Changes in VAT in Slovakia from 2025: What can we expect?
Significant changes to Value Added Tax (VAT) will come into effect on January 1, 2025, impacting 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 VAT registration requirements, and other measures affecting a wide range of economic activities.
1. Increase of the Standard VAT Rate to 23%
Starting from January 1, 2025, significant 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 the adaptation of their invoicing systems, review their pricing policies, and establish clear 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 VAT rates:
19% VAT Rate:
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.
5% VAT Rate:
The lowest rate will apply to essential 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 purpose of this reduced rate is to ease the financial burden on households and support the affordability of basic necessities.
Reduced VAT Rates of 19% and 5%
The reduced VAT rates of 19% and 5% will apply to certain 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 5% Reduced VAT Rate
According to 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, Section 1.
- Legal basis: § 27, Part 2, Point a) of Law No. 222/2004 Coll.
- Medicines and medical devices. This category includes pharmaceutical products listed in Annex No. 7, Section 2.
- Books and printed materials. Printed books, brochures, magazines, provided that advertising makes up no more than 50% of the total content and erotic content does not exceed 10%.
- Legal basis: § 27, Part 2, Point b) of Law No. 222/2004 Coll.
- Accommodation services. Hotels, guesthouses, and other types of accommodation.
- Catering services. Meals in restaurants, excluding alcoholic beverages. These services are listed in Annex No. 7a, Section 2.
- Sports services. Fees for attending sporting events, fitness centers, and other services related to sports.
- Social enterprises. Goods and services provided by registered social enterprises that reinvest 100% of their profits to achieve their goals.
- Legal basis: § 27, Part 2, Point c) of Law No. 222/2004 Coll.
Goods Subject to the 19% Reduced VAT Rate
According to Annex No. 7, Section 1 of the VAT Law, the 19% VAT rate applies to the following categories:
- Electricity, gas, water. These goods were previously subject to the standard 20% VAT rate.
- Legal basis: § 27, Part 3, Point a) of Law No. 222/2004 Coll.
- Products not classified as essential goods. This includes a wide range of food items, except for those included in the essential goods group and taxed at the 5% rate.
- Non-alcoholic beverages served in restaurants. These services are taxed at the reduced rate to support the hospitality sector.
- Legal basis: § 27, Part 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 is 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 Consequences of the Changes
Entrepreneurs must carefully update their invoicing 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 more information, it is recommended to review the full text of Law No. 222/2004 Coll., including Annexes No. 7 and 7a.
3. Changes in VAT Registration Requirements
Starting from January 1, 2025, the rules for registering for Value Added Tax (VAT) in Slovakia will undergo fundamental changes. These changes will affect both local entities and foreign organizations providing goods and services in the Slovak market. The main objective of the changes is to align the rules with European standards, simplify the administrative process, and improve tax administration.
Domestic Entities
For local entities providing goods or services in Slovakia, the income threshold for VAT registration will change. Starting from January 1, 2025, the following thresholds will apply:
- Value of goods or services supplied in the previous calendar year: If a business exceeds taxable sales of more than €50,000 in the previous calendar year, it is required to register for VAT.
- Value of goods or services supplied in the current calendar year: If sales in the current year exceed €62,500, the business must register for VAT by the end of the month following the month in which this threshold was exceeded.
These changes provide certain relief for small businesses, allowing them to maintain their VAT-exempt status for a longer period, thereby reducing administrative burdens and enabling them to offer more competitive prices. For taxpayers who do not exceed this threshold, VAT registration remains voluntary according to § 4, Paragraph 4 of Law No. 222/2004 Coll.
Legal basis:
- Law No. 222/2004 Coll. on Value Added Tax, § 4, Paragraphs 1 and 2.
Foreign Entities
For foreign businesses operating in Slovakia, a fixed income threshold will be introduced, after which VAT registration will become mandatory. Starting in 2025, the rules will change as follows:
- Value of taxable supplies with the place of performance in Slovakia:
If a foreign entity without a registered office or representation in Slovakia generates income from supplies of goods or services with the place of supply in Slovakia exceeding €10,000 during the calendar year, it will be required to register for VAT.
This change aims to improve fairness and create equal conditions for all entrepreneurs operating in the Slovak market. VAT registration will also be mandatory in cases where a foreign entity provides digital services or remotely sells goods to Slovak consumers. However, foreign organizations using OSS (One-Stop Shop) or IOSS (Import One-Stop Shop) schemes, which allow VAT registration in the country of origin, are exempt from this requirement.
