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Special Arrangements for the Application of the Exemption from Value-added Tax for Small Enterprises - effective from 01.01.2025
The special scheme for value-added tax for small enterprises (special SME scheme) is an EU-wide special scheme for small enterprises, the main purpose of which is to introduce uniform rules and reduce the administrative burden for the taxable persons having the status of small enterprises throughout the European Union.
From January 01, 2025, the special SME scheme allows the taxable persons with small enterprise status to supply goods and services to their customers tax-free (exempt from VAT).
By applying the special SME scheme, the taxable person also loses the right to deduct tax on goods and services used to provide exempt supplies.
Once the basic conditions are met, applying the special SME scheme is voluntary for taxable persons.
Who can benefit from the special SME scheme?
A taxable person whose annual turnover throughout the European Union does not exceed EUR 100 000 in the current calendar year and, at the same time, whose annual turnover throughout the European Union did not exceed EUR 100 000 in the preceding calendar year.
At the same time, each Member State sets the amount of its national threshold which cannot be exceeded in order for the taxable person to benefit from the special SME scheme in the territory of that Member State.
Special SME scheme for a small enterprise of a domestic person
The interest to apply the special SME scheme in one or more Member States of the European Union may be notified to the tax authority electronically by a small domestic enterprise using a prescribed form, the template of which shall be determined and published by the Financial Directorate of the Slovak Republic on its website.
A small enterprise of a domestic person may apply the special SME scheme based on a decision issued by the tax administrator. In this decision, it will be assigned a new identifier - an individual identification number with the suffix 'EX' and notified of each Member State that confirms that the conditions for applying the special SME scheme on its territory are met.
Small enterprises shall register for the purposes of applying the special SME scheme only once, in the Member State of establishment, meaning, in the Member State of the European Union in which they have their registered office, place of business, or place of residence. The Member State of establishment shall assign the taxable person an individual identification number with the suffix 'EX', which it shall use in all Member States of the European Union in which it applies the special SME scheme.
During the application of the special SME scheme, the taxable person is obliged to submit the electronic form 'Quarterly report of the small enterprise of a domestic person' in the Member State of establishment, after the end of each calendar quarter. This form will be published on the website of the Financial Directorate of the Slovak Republic. This form, through which the taxable person informs about the turnover achieved in all Member States of the European Union, replaces the taxable person's obligation to file regular VAT returns in the Member States.
Special SME scheme for a small enterprise of a foreign person
A small enterprise of a foreign person may supply goods and services in the territory of the Slovak Republic which are exempt from tax if it is identified in the Member State of establishment for the special SME scheme and the Slovak Republic has confirmed that the conditions for the application of the special SME scheme in its territory are fulfilled.
EU legislative bases and their transposition into Slovak legislation
- Council Directive (EU) 2020/285 amending Directive 2006/112/EC on the common system of value added tax as regards the special scheme for small enterprises and Council Regulation (EU) No 904/2010 as regards administrative cooperation and exchange of information for the purpose of monitoring the correct application of the special scheme for small enterprises,
- Commission Implementing Regulation (EU) 2021/2007 [new Window] aying down detailed rules for the application of Council Regulation (EU) No 904/2010 as regards the special scheme for small enterprises,
- Council Directive (EU) 2022/542 [new Window] amending Directives 2006/112/EC and (EU) 2020/285 as regards rates of value-added,
- the national transposition of European legislation concerning the special scheme for SMEs is part of §68e, 68f, and 68g of the amended Act No 222/2004 Coll. [new Window; only Slovak language] on value-added tax, as amended, effective from 01.01.2025.
Forms for special SME scheme
- electronic form – Notification of the application of the special scheme for small enterprise exemption/Updating the list of Member States for the application of the special scheme/Notification of change of data/Cancellation of the application of the special scheme
- electronic form – Quarterly report of a small enterprise of a domestic person
- electronic form with the possibility of paper submission – Notification of a small enterprise of a foreign person
SME on the WEB (SoW)
The SME on the WEB [new Window] application allows any web user to validate whether a given taxable person is an exempted small enterprise benefiting from the special SME treatment in one or more Member States by checking the status (active/inactive) and the validity of the individual identification number with the suffix 'EX' in one or more Member States of exemption on the date of verification.
