VAT group registration ex officio
Amendment to the VAT Act and new VAT group registration institute
A government draft amendment to the Value Added Tax Act (“VAT”) has been submitted to the National Council of the Slovak Republic for discussion. This draft, inter alia, also provides for a new institute of ex officio registration of VAT groups.
The currently applied VAT group registration regime is based on the voluntary registration of several, related taxable persons with their registered office, place of business or establishment in the territory of the Slovak Republic to act as a single taxable person with one assigned VAT identification number.
Aim of the proposal: VAT registration of a group ex officio
The aim of the new draft is that the tax administrator will have the authority to decide on the registration of two or more taxable persons, which are mutually connected by financial, economic, and organisational ties, as a single VAT payer (ex officio group) if it identifies VAT evasion (fraud) in their business.
Examples of circumventing mandatory VAT registration
Such a situation may be, for example, the split of economic activities and invoicing of supplies to several related persons (a limited liability company and an entrepreneur, two limited liability companies with the same owner, etc.), thereby intentionally avoiding the limit for compulsory VAT registration (currently EUR 50,000) and payment of tax, and thus taking unfair advantage.
When the tax administrator identifies such conduct, the suspected group members will be invited to comment on the grounds for group registration ex officio. If these reasons are not refuted or the members of the group fail to comply with the tax administrator’s request, the tax administrator will decide, ex officio, on the registration of the members of the group, assign a VAT number to the group and appoint a representative of the group.
