identified for VAT purposes. The main difference is the impossibility to claim input VAT, as the person is not a payer.

Registration of a person acquiring goods from the EU § 7

Any taxable person who is not registered as a taxable person and acquires goods domestically from another EU State is required to register for VAT purposes before the value of the acquired goods (without VAT) for a calendar year reaches € 14,000.

When registering according to § 7, the reference period is a calendar year, not any 12 consecutive months. The tax office shall register the person within seven days from the date of delivery of the application.

In the event that a taxable person is a taxpayer pursuant to Section 7a, he shall not submit an application for registration pursuant to Section 7. He uses the already assigned tax identification number, which was assigned to him during registration according to § 7a.

Registration of a person acquiring / supplying services from / to the EU § 7a

A taxable person who receives or supplies services from / to another Member State, which place of supply is determined in accordance with § 15 par. 1 of the VAT Act, is obliged to register as a person identified for VAT according to § 7a of the VAT Act.

The application for registration is mandatory before the delivery / receipt of the service, regardless of the value of the delivered / received service. The tax office shall register the person within seven days from the date of delivery of the application for registration.

When receiving a service from another Member State, the taxable person is obliged to pay tax on the service received but is not entitled to deduct the input tax. After the end of the tax period, the person is obliged to file a VAT Return, VAT Ledger and pay the tax within the same period.

When the service is supplied to another Member State, the taxable person shall be required to submit an EC sales list by the 25th day following the end of the calendar quarter in which he supplied the services.

If you would like us to evaluate your case and/or to help you to register for the VAT, please contact as at [email protected].