The expert evaluates 5 changes in the field of taxes: Companies will announce accounts and a special method of VAT payment will be added – oPeniazoch.sk

ubomíra Murgašová, tax manager of the consulting company Grant Thornton, summarizes and evaluates the key proposed changes that the mentioned amendment brings.

Amendment .1: Notification of bank accounts and VAT liability are transferred with responsibility also to the customer

The most significant change in the VAT Act concerns the introduction of a new notification obligation to pay value added tax. Tax entities are obliged to notify the tax administrator of each of their own Slovak and foreign bank accounts used for doing business in Slovakia, immediately from the date when they become tax payments or from the time when they have established such an account. For payers who are registered for VAT before 15.11.2021, after the approval of the draft amendment, the deadline for notifying their bank accounts on a special form should be 30.11.2021.

The announced bank accounts will be published by the tax office on the financial administration website. Failure to notify the bank account will result in the excess deduction or overpayment of VAT not being paid to the payer unless the bank account is notified. The tax administrator may also impose a fine for failure to notify the bank account within the time limit.

Another important impact of the notification of bank accounts will be the amended liability for VAT payment. If the customer pays VAT to his supplier on an account other than the account published on the page of the Financial Administration on the day of entering the payment order, then this customer will pay if the supplier does not pay VAT to the tax office. “I definitely recommend that customers take proof of the supplier’s account at the time of entering the payment order in the form of a screenshot of the Financial Administration page with the given account. During the tax audit, the customer will need to prove that he has paid the payment to the correct account. ” Murgašová recommends. The financial administration will not publish historical bank accounts, only an updated list.

How he evaluates this change. Murgašová:
In the explanatory memorandum, the Ministry of Finance of the Slovak Republic assumes a reduction in the VAT gap and an improvement in the collection of VAT by introducing a new obligation for payers. The proposed change will have a significant impact on all payers and, in particular, it will transfer the responsibility for non-payment of VAT to customers. Customers will be obliged to check the correctness and timeliness of the supplier’s bank account on the Financial Administration page, separately for each payment. For companies that have a large number of suppliers and regular payments, this change will represent an additional administrative burden and risk of liability for the supplier’s VAT, unless they can prove that they have paid the payment to the published account. Entities will start with further archiving of data, even at the time of payment the bank account of the supplier was published on the FRSR website, the database will be updated only to the current date and the daily archive of the list of accounts is not taken into account. If it is necessary to prove historically that a bank account was published on the FRSR website at the time of payment, such evidence will have to be taken in addition to the account.

Amendment .2: Special method of payment of VAT (so-called split-payment): Those who do not trust the supplier may pay VAT directly to the state

The amendment introduces a new monos for the payment of VAT to customers by the tax office on behalf of the supplier in the event that the customer knows or suspects that the supplier will not pay VAT to the tax office. In this way, you only pay the tax base without VAT to the supplier. In the event of such payment, the customer will not be charged for non-payment of VAT to the supplier. However, once the customer pays the VAT liability to the tax office on the supplier’s account, it will not be possible to return this overpayment to the customer, even if the supplier pays his tax liability. On the contrary, these funds will represent an overpayment of the supplier, which the supplier may request from the tax office.

For a better idea of ​​how this institute could work in practice, we will use the following example:
The supplier has concluded a contract with the customer for the delivery of goods for 100,000 euros without VAT. When paying the invoice for the delivered goods, the customer suspects that the supplier will not pay VAT, as at the time of payment no bank account of the supplier was published in the list of the Financial Report. According to the above, the customer would thus be exposed to the risk of liability for unpaid VAT in the amount of EUR 20,000. Therefore, the customer decides to pay the supplier out of the total invoiced amount of 100,000 euros and 20,000 euros to the customer to the tax office. This relieved the customer of the risk of paying the customer EUR 120 000 and, at the same time, the monopoly office should charge him an additional EUR 20 000 in the event of a VAT liability. In the event that the supplier also pays the amount of 20,000 euros to the tax office, he will return it to the tax office as an overpayment.

How he evaluates this change. Murgašová:
The payment of VAT to customers for significant payments for the supply of goods or services directly to the bank account of the tax office worked in practice, even though it had no legislative support in the VAT Act. This will unify practice and legislation and reduce the customer’s risk of VAT liability.

