Amendment to the Slovak VAT Act has introduced joint liability for Slovak VAT
By Marián Augustín, AT Partners, k.s.
The latest amendment to the Slovak VAT Act has introduced customer liability for VAT charged on goods or services supplied in Slovakia, if the supplier has not paid (or has become unable to pay) the VAT when the customer knew or should have known that the VAT could not be paid to the tax authority.
The circumstances under which the customer should have known that the VAT will not be paid to the tax authority are: (1) unreasonably high or low consideration for the supply; (2) ongoing business with "unreliable" suppliers; or (3) personally connected parties via either a statutory body position or ownership ties. The definition of an "unreliable" supplier has been introduced to the Slovak VAT Act.
If a VAT payer (1) has ceased to conduct an economic activity; or (2) repeatedly fails to comply with obligations to submit a tax return, fails to pay the tax, fails to comply with obligations during a tax audit, or has been unavailable at its address, the tax authority can deregister this VAT payer ex-officio. The list of these "unreliable" taxpayers has been posted on the official W of the Slovak tax authority and will be updated regularly.
As a result, if a customer purchases goods or services from an "unreliable" taxpayer and the supplier fails to pay VAT to the tax authority, the tax authority shall request that the customer pays the VAT. So far, the joint liability has been used only in cases of personally related parties with obvious intentions of tax fraud.
AT Partners, k.s., Bratislava, Slovakia
T: +421 25 296 69 55
Marián Augustín is a Slovak statutory tax advisor, an active member of the VAT Methodological Committee of the Slovak Chamber of Tax Advisors and a member of GGI's ITPG and VAT Practice Group. He also gives lectures on various VAT issues and has worked as a tax advisor for both Andersen and Ernst & Young in the past.
AT Partners, k.s. is a professional services organisation located in Bratislava. It provides integrated solutions that draw on diverse and profound competencies in tax, audit and accounting consulting and assurance. AT Partners provides clients with a broad variety of tax, audit and accounting advisory services as well as payroll compliance.
published: July 2013