- Proposed Legislation: The document outlines a draft law amending Act No. 222/2004 on Value Added Tax (VAT), aiming to introduce mandatory electronic invoicing and real-time data reporting to combat tax evasion.
- Objectives: The law aligns with the Slovak government’s commitment to enhance tax compliance by adopting EU directives on VAT for the digital age, requiring VAT payers to issue and receive invoices in a specified electronic format starting January 1, 2027.
- Data Reporting Requirements: Effective January 1, 2027, VAT payers will be obligated to report data from issued and received electronic invoices for domestic transactions electronically, streamlining the invoicing process and improving efficiency in tax administration.
- Current Situation Evaluation: The existing VAT regulations allow for both paper and electronic invoicing, but most invoices are still issued on paper, leading to delays in processing and payments. The current system is inadequate for preventing tax evasion and does not prevent the re-entry of individuals involved in fraudulent activities.
- Public Involvement: The public is invited to participate in the legislative preparation process by submitting comments or proposals by January 31, 2025, with the commenting procedure expected to begin in the second quarter of 2025.
Source:
Unofficial translation – Supporting documentation
PRELIMINARY INFORMATION
(according to § 9 of Act No. 400/2015 Coll. on the Creation of Legal Regulations and the Collection of Laws of the Slovak Republic and on the Amendment and Supplementation of Certain Laws as amended)
- Proposed Legislation:
Draft law amending and supplementing Act No. 222/2004 Coll. on Value Added Tax as amended (hereinafter referred to as “the draft law”).
- Main Objectives of the Proposal:
The Government of the Slovak Republic, in its program declaration for 2023–2027, has committed to enhancing the fight against tax evasion and, in this context, aims to introduce mandatory electronic invoicing and real-time reporting of data to the tax administration as part of its medium-term priorities. The aim of the draft law is to incorporate Article 0 of Council Directive (EU) amending Directive 2006/112/EC regarding VAT rules for the digital age, approved on November 5, 2024, by the Council of Ministers (Ecofin) (hereinafter referred to as “the directive”), into Act No. 222/2004 Coll. on Value Added Tax (hereinafter referred to as “the VAT Act”). This will establish mandatory electronic invoicing for taxable persons who are VAT payers (hereinafter referred to as “the payer”) and require the mandatory real-time reporting of data from domestic transactions from electronic invoices to the tax administration.
With the amendments to the VAT Act, starting January 1, 2027, payers will be required to issue and receive invoices in a prescribed electronic format. An electronic invoice will only be considered valid if it contains the information required by the VAT Act and is issued, sent, and received in a structured electronic format that allows for automatic and electronic processing. To ensure uniformity of electronic invoices related to payers, there will be a requirement to issue invoices in a structured format compliant with the European standard for electronic invoicing and the list of its syntaxes established by Directive 2014/55/EU of the European Parliament and the Council of April 16, 2014, on electronic invoicing in public procurement.
Starting January 1, 2027, there will be a requirement to report data from issued and received electronic invoices for domestic transactions. The data from the invoices will be reported electronically in a manner consistent with the provisions of Article 4 of the directive, which governs the submission of data from electronic invoices for cross-border transactions within the EU. The aim of these changes is to digitalize the entire process from issuance by the supplier to processing the electronic invoice by the recipient, as well as the subsequent transmission of data from the electronic invoice to the tax administration, ensuring that this process is automated with minimal manual intervention, resulting in a significant reduction in processes related to invoice receipt and processing (e.g., eliminating the need to manually enter data from paper invoices into the system). The earlier implementation of the electronic invoicing and reporting system for domestic transactions will prepare payers for the mandatory reporting of data on cross-border transactions according to the aforementioned Article 4 of the directive, which must be transposed into the VAT Act and effective by July 1, 2030.
This measure from the state will contribute to an effective fight against tax fraud, has the potential to reduce tax gaps in both VAT and corporate income tax, and improve tax collection. By providing real-time access to data from electronic invoices, the tax administration will be enabled to process the necessary input data promptly for identifying compliance with tax obligations and establishing certain control mechanisms within risk analysis to prevent fraudulent activities, possibly alongside adjustments to selected tax administration institutes. This assumes changes to the end services and related information systems of the tax administration, as well as building capacities utilizing new analytical tools for processing data obtained from electronic invoices.
On the business side, commercial operations will also be simplified, and there will be improvements in efficiency and the quality of the business environment. Furthermore, the speed of data transmission, the guarantee, and the reliability of communication will increase by establishing standardization in the field of electronic invoicing due to the current diversification of the environment (various levels of used standards, environments prone to emerging errors, etc.).
In addition, in line with the aforementioned goal of the Slovak government to enhance the fight against tax evasion, there will be changes in tax registration effective from January 1, 2026, aimed at eliminating tax registration avoidance and in the area of deregistration, to prevent the re-entry of persons who have demonstrably actively and knowingly participated in fraudulent transactions into the VAT system.
- Assessment of the Current Situation:
According to the current legal regulation, the VAT Act allows for both paper and electronic forms of invoices if the contractual parties agree on such a form. However, in practice, most invoices are issued in paper form. This results in delays in invoice delivery within the business environment, which subsequently affects payment speed.
Currently, there is no obligation for payers to submit data from issued and received invoices in real time. Payers are required to submit data from issued and received invoices in a control report, which must be submitted by the 25th day after the end of the relevant tax period. It is evident that this tool no longer sufficiently reflects the new trends in tax evasion. Its weak point can be identified as the delayed acquisition of relevant data from issued invoices by payers, which does not allow the tax administration to respond promptly to identified suspicions of improper practices by taxpayers.
The current legal regulation of the VAT Act regarding registration provisions is insufficient in preventing unlawful activities. It also does not adequately prevent the re-entry of individuals who have actively participated in fraudulent transactions into the VAT system.
- Public Involvement in the Preparation of the Legislation:
The public can participate in the preparation of the legislation by submitting comments or proposals within the scope of the objectives outlined in point 2, by January 31, 2025.
Contact Information: Ministry of Finance of the Slovak Republic
Tax and Customs Section
Štefanovičova 5
817 82 Bratislava
Email: [email protected]
[email protected]
- Expected Date for Commencement of the Public Consultation: 2nd Quarter 2025
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
