If you buy goods or services from abroad or supply them there, you have obligations to the state in terms of VAT. The VAT Act (hereinafter VAT) underwent changes on 1 January this year and other changes apply from 1 July 2021. Some do not apply only to legal entities and entrepreneurs, but also to natural persons, i.e. ordinary people who order via the Internet from abroad. Let’s take a closer look at §4, §7 and §7a of the current VAT, concerning changes in the VAT registration obligation.
The most important changes
To be objective, changes in the VAT law are not an another whim of the Minister of Finance. Act no. 344/2020,, which amends Act no. 222/2004 Coll. on value added tax takes over the supranational legislation from the directives of the Council of the European Union.
Among serveral changes, we can consider the most important:
- the possibility of correcting the tax base in the event of an uncollectible receivable
- defining and modifying the rules for the distance sale of goods – until recently, mail order sales – within the Union, but also from other countries
- changes in the rules for determining the place of delivery when selling goods to a distant country
- the introduction of “legal fiction” when selling goods to a distant country
- abolition of the tax exemption for the import of consignments with a value of up to € 22, as the elimination of distortions of competition between suppliers of goods from the EU and suppliers from third countries
- introduction of new rules for the sale of goods using an electronic communication interface
- the obligation to prove the dispatch or transport of the goods at export
- extension of special arrangements for the application of the tax
introduction of special arrangements for the declaration and payment of tax on the import of goods
Did you know?…
… the VAT law has been amended and amended a total of 44 words since its “birth” in 2004 – forty-four times? A remarkable number in 17 years. We will not look for the reasons, but we must put the hat down in front of colleagues from our industry, who not only manage to register changes, but also apply them in practice without mistakes.
As part of the registration obligation there were changes in the VAT regulationwith a registered office or establishment in Slovakia, as well as a change in the registration obligation for another reason.
- if the taxable person is not registered according to § 4 as a taxpayer, he will be assigned a VAT ID for the purposes of applying a special arrangement
- if the taxable person achieves a turnover in the Czech Republic for the registration of a VAT payer under § 4 more than € 14,000 or requests voluntary registration, he will be left with the same VAT ID number after registration, which was assigned to him for the purposes of applying special arrangements
- if a taxable person achieves or is to achieve a turnover from another EU Member State of € 14,000 or more, he must submit an application for registration under § 7 VAT and remain with the same VAT ID number as he was assigned for the purposes of applying the special regulation
- similarly, the same VAT ID remains for the person who must register for VAT for the reasons stated in § 7a ZDPH,i.e. if he receives or supplies a service from or to another EU Member State
- the above applies equally to the purchase of goods or services as well as to their delivery
- the tax office will issue a certificate of registration and assign a VAT ID no later than 7 days from the submission of the application for registration
- on the date specified in the tax registration certificate, the taxable person becomes a taxable person
The complete wording of the VAT Act, with changes valid from 1.1.2021 and 1.7.2021, is available on the website of the Financial Administration of the Slovak Republic.. In the document you will also find comments, methodological instructions, guidelines and forms for current changes.
So when is it necessary to pay VAT ?
When buying goods or services from abroad or their delivery? Well, whenever the law shows it. We also know that practically applied knowledge of VAT legislation is not really commonplace, let’s give it financial literacy. Since we cannot – and fortunately not all – know everything, we can boldly delegate. If you do not know how to deal with VAT in connection with foreign trade, we are available.. We also deal with VAT and we will be happy to help you professionally.