Rights and Obligations of Foreign Person

A foreign person is defined in the VAT Act as a A taxable person not having the seat, place of business, fixed establishment, domicile or habitual residence within the country (hereinafter referred as a "foreign person")  Such foreign person shall be registered according to article 5 of the VAT Act. within the Slovak republicThere could be another type of registration for foreign persons. According to § 6 of the VAT Act, shall be registered foreign persons who performed distance selling, it means if the person delivers goods to the SR in the form of mail-order sale

• Registration of foreign person according to § 5

• When a foreign person must be registered
• When a foreign person need not be registered
• Registration of a foreign person at mail-order trade according to § 6
• Changes in registration of foreign persons according to § 6a/
• Change in registration of a payer according to § 6a/ 1
• Change in registration of a payer according to § 6a/2
• Registration of change according to § 6a/ 3
• Tax obligation
• Tax deduction
• Tax deduction according to § 49 to § 51 of the VAT Act
• Tax refund according to § 55a to § 55e of the VAT Act
• Keeping records
• Tax period
• Tax return
• Summary statement
• Control statement
• Cancelled registration of a foreign person
• Cancelled registration of a foreign person registered according to § 5
• Cancelled registration of a foreign person registered according to § 6
• Late registration of a foreign person
• Obligation to pay tax
• Tax deduction
• Filing of tax return

1. Registration of a foreign person according to § 5

When a foreign person must be registered

If any legal entity or an individual starts to perform within the Slovak republic(in the Slovak Republic) any activity that is subject to the value added tax and if that person has no registered seat, place of business or establishment within the Slovak republicand performs business activities in a foreign country, i.e. on the territory of another member state or on the territory of a third country (hereinafter referred to as the “foreign person”), such foreign person is obligated to file an application for registration of tax with the Bratislava Tax Office prior to the start of the given activity that is subject to the tax, other than the import of goods. The foreign person has no determined amount of turnover or any other limit for registration within the Slovak republic. The Bratislava Tax Office is obligated to register the foreign person as a taxpayer, to issue a certificate on tax registration to that person, and to allocate the tax identification number immediately, no later than within seven days of the date of delivery of the application for tax registration. The foreign person shall be a payer from the date shown in the certificate on tax registration; that date may not be later than the 31^st day following delivery of the application for tax registration.

The foreign person shall submit the following documents at registration as a VAT payer:

1. A completed application for VAT registration - foreign person
2. An original extract from the Commercial Register or a notarized copy thereof
3. An official translation of the extract from the Commercial Register into the Slovak language (not required for the Czech language)
4. if the person has appointed a representative, a Power-of-Attorney does not need  to be notarized if executed in Slovak language, but if executed in any other language (except for the Czech language), it must be accompanied by official translation thereof.

The documents may be delivered by the applicant for registration in the form of attachments to the application for registration or they may be submitted for review directly at the Tax Office.

Representation:

At VAT registration, the foreign person may be represented by a representative that will be appointed according to § 9 of the Act on Administration of Taxes No. 563/2009 Coll. The Power-of-Attorney does not need to be notarized. If the scope of the Power-of-Attorney is not limited, the Power-of-Attorney will be considered general.

The Power-of-Attorney will be effective for the tax administrator from the date of delivery thereof or from the date of granting thereof in a protocol at the tax administrator.

In respect of any tax subject which has the registration obligation and which has residence or registered seat outside the territory of a member state, he is obligated to appoint a representative for service of documents who has residence or registered seat on the territory of the SR; otherwise the paper documents will be kept by the tax administrator and will be effective on the date of delivery thereof.

When a foreign person does not need to be registered

A foreign person does not need to apply for VAT registration in the event the person provides:

• a) any transportation services and supplementary services related thereof, that are relieved from tax according to § 47(6), (8), (10) and (12) and § 48(8) (transportation services connected with export or import of goods)
• b) any services and goods , and the person obligated to pay the tax is the recipient – the taxable person (§ 69(2) to (4),
• c) any goods according to § 13(1)(e) and (f), and the person obligated to pay the tax is the payer or the person registered for tax according to § 7 or § 7a (§ 69(9)),
• d) any goods from this country to another member state, that were imported from a third country, and the foreign person was represented by a tax representative according to § 69a, or
• e) any goods within trilateral trade according to § 45, where the person participates as the first customer.
• f) telecommunications services, radio and television broadcasting services and electronically supplied services supplied to a person other than a taxable person in case provider uses the special scheme “MOSS” and the state of identification is other the Member State than Slovak Republic

2. Registration of a foreign person at mail-order trade according to § 6

If a foreign person from another member state supplies any goods to this country in the form of mail-order sale and the aggregate value excluding tax of the given supplied goods reaches EUR 35,000 in a calendar year, the foreign person is obligated to file an application for registration of tax with the Bratislava Tax Office, prior to supply of the goods, the value of which will reach EUR 35,000. Mail-order trade means any sale of goods transported by a foreign person from another member state or transport of which is arranged at that person´s account to this country to the purchaser who has no VAT number.

