The most common mistake made by newly established companies (mostly non-VAT payers) is failing to fulfill their registration obligation before receiving services from Google/Facebook or other web services, or failing to include their VAT ID number on the invoice they receive. However, invoicing within the EU does not only refer to the receipt of services. It can also involve the supply of goods and services to the EU and the acquisition of goods from the EU.

General Information

When supplying goods and services within the European Union, it is important from the perspective of individual countries to determine which country will be the recipient of the VAT. Naturally, every country wants to maximize the amount of VAT collected for its own budget. Therefore, uniform legislation applies to trade within the EU, which determines the place of supply of goods and services within the EU and, consequently, the country that will collect the VAT.

Registration Requirement

If you receive services from EU countries, provide services to EU countries, or purchase goods from another EU member state with a value exceeding €14,000 within a single year, you are required to register for VAT pursuant to Sections 7 and 7a of the VAT Act. If you are already registered as a VAT payer under Section 4, you do not need to complete a separate registration (under Sections 7 and 7a).

Purchasing Services from the EU

For services provided by a foreign entity from the EU or a third country, where the obligation to pay VAT in Slovakia applies, that obligation is transferred to the recipient of the services—in our case, the Slovak customer. The tax liability arises on the date of supply of the service, that is, when the service is provided or when the provision of the service is completed.

A service provider from the EU must issue us an invoice without VAT, marked with the note “reverse charge” or “prenesenie daňovej povinnosti,” or in another foreign language. A Slovak VAT payer calculates the VAT on the service received and pays 20% VAT. If the taxpayer is registered as a VAT payer under Section 4 (pink card), they may claim a deduction for the tax paid in this manner and, ultimately, will not pay any VAT. If the taxpayer is registered under Section 7a (white card), they are not entitled to a VAT deduction. An example of such a service from the EU could be an invoice from Facebook for advertising services.

Provision of Services to the EU

When providing basic services to the EU pursuant to Section 15, we supply services to a taxable person without VAT, with the note “reverse charge.” If we are VAT-registered, we provide services to a non-taxable person and include 20% VAT on the invoice; if we are not VAT-registered, we do not include VAT on the invoice. We follow the same procedure when supplying goods to the EU.

Purchase of Goods

If you purchase goods from abroad from a VAT-registered supplier, and we are a VAT-registered business in Slovakia and provide the supplier with our VAT ID number, the supplier will issue an invoice to us without VAT. Subsequently, when calculating and, if applicable, claiming a VAT credit, the Slovak VAT-registered business will proceed in the same manner as when receiving a service from the EU. If we do not provide our VAT ID number, the supplier will issue us an invoice with the VAT rate of that country, and we will not be entitled to a VAT refund.

Provision of a Service from a Third Country

If the service is provided from a third country (the U.S., Australia, Ukraine, Russia, and others), the invoice does not include VAT and may (but is not required to) include a European Union VAT ID number. A Slovak VAT payer shall proceed in the same manner as when receiving a service from the EU when calculating VAT and, subsequently, claiming any deductions.

Filing a VAT Return and VAT Control Statement

A VAT payer is required to file a monthly or quarterly tax return, or a summary and control statement, by the 25th day following the end of the period (month or quarter) to which the transaction relates, and to pay the VAT (if a tax liability has arisen).

At the TaxWise accounting firm, we handle EU invoices on a daily basis. Our clients can always consult with us regarding the accuracy of their invoicing at any time by phone or email. By regularly processing invoices from both VAT-registered and non-VAT-registered entities, we are able to detect and correct any errors in a timely manner. If you are interested in our services, please feel free to fill out a non-binding request for accounting or consulting services.