Regulatory updates - Slovakia

The national eFaktúra e-invoicing system implementation is expected to continue based on the European Commission’s “VAT in the Digital Age” (ViDA) initiative and the legislative framework to be approved by the EU Member States. This means no new updated timeline has been specified other than a reference to ViDA and its proposed e-invoicing timelines.

Additionally, the draft outlines other areas of improvement, such as the financial administration’s electronic services. One area is optimizing the financial administration and reducing errors concerning payment of taxes, fees, etc., by including QR codes on taxpayer invoices and pre-filled tax return forms for individuals.

The financial administration plans to add these QR codes by late May and June 2024. The first output documents with QR codes are going to be sent to taxpayers around the same time.

As previously reported by Pagero, all state and public bodies in Slovakia and entrepreneurs supplying them with goods and services will gradually be required to exchange e-invoices.

According to the latest update to the Government's e-invoicing website, the current expected timeline is the following:      

• Q1 2024 – Ministry of Finance of the Slovak Republic and Datacentrum and its suppliers;
• Q1 2024 – Budget organizations of the Ministry of Finance of the Slovak Republic, including the Financial Administration of the Slovak Republic;
• Q1 2024 – Other government and public administration entities;
• Engaging entrepreneurs for transactions with government and public administration institutions.

The above dates are the Government's expected schedule and subject to change.

The Slovak Ministry of Finance has introduced a draft amendment to the VAT law suggesting a few changes, including a reduced threshold for issuing simplified invoices.

Currently, a simplified invoice can be issued for supplies of goods or services up to EUR 1000,00 without VAT. However, the draft amendment proposes to reduce this threshold to EUR 400,00 without VAT.

The objective of this change is to combat tax evasion and fraud, as well as harmonize the Slovak VAT rules with the Council Directive 2006/112/EC. The draft amendment is subject to parliamentary approval and is expected to be effective from 1 July 2024.

Here are some examples of other updates proposed to the VAT law:

• Special scheme for small businesses;
• Changes in VAT registration and VAT deregistration of established and non-established taxable persons;
• Changes in late VAT registration and related reporting;
• Changes in deadlines for filing VAT reports and issuing invoices;
• Reverse charge mechanism for goods importation (depending on further conditions);
• Revision of the place of supply of services for virtual events;
• Input VAT deduction from intra-community acquisition of goods based on documents other than invoices.

As the draft amendment still requires parliamentary approval, there might be differences between the final approved legislation and the current draft proposal.

According to the announcement, all state agencies in Slovakia and entrepreneurs supplying them with goods and services will gradually be required to exchange e-invoices.

Currently, only invoices made between G2G (government-to-government) and B2G (business-to-government) are subject to the e-invoicing requirements.

This is what the updated schedule for government and public administration institutions looks like:

• Q3 2023 – Ministry of Finance of the Slovak Republic and Datacentrum and its suppliers;
• Q4 2023 – Budget organizations of the Ministry of Finance of the Slovak Republic, including the Financial Administration of the Slovak Republic;
• Q1 2024 – Other government and public administration entities;
• Engaging entrepreneurs for transactions with government and public administration institutions.

The above dates are subject to change since no final regulations have been introduced yet. Pagero is committed to keeping you informed about developments in Slovakia timely.

As previously reported by Pagero, the Ministry of Finance in Slovakia has suggested a gradual roll-out of the new CTC model.

The project's timeline has changed several times. Right now, according to the information on the IS EFA platform, the system’s testing for a selected group of public entities is planned for April 2023.

There are no specifications yet on when this platform will become operational and whether it will be mandatory for public or private entities.

Once more information is available, Pagero will notify its customers in due time.

In February last year, the Ministry of Finance of Slovakia suggested a gradual roll-out approach for a new CTC model. You may read more about it in our previous update.

According to the information provided on the official landing page dedicated to the new system - IS EFA, the implementation periods have been updated as follows:

• Starting June 2022, it should be possible for the public to start testing the new infrastructure

• Starting January 2023, IS EFA should be available for live operation with B2G, G2G, and G2B e-invoices.