A foreign person from another member state, who would supply any goods subject to excise duty and the goods would be determined for private person´s personal consumption, is obligated to apply for registration regardless the limit which would be reached by sale within the Slovak republic, prior to supply thereof. In respect of delivery of any goods which is subject to excise duty, delivery of the goods represents mail-order sale solely under the condition that the goods are delivered to individuals for their personal consumption.

A foreign person may apply for registration also in the event the value of the goods shipped to this country has not reached the limit of EUR 35,000 in a calendar year.

The Bratislava Tax Office is obligated to register the foreign person for tax, to issue a certificate on tax registration, and to allocate a tax identification number immediately, no later than within seven days of the date of delivery of the application for tax registration. On the date shown in the certificate on tax registration, the foreign person shall be a payer; that day may not be later than the 31^st day following delivery of the application for tax registration.

No mail-order trade

No mail-order trade is represented by the following cases:

• the goods are transported by the customer or at customer´s account
• it involves a new transport means
• the goods are delivered with assembly or installation

3. Changes in registration of foreign persons according to § 6a/

The information regarding the foreign persons who are registered as payers according to § 4, § 5 or § 6, may be subject, during their activities performed on the territory of the SR, to changes in registration due to any change in the status of the foreign person (closing of a permanent establishment or on contrary, foundation of a permanent establishment within the Slovak republic, change of registered seat by relocation to the SR, etc.)

3.1 Change in registration of a payer according to § 6a/ (1)

A taxable person who is registered according to § 5 or § 6 and who no more meets the status of a foreign person is considered a payer registered according to § 4 from the date when that person no more met the status of a foreign person and still performs the activity that is taxed within the Slovak republic. The taxable person is obligated to report to the tax office the fact that it no more meets the status of a foreign person, within ten days of the date when the person lost the status of a foreign person. The notice shall contain the date when the person lost the status of a foreign person, and the address of the registered seat, place of business, establishment, residence or habitual abode within the Slovak republic.

From the above it follows that if a foreign person no more meets the status of a foreign person (e.g. due to the reason that an establishment was founded within the Slovak republic according to § 4(7) of the Act or the registered seat has been relocated to the SR, any change of residence), that person will be regarded as person who is registered according to § 4 of the Act (registration according to § 4 applies to any persons based within the Slovak republic). The change in registration according to § 5 and § 6 of the Act for registration according to § 4 is not subject to reaching any turnover.

3.2 Change in registration of a payer according to § 6a/ (2)

If a taxable person satisfies the conditions for registration according to § 5 or § 6 and is registered according to § 4, such person is considered a registered payer according to § 5 or § 6 from the date of closing the registered seat, place of business, establishment, residence or habitual abode within the Slovak republic; such information must be reported to the tax office within ten days of the date of closing the registered seat, place of business, establishment, residence or habitual abode within the Slovak republic.

From the above it follows that change in registration from § 4 to registration according to § 5 or § 6 of the Act is resolved in similar way (e.g. a foreign legal entity´s establishment according to § 4(7) of the Act no more satisfies the criteria of an establishment). The change in registration from § 4 to § 5 or § 6 of the Act may be made in the event there exists a reason for registration according to § 5 or § 6, i.e. if the person, having acquired the status of a foreign person, will perform any activity within the Slovak republic, that is subject to VAT to be paid within the Slovak republic.

3.3 Registration of change according to § 6a/ (3)

The Tax Office shall make a change in the certificate on tax registration as of the date of occurrence of the circumstance that has resulted in change of registration.

