Slovakia: Tax liability for construction services

30. August 2016

According to an amendment of the value-added tax act in Slovakia (effective since 1 January 2016), tax liability has been transferred to the recipient of services in the construction sector, too. Since 01/01/2016, transfer of tax liability in Slovakia has applied to deliveries related to building work and assembly services, provided the deliveries and services come under section F of the statistical classification of products (CPA) and both the supplier and the recipient are VAT payers.

Transfer of tax liability

“Transfer of tax liability” means that upon delivery of these services, the invoice issued will not include VAT. The duty to pay tax is transferred to the recipient of the service/s, with the recipient being entitled to deduct input tax if the latter meets the relevant general requirements.

“New provisions for the construction sector have de facto caused problems.”

Peter Ďanovský, a tax advisor and partner at TPA in Slovakia.

In the context of invoicing, this new provision de facto poses problems for the service provider, as it is unclear whether or not the respective service or delivery comes under section F of the CPA. The financial authorities have published several application guidelines in this respect as well a detailed, regularly updated overview of the activities specified in CPA section F. An information request in this matter may be addressed to the tax office.

Pay VAT on the invoices

The purpose of this amendment is to improve the solvency of small and medium-sized companies, which previously had to pay VAT on the invoices issued before actual receipt of payment from the supplier. This provision is also intended to prevent tax fraud.

 

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