Note that the current information does not say that the platform will become mandatory for use from 2023 - only operational. There are indications that the platform will become enabled for B2B and B2C transactions starting from 2024.

Please note that all the dates mentioned above are subject to change, as no final regulations have been put into place. Pagero is closely monitoring the developments in Slovakia and will keep you updated with the latest changes.

Earlier in March this year, we have posted an update with some indicative dates for the CTC roll-out in Slovakia. The proposed draft law is yet to be approved at the beginning of the following year.

We have now known from the E-invoice website, newly developed by the Ministry of Finance, that there will be a unified process of electronic circulation of invoices and sending structured data from invoices to the financial administration. This will take place via an information and communication solution - e-invoicing information system (IS EFA), local name - informačný systém elektronickej fakturácie.

The e-invoicing solution

The e-invoicing system will support both invoice issuance and reception of domestic Slovak transactions. At the same time, it will help foreign suppliers create structured invoices, which can then be distributed by other channels, e.g., e-mail. Slovak buyers trading with foreign suppliers will be required to upload received invoices in xml on the Slovak e-invoicing system.

The new e-invoicing system is said to help minimise the administrative burden for all businesses when implementing the e-invoicing solution. Slovak taxpayers will be able to fulfil the new obligations through their own certified accounting software, or via a free online portal operated by the Ministry of Finance.

Implementation phases

• August 2021: Demo account available for public testing of the IS EFA;
• January 2022: E-invoicing via the system: for B2G, G2G and G2B transactions (Planned);
• January 2023: E-invoicing via the system: for B2B and B2C transactions (Planned).

Technical specifications

According to the Slovak e-invoice website, the syntaxes in use are UBL 2.1 and CII D16B (EN syntaxes). There are also demo accounts available for the public to test the platform.

The introduction of the new invoicing system will help the country promote cross-border trade and interoperability in the field of e-invoicing while increasing the transparency of invoices issued and received by public authorities.

Earlier in February 2021, the Ministry of Finance in Slovakia revealed a new draft law on sending data to the Tax Administration. According to the authorities' preliminary statements, the aim is to introduce real-time invoice reporting that is supposed to be mandatory for all transactions over time alternatively an e-invoicing mandate.

It is expected that a public consultation on the measure is underway until the end of March 2021. Preliminarily, the validity of the law is proposed at the beginning of 2022. Subsequently, there will be room for testing technical solutions. The latest date for the start of live operations can be expected in January 2023.

One should bear in mind that implementing a CTC model demands a lot of new legislation, update of current legislation, set up new technical solutions on both sides, and thus seems to be a long-term project.

Current challenges in the Slovak taxation systemThe Government of the Slovak Republic has committed itself to reduce the VAT collection gap (20%) to the EU average (11%). However, several challenges have been detected in hindering the new trends in tax evasion development.

One of them is the time-delayed data acquisition from the invoices issued by the taxpayers. This does not allow the Tax authorities to react operatively to identified suspicions of any unfair practices.

Furthermore, there is a gap in the VAT collection caused by the improper collection of income tax. If the tax subjects are not VAT-payers, the audit report does not allow to detect tax evasion on their income tax. Thus, the Financial Administration does not have any information on income tax on invoiced goods and services by non-VAT payers during the taxation period.Outlines of the new modelThe new draft law is intended to introduce the obligation for all businesses to issue B2B invoices for all transactions, for which B2C receipts are not issued with the e-cash system. Under the planned schema, the sellers will be obliged to submit certain invoice data elements to the governmental platform prior to issuing the final sales invoice. The buyers will have a corresponding obligation to report purchase invoices.

It is planned that the taxpayers will be able to send the invoicing data required automatically through certified software. For businesses not using any accounting software, a free online solution will be provided.

The measures currently in place will be reviewed in consideration with reducing the administrative burden on businesses.

* You can read the full report here: https://ec.europa.eu/taxation_customs/sites/taxation/files/vat-gap-full-report-2020_en.pdf