4. Tax obligation

A foreign person who supplies any goods and services on the territory of this country, that are subject to tax according to § 69(1) of the VAT Act, will be obligated to pay the tax as follows:

• at supply of goods on the date of delivery thereof (the right to deal with the goods as the owner thereof) - § 19(1)
• at delivery of service on the date of delivery of the service (completion of the service) - § 19(2)
• at repeated delivery of goods or service no later than on the last day of the period to which the relevant payment applies - § 19(3)
• at receipt of advance payment on the date of receipt thereof - § 19(4)
• at delivery of goods under a commission agreement, the principal´s tax obligation will occur on the same date as the commission agent´s tax obligation – 19(5)
• at procurement of service according to § 9(4) including procurement of any repeated or partially delivered services, the service procured by a person who acts on his own behalf is considered delivered on the date of issuing the invoice under which the procurer claims payment for the service, and unless the invoice is issued by the end of the third calendar month following the calendar month when the service was delivered, the tax obligation will occur on the last day of the third calendar month following the calendar month when the service was delivered; no date of delivery of the service according to the foregoing provision is determined, if the service is procured with the place of delivery according to § 15(1), in respect of which the tax should be paid by the procurer of the service - § 19(6)
• at transfer of copyright to the copyright holder on the date of receipt of payment from an organization for collective management of copyright, if such organization collects, in its own name and for the copyright holder, the remunerations and payments of remunerations for granting of the right to use the work - § 19(6)
• at delivery of goods via vending machines or any other similar machines working as slot machines for coins, bank notes, stamps or any other means of payment replacing money, the tax obligation will occur on the date of taking out the money or stamps from the machine or finding the turnover amount in any other way - § 19(7)
• at delivery of goods that are shipped or transported from this country to another member state and the delivery thereof satisfies the conditions for relief from tax according to § 43(1) to (4) - § 19(8)
• a) on the 15^th day of a calendar month following the calendar month when the goods were delivered, or
• b) on the date of issuing the invoice, if the invoice was issued before the 15^th day according to paragraph (a) above,
• at delivery of any goods that are shipped or transported from this country to a destination on the territory of a third country (§47(1) and (2), there will be no tax obligation. The date of delivery is considered the date of exit of the goods from the EU territory, which is confirmed by the customs authority in the customs declaration or in the simplified customs declaration - § 19(9)

A foreign person registered according to § 5 shall have no tax obligation in the event the person obligated to pay tax is that foreign person´s customer – the taxable person within the Slovak republic.

The person obligated to pay tax is the local taxable person also in the event of receiving any services supplied by a foreign person registered for tax within the Slovak republic according to § 5, in respect of which the place of delivery is determined according to § 15(1) of the VAT Act.

For the purposes of determining the person obligated to pay tax according to § 69 of the VAT Act, a foreign person means also any person who has an establishment within the Slovak republic, but that establishment is not engaged in delivery of goods or services within the Slovak republic by that person.

5. Tax deduction

The tax may be deducted within the Slovak republic by a foreign person in compliance with the statutory conditions.

Tax deduction according to § 49 to § 51 of the VAT Act

The payer shall have the right to deduct tax from goods or services on the date of occurrence of the tax obligation in respect of those goods or services.

Date of occurrence of the right for tax deduction (§ 49)

The payer shall have the right for tax deduction, if the tax:

• is applied to that payer by another payer within the Slovak republic from the goods and services which are or should be supplied to the payer,
• applied by the payer from the goods and services, in respect of which the tax should be paid by the recipient according to § 69(12)
• applied by the payer at acquisition of goods within the Slovak republic
• paid to the tax administrator within the Slovak republic at import of goods from a third country

Application of the right for tax deduction (§ 51)

The right for tax deduction according to § 49 of the VAT Act may be applied by the payer, if:

• at deduction of tax for delivery of any goods and services within the Slovak republic, the payer has an invoice from a payer, issued according to § 71,
• at deduction from acquisition of any goods from another member state, the payer has an invoice from a supplier from another member state,
• at deduction of tax at import from a third country, the payer has an import document confirmed by the customs authority, where the payer is shown as the recipient or importer.

When the tax cannot be deducted

A payer - a foreign person registered according to § 5 of the VAT Act – cannot deduct tax at:

• purchase of any goods and services for the purpose of amusement and entertainment,
• use of any purchased goods or services for any purpose other than business,
• purchase of any goods and services, where the tax should be paid by the recipient of the service,
• purchase of any goods and services that will be used for any relieved supplies in respect of which there is no right for tax deduction

Tax refund according to § 55a to § 55e of the VAT Act

A foreign person – tax payer who satisfies the conditions for tax refund according to § 55a of the VAT Act (tax refund) cannot apply tax deduction from any goods and services in the tax return, which means that if the person buys any supplied goods and services within the Slovak republic and such goods and services are related to the supplies of goods and services where the tax is paid by the customer, that person shall have no right to deduct the tax according to § 49(9), but may apply for tax refund.

More information on tax refund is available in a separate part dealing with tax refunds, under the name VAT refund to a foreign person from another member state.