Legal basis:
- Law No. 222/2004 on Value Added Tax, § 5, Paragraphs 1 and 2
- Council Implementing Regulation (EU) No. 282/2011
Practical Consequences of the Changes
The new rules will affect a significant portion of entrepreneurs who were previously not required to register for VAT. Domestic companies with lower sales volumes will gain more flexibility, while foreign companies will need to pay more attention to whether they exceed the new €10,000 threshold. In both cases, it is important to ensure:
- Proper monitoring of revenues: Entrepreneurs must track their turnover throughout the calendar year and ensure registration if they exceed the established limits.
- Compliance with registration deadlines: Registration must be completed within the timeframes set by the legislation.
- Updating accounting systems: It is essential that accounting software correctly tracks all taxable transactions and alerts the business to any potential threshold exceedances.
Example: VAT Registration in 2025
1. Domestic Entrepreneur Yana runs a business in Slovakia as a sole proprietor, providing graphic services. In 2024, her turnover was €45,000, so she was not required to register for VAT by the end of 2024.
In 2025, the situation changes:
- In January and February 2025, Yana earned €30,000 in income.
- In March 2025, she secured a large order, and her total turnover for the year exceeded the €62,500 threshold for the current calendar year.
Registration Obligation:
Yana is required to register as a VAT taxpayer. She must submit her registration application by the end of April 2025, as the obligation to register arises in the month when her turnover exceeded the €62,500 threshold (March 2025).
After registration, Yana will need to apply VAT to all the services listed in her invoices. She will be obligated to issue invoices to clients with the corresponding VAT rate (23%), which will increase the cost of her services.
2. Foreign Entity
The Austrian company WebDesign GmbH provides website creation services to clients in Slovakia. In 2025, it entered into several contracts with Slovak entrepreneurs:
- In January 2025, it issued invoices totaling €7,000.
- In March 2025, it entered into another contract, which increased the value of its services provided in Slovakia to €12,000.
Registration Requirement:
Since the value of its services exceeds the €10,000 threshold applicable to foreign entities, WebDesign GmbH is required to register for VAT in Slovakia.
The company must apply for registration no later than the end of the month following the month in which it exceeded the threshold, i.e., by the end of April 2025. After registration, it will be required to include VAT (23%) on the invoices issued to Slovak clients.
4. Self-Assessment on Goods Importation
Starting from 2025, the self-assessment mechanism will be available for imports of goods from third countries. This means that a VAT payer can deduct the tax in the same tax period in which the VAT liability arose. This mechanism simplifies the import process and reduces the financial pressure on entrepreneurs who import goods.
5. Reduction of the Threshold for Simplified Invoices
Starting from January 1, 2025, amendments to the Value Added Tax (VAT) Act will come into force, introducing significant changes in the area of issuing simplified invoices. One of the key changes is the reduction of the threshold for issuing simplified invoices from the previous amounts of €1,000 (for cash payments) and €1,600 (for payments by other means) to a single amount of €400 including VAT.
What is a Simplified Invoice?
A simplified invoice is a document that contains fewer mandatory details compared to a full invoice. Its purpose is to simplify the administration of smaller transactions. According to § 74, paragraph 3 of the VAT Act, a simplified invoice may be, for example, a document issued by an electronic cash register (e-Kasa) or a document from a vending machine.
Current Limitations for Simplified Invoices:
- €1,000 including VAT: for cash payments.
- €1,600 including VAT: for payments made by other means replacing cash (e.g., credit card payments).
New Single Limit Starting January 1, 2025:
Starting January 1, 2025, a single limit of €400 including VAT will be introduced for issuing simplified invoices, regardless of the payment method. This means that for transactions exceeding this amount, a full invoice will need to be issued with all the required details in accordance with § 74, paragraph 1 of the VAT Act.
Practical Implications for Entrepreneurs:
- Adjustment of Invoicing Processes: Businesses will need to review their invoicing procedures and ensure they issue full invoices for transactions exceeding €400 including VAT.
- Update of Cash Register Systems: Cash register systems will need to be adapted to the new limits to avoid the incorrect issuance of documents.
- Increased Administrative Burden: For some businesses, the reduced threshold may lead to an increase in administrative work related to issuing full invoices.