Amendment to the Act - Changes in VAT 2021

Changes in VAT from 1.1.2021

The amendment to the Act on Value Added Tax significantly changes the mail order sales of goods in a significant way. You can read what specific changes are made to our article.

Changes in (internet) distance sales of goods

From 1 July 2021, the rules for mail order sales of goods (new for distance sales) will change significantly. It is mainly about selling goods through e-shops, online platforms.

Under the new rules, when goods are delivered to non-business entities from another Member State (mainly natural persons) and businesses without VAT, the threshold for the collection of VAT in the Member State of consumption is reduced from EUR 35,000 and EUR 100,000 respectively to EUR 10,000 per calendar year.

Where a Slovak trader supplies natural persons from another Member State with goods worth more than EUR 10 000 per calendar year, he must pay VAT no longer in Slovakia but in the Member State of consumption. However, it does not need to register for VAT in the Member State of consumption for this purpose, but it can use the extended one stop shop (OSS) in Slovakia. The 'Slovak' VAT return then charges VAT on the basis of the VAT rates in force in each EU Member State.

In the case of distance sales of goods imported through a Slovak intermediary
(e-shop or online platform) from a third country to Slovakia, where the value of the consignment is less than 150 euros and is not excise goods, the fiction of delivery is introduced. A third-country supplier will nothave to register and pay VAT in Slovakia, but may do so by a Slovak intermediary who will be considered to be the person to whom the goods were supplied for this purpose and will be considered as the supplier of the goods at the same time.

Abolition of the exemption on importation of goods

From 1 July 2021, the VAT exemption on imports of consignments up to EUR 22 shall be abolished. This means that, once new, such small consignments, e.g. from China or the USA, will also be subject to VAT.

Possibility of vat refund for irremable claim

As early as the beginning of 2021, the trader will be able to correct the taxable amount if he has paid VAT on the supply of goods or services, but the customer has not paid the claim at all or paid only partially and the claim has thus become irreenable. This means that, by means of a VAT return, such a person will ask for VAT from the State back.

A claim which is enforced in enforcement proceedings or is in bankruptcy or restructuring proceedings, is discharged or extinguished without a successor in title, has died or is a claim of less than EUR 300 shall be deemed irreenable.

On the contrary, a customer who does not pay such a claim will have to increase his tax base, i.e. he will have to refund the VAT to the State by means of a VAT return.

Change in UK status

The transition period for Britain's exit from the European Union expires at the end of December 2020. From January, therefore, the United Kingdom will be considered a third country. This means that the movement of people, goods and services will be made more difficult. Among other things, we must all prepare for customs clearance for the export and import of goods with the UK.

Finally, we would like to point out that we have mentioned the above changes in a simplified interpretation. When applying a specific provision of the law, we recommend that you always consult a tax advisor in advance.

Mgr. Ing. Ľuboš Čandik
Author of the article
He studied corporate management at the University of Economics and the Faculty of Law in Bratislava. Since 2005, he has worked for several major tax consultancy companies of international focus. It focuses on income tax, VAT, international taxation, tax optimisation, social and health regulations, labour and business law. He has been tax adviser since January 2013. He speaks fluent German and English.

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