6. Keeping records

The payer is obligated to keep detail records in individual a tax period on the supplied goods and services and on received goods and services; separate records should be kept on delivery of goods and services to another member state, on acquisition of goods from another member state, and on import of goods. The records shall contain the information essential for correct computation of the tax. For the purpose of tax deduction, the payer shall keep the records separately for the goods and services with the option of tax deduction and for the goods and services with no option of tax deduction. The payer shall keep records also on any payments received prior to delivery of goods and services and any payments provided prior to delivery of goods and services.

7. Tax period

A tax period applicable to a taxpayer is a calendar month, but a foreign person registered according to § 5 or § 6 of the VAT Act shall file a tax return for a tax period only in the event that person is obligated to pay tax for the tax period according to § 69; if, during the tax period, the person delivered any goods that were relieved from tax according to § 43 or § 47; if the person delivered goods according to § 45 or if tax deduction is applied.

 

8. Tax return

The tax return will be filed by a foreign person registered according to § 5 and § 6 of the VAT Act within 25 days following the end of the tax period, if that person is obligated to pay tax according to § 69, or if, in the tax period, that person delivered any goods relieved from tax according to § 43, imported any goods to a third country, delivered any goods within trilateral trade or if tax deduction is applied. The foreign person is obligated to pay the person´s own tax within 25 days following the end of the tax period. If the result of the tax return is any excess refund, the process of refund is regulated in § 79(4) of the VAT Act.

Person´s own tax means the positive balance between the deducted tax and the total due and payable tax.

Excess refund means the excess of the total amount of deductible tax over the total amount of tax for the relevant the tax period, other than the import tax.

 

9. Summary statement

The payer is obligated to file a summary statement for each calendar month, during which:

• the payer delivered any goods relieved from tax according to § 43(1) from this country to another member state to a person that is tax identified in the other member state,
• the payer relocated any goods relieved from tax according to § 43(4),
• the payer participated in any trilateral trade as the first customer according to § 45.

The payer may file the summary statement for a calendar quarter, if the value of the goods delivered to another member state has not exceeded the value of EUR 50,000 in the relevant calendar quarter and at the same time in the preceding four calendar quarters. The option to file the summary statement for a calendar quarter shall no more apply from the end of the calendar month when the value of goods exceeded EUR 50,000 in the relevant calendar quarter, and the payer is obligated to file the summary statement separately for each calendar month of the relevant calendar quarter.

The summary statement is filed solely in electronic form within 25 days following the end of the period for which the payer is obligated to file the summary statement.

10. Control statement

The obligation to file a control statement:

A foreign person who is registered for tax within the Slovak republicaccording to § 5 or § 6 is obligated to file, solely in electronic form, also the control statement simultaneously with the tax return in the event that person delivers within the Slovak republicwithin the Slovak republic any goods or service in respect of which the person is obligated to pay tax according to § 69(1) and that person buys any goods or services from another local payer or if that person acquires goods from another member state – i.e.:

• supplies goods within the Slovak republicto another tax payer (table A1 should be completed),
• supplies goods within the Slovak republicto another payer in respect of which the tax obligation is fulfilled by the customer, and the commodities represent agricultural plants, metals and metal objects, mobile phones, integrated circuits (table A2 should be completed),
• he is a person obligated to pay tax within the Slovak republicat acquisition of goods within the Slovak republic according to § 69(6), (9) to (12) of the VAT Act (table B1 should be completed),
• if he purchased goods or services and accepted invoices from a Slovak payer with the right to deduct tax (table B2 should be completed),
• if he received any simplified invoices from local tax payers for delivery of goods or services (documents from ERP, entry ticket, highway toll vignette, etc. according to § 74(3) – he shall state only the total tax base and VAT for the relevant tax period (table B3 should be completed),
• if he issued any corrective invoices to the invoices shown in tables A1 and A2 (table C1 should be completed),
• if he received any corrective invoices to the invoices shown in tables B1 and B2 (table C2 should be completed),
• if he delivered within the Slovak republicany goods or service and issued any simplified documents, including corrective documents, in respect of which he is obligated to pay tax – the total amount of turnovers for the relevant the tax period should be inserted (table D1 should be completed),
• if he delivered within the Slovak republicany goods or services including repair, that are not registered through the cash registers and which are not included in table D1 (table D2 should be completed).

When no control statement is filed:

• if the foreign person is not obligated to file a tax return in the relevant tax period,
• if the foreign person delivered solely a supply which is relieved from tax according to § 43 of the VAT Act (intracommunitary supply), and at the same time no tax is deducted,
• if the foreign person delivers any goods to a third country, which is relieved from tax within the Slovak republicaccording to § 47 (export), and at the same time no tax is deducted,
• if the foreign person delivers any goods with installation and assembly with the place of delivery in another member state or in a third country, and at the same time no tax is deducted,
• if the foreign person delivered any energies (gas, electricity, heating and cooling) with the place of delivery in another member state, and at the same time no tax is deducted,
• if the foreign person delivers any relieved services (financial, medical, etc.)