Amendment .3: The Tax Reliability Index will be published by all taxpayers

The adjustment of the tax reliability index in Slovakia has been operating since 2018, and some changes should take place from 1 January 2022. In the first place, each taxpayer (income tax payer) should be assigned an index of fulfillment of tax obligations, on the basis of which he will be assigned additional benefits. Taxpayers should be divided into 3 groups: a highly reliable, reliable and unreliable tax entity. The criteria for distribution are fulfillment of tax obligations (submission of returns and statements within the deadline), timely fulfillment of notification obligations, payment of taxes, advances and fines, results of tax audit, correctly calculated amount of tax in tax return or additional tax return. A more detailed methodology for allocating the index should be published by the Financial Directorate of the Slovak Republic on its website.

According to the amendment, the tax office sends a notification to each taxpayer about the assigned tax reliability index. Unlike in the past, the notification will also state the reasons why such an index was assigned to the taxpayer. In case of disagreement with the assigned index, it will be possible to object within 15 days from the delivery of the notification. The objection must be substantiated. Another change will be the publication of the assigned index on the financial administration website and publicly available to everyone. The re-evaluation of the index is performed by the tax office every six months and in case of changes, it notifies this new index to the taxpayer. For newly registered taxpayers, their first tax liability index will be announced after two years.

How he evaluates this change. Murgašová:
We appreciate that the assignment of the tax reliability index will become more transparent, by setting specific decisive criteria. Taxpayers will even monos me against the assigned index. However, we would accept if the size of the taxpayer and the breath of “transgression” were also taken into account when fulfilling individual tax obligations. It would be a pity if an honest taxpayer lost his benefits and was labeled unreliable if he neglected to pay a 30-euro naas fine for the volume of all obligations. I perceive that the publication of the index could be a motivating element for some to improve the fulfillment of their tax obligations, but a negative rating can affect the company’s reputation and client relationships. The situation will be all the more sensitive if a negative rating has been assigned to the taxpayer by mistake or only for a minor breach of duty.

Amendment .4: Exclusion of statutory bodies for three years for two reasons

The amendment introduces a new institute of exclusion of a statutory body – a natural person – from the bodies of a company or organized bodies. This change also follows on from the changes to the Commercial Code.

The exclusion will be possible for two reasons:
• If the statutory body (ie acting procurator, only the supervisory body, the head of organized units, etc.) operated in the company at the time when the VAT return was filed for the tax period for which the VAT tax control was opened, and at the same time did not allow tax control
• If the tax audit for VAT has not been performed and the total arrears on all taxes is more than 5,000 euros for more than a year. In this case, the exclusion also applies to those natural persons who were not in office at the time of filing the VAT return.

The tax office, as the tax administrator, will issue a decision on the exclusion of a statutory body-natural person from the company’s bodies, thus losing the monos acting as a statutory body for three years in companies in the Slovak Republic from the date of validity of the decision on exclusion. The excluded natural person will be able to appeal against the exclusion decision, but will not be able to initiate a review of the decision outside the appeal proceedings and a motion to reopen the proceedings. The decision to exclude is reviewed by a court.

How he evaluates this change. Murgašová:
The new institute should assist the financial administration in a situation where the taxpayer does not cooperate and is non-contact during VAT controls. The risk of exclusion can be motivating for these taxpayers and at the same time eliminates cases where the taxpayer establishes a new limited liability company and continues in the same approach as before. Financial management in this way will be more likely to identify these entrepreneurs than before.

Amendment .5: Reduced VAT rate for state housing support

Miloš Švrek’s separate parliamentary proposal was also submitted to the parliament, proposing to introduce a 5% reduced VAT rate, both for buildings meeting the conditions of state-supported rental housing, and for the renovation and reconstruction of such buildings. Furthermore, this amendment proposes to limit the non-taxable building intended for state-supported rental housing after five years. In the case of using the building for a purpose other than state-supported rental housing or selling this building to other persons, it is proposed to introduce a correction mechanism in order to adjust the unjustified right to a reduced VAT rate.