Starting from January 1, 2025, significant changes to the value-added tax (VAT) law will come into effect, affecting both the business environment and consumers. Amendments to the VAT Law include an increase in the standard rate, the introduction of new reduced rates, adjustments to the conditions for VAT registration, and other measures that will impact a wide range of economic activities.

1. Increase in the Standard VAT Rate to 23%

Starting from January 1, 2025, important changes will come into effect in the Value Added Tax (VAT) Law (Law No. 222/2004 Coll. on VAT). These changes include an increase in the standard VAT rate from 20% to 23%, as well as the introduction of new reduced rates of 19% and 5%. The reduced VAT rate of 10% will be abolished and will no longer apply to goods or services.

From the beginning of 2025, the standard VAT rate in Slovakia will rise from the current 20% to 23%. This adjustment is aimed at increasing government revenues and stabilizing public finances. The increase in the standard rate will affect a wide range of goods and services that were previously subject to this rate.

In practice, this means that, for example, electronics, clothing, cars, and many other goods and services will become more expensive for consumers. Businesses will need to prepare for adapting their billing systems, reviewing their pricing policies, and establishing communication with customers.

2. Introduction of Two New Reduced VAT Rates

In addition to the increase in the standard rate, the amendment introduces two new reduced rates:

VAT Rate of 19%
This rate will apply to certain goods and services that were previously subject to the 10% rate, such as basic food products, electricity, gas, and water. It will also apply to non-alcoholic beverages served in restaurants and cafes.

VAT Rate of 5%
The lowest rate will apply to staple food items (such as bread, meat, dairy products), medicines, books (both printed and electronic), as well as services related to accommodation, restaurants, and catering. The aim of this reduced rate is to ease the financial burden on households and support the accessibility of essential goods.

Reduced VAT Rates of 19% and 5%

The reduced VAT rates of 19% and 5% will apply to specific goods and services. These rates are detailed in Annex No. 7 (for goods) and Annex No. 7a (for services) of the VAT Law.

Goods Subject to the Reduced VAT Rate of 5%

In accordance with Annex No. 7 of the VAT Law, the 5% VAT rate applies to the following categories:

• Certain food products (e.g., meat, bread, dairy products). These items are listed in Annex No. 7, Item 1.
  Legal basis: § 27, Section 2, Point a) of Law No. 222/2004 Coll.
• Medicines and medical devices. This category includes medicinal products listed in Annex No. 7, Item 2.
• Books and printed materials. Printed books, brochures, magazines, provided that advertising does not constitute more than 50% of the total content and erotic content does not exceed 10%.
  Legal basis: § 27, Section 2, Point b) of Law No. 222/2004 Coll.
• Accommodation services. Hotels, guesthouses, and other accommodation facilities.
• Catering services. Meals served in restaurants, excluding alcoholic beverages. These services are listed in Annex No. 7a, Item 2.
• Sports services. Fees for attending sports events, fitness centers, and other sports-related services.
• Social enterprises. Goods and services provided by registered social enterprises that reinvest 100% of their profits in achieving their goals.
  Legal basis: § 27, Section 2, Point c) of Law No. 222/2004 Coll.

Goods Subject to the Reduced VAT Rate of 19%

In accordance with Annex No. 7, Item 1 of the VAT Law, the 19% VAT rate applies to the following categories:

• Electricity, gas, and water. These goods were previously subject to the standard VAT rate of 20%.
  Legal basis: § 27, Section 3, Point a) of Law No. 222/2004 Coll.
• Products not classified as staple foods. This includes a wide range of food products, except those categorized as staple foods and taxed at the 5% rate.
• Non-alcoholic beverages served in restaurants. These services are subject to the reduced rate to support the gastronomic sector.
  Legal basis: § 27, Section 3, Point b) of Law No. 222/2004 Coll.

Abolition of the 10% VAT Rate

The current reduced VAT rate of 10% will be completely abolished. This change has been introduced as part of the government's consolidation measures and reflects the need to simplify the tax system.

Legal basis: Law No. 422/2024 Coll., which amends Law No. 222/2004 Coll.

Practical Implications of the Changes

Entrepreneurs must carefully update their billing systems, ensure the correct application of VAT rates to specific goods and services, and simultaneously inform their customers about the changes. Failure to comply with the rules may result in penalties under Law No. 563/2009 Coll. on Tax Administration (Tax Code).

These changes require thorough preparation from all VAT-registered entities. For further information, it is recommended to review the full text of Law No. 222/2004 Coll., including Annexes No. 7 and 7a.

3. Changes in the Conditions for VAT Registration

Starting from January 1, 2025, the rules for VAT registration in Slovakia will undergo significant changes. These changes will apply to both local entities and foreign organizations providing goods and services on the Slovak market. The main goal of these changes is to align the rules with European standards, simplify the administrative process, and improve tax administration.