11. Cancelled registration of a foreign person

Cancelled registration of a foreign person registered according to § 5 of the VAT Act

A foreign person registered according to § 5 is obligated to apply for cancellation of the tax registration upon termination within the Slovak republicof the activity that is subject to tax, regardless the duration of the period when that person was a tax payer and the amount of the reached turnover.

A foreign person is not obligated to apply to cancellation of registration in the event that person performs any temporary works on this territory, and plans to perform them in the future.

Cancelled registration of a foreign person registered according to § 6 of the VAT Act

A foreign person registered for tax according to § 6 of the VAT Act due to delivery of goods in the form of mail-order sale within the Slovak republicmay apply, according to § 81(3) of the VAT Act, for cancellation of tax registration if that person performs within the Slovak republicno activity, other than the mail-order trade, under the condition that:

• in the current calendar year, the aggregate value of the delivered goods, excluding tax, shall not reach EUR 35,000, and at the same time
• in the preceding calendar year, the value of the delivered goods, excluding tax, did not reach EUR 35,000.

A foreign person registered for tax according to § 6 of the VAT Act must charge with the Slovak tax any goods delivered from another member state to this country at mail-order trade of goods minimum for the period of two calendar years, and therefore, that person must be registered for tax according to § 6 of the VAT Act minimum for the period of two calendar years. However, the tax registration need not last for the whole two years in all cases. It means e.g. the situation when the person terminates within the Slovak republicthe activity that is the subject to taxation.

A foreign person registered for tax according to § 6 of the VAT Act may not apply for cancellation of tax registration in the event that person stops to deliver goods in the form of mail-order sale from another member state to this country, but performs within the Slovak republicany activities that are subject to taxation according to § 2 of the VAT Act, and is obligated to pay tax according to § 69 (1) of the VAT Act.

General conditions for cancellation of registration

Upon expiry of the day as of which a legal entity or an individual is no more a tax payer:

• the current tax period will be terminated,
• the tax identification number will be null and void,
• the tax registration certificate will be null and void.

The person who was the tax payer is obligated to deliver the tax registration certificate to the tax office within ten days of the date when that person was no more the tax payer.

The person whose tax registration is cancelled is obligated to file a tax return within 25 days of the end of the last the tax period, and the person is obligated to pay the person´s own tax within the same period (§ 78(2) of the VAT Act).

12. Late registration of a foreign person

A foreign person who failed to fulfill the registration obligation within the Slovak republic or has registered for VAT on a late date, has the rights and obligations arising from the VAT Act.

Obligation to pay tax

A foreign person who failed to fulfill the obligation to file the application for tax registration or who filed the application for tax registration on a late date is obligated to pay tax for the period in which that person should have been in the position of a payer, from delivery of goods and services within the Slovak republic, other than the tax on delivery of goods and services in respect of which the tax should be paid by the recipient of delivery. The tax obligation is shown in the so-called additional tax return which is identical to the VAT return form. The tax base is the counter-value received or to be received by the foreign person from the recipient of delivery, less the tax.

Tax deduction

A foreign person who failed to fulfill the obligation to file the application for tax registration or who filed the application for tax registration on a late date, has the right, for the period in which that person should have been in the position of a payer, for tax deduction relating to the goods and services that were used for delivery of goods and services, in the extent and under the terms and conditions according to § 49 and § 51 of the VAT Act. The tax deduction shall be applied in the same tax return which shows the tax according to § 78(9). The period during which the foreign person should have been a payer, shall start on the date of performance of the first taxable trade within the Slovak republic that would be subject to the obligation to pay tax, should the person be in the position of a payer.

Filing of tax return

A person who failed to fulfill the obligation to file the application for tax registration or who filed the application for tax registration on a late date is obligated to file one so-called additional tax return for the period when it should have been a payer, within 60 days of the date of discovery by the tax office that the person failed to fulfill the obligation to file the application for tax registration or within 60 days of the date of filing the late application for tax registration.

In the tax return, the person shall state the tax to be paid by that person according to § 69(13) of the VAT Act and that person is obligated to pay the tax upon deduction of tax within the period for filing the tax return according to § 55(4) of the VAT Act;

On page one of the tax return, the foreign person shall state only the year when the additional tax return is filed. For example, if the foreign person should have been registered for VAT already on 22.8.2012, and the foreign person was registered later on 1.10.2013, page one will show the year 2013. No tax period will be stated.