Ing. Marcel Muráni, LL.M.
Tax advisor, Partner
In line with the objective of the Government of the Slovak Republic to intensify the fight against tax fraud and reduce tax evasion, significant changes in the area of registration for value added tax are being prepared with effect from 1 January 2026. The new legislation responds in particular to situations where business activities are split between several formally separate entities solely in order to avoid the obligation to register for VAT or to retain the advantages associated with non-payer status. Such practices make it more difficult for the tax administrator to monitor tax obligations and often lead to distortions of competition.
For this reason, it is proposed to supplement the VAT Act with a new Section 4c “Registration of a group ex officio”. This is a tool that will allow the tax administrator to decide to register several taxable persons as a single VAT payer where their joint business activity is aimed at circumventing tax obligations. The first paragraph of this provision precisely defines the grounds for registration – namely situations where several entrepreneurs carry out business with the main objective of avoiding the payment of tax.
Procedure
In order to ensure transparency and the possibility of defence for the entities concerned, the Act lays down a clear administrative procedure:
- Identification of entities – if the tax office identifies that several persons are conducting business in a manner fulfilling the grounds for group registration, it sends these persons a notice.
- Appointment of a common representative – after delivery of the notice to all entities concerned, an 8-day period begins, within which they must agree on a common representative.
- Representative appointed by the tax administrator – if the entities do not reach agreement, the tax administrator appoints the representative.
- Request for comments – the tax administrator subsequently sends the representative a request in which it sets out the specific reasons for the intended registration. The representative has the opportunity to comment on these reasons; the time limit for a response will not be shorter than 15 days.
- Decision on registration – if the representative fails to prove that the reasons of the tax administrator are unfounded, the tax office will decide to register the group ex officio.
- Appeal – the entities concerned may appeal the decision within 8 days. The appeal has suspensive effect, which means that registration will not take place until the decision becomes final.
Status and functioning of the registered group
Once registered, the group will act vis-à-vis third parties as a single value added tax payer. In this capacity, the group is assigned a common VAT identification number (VAT ID), which all members of the group are obliged to use when making taxable supplies to external entities. The unified designation of the group ensures consistent identification in all tax operations.
Mutual transactions between members of the group are not considered to be subject to VAT, as they are treated as internal operations within a single VAT payer. As a result, there is no obligation to charge tax on such supplies and the administrative burden arising from intra-group transactions is reduced.
The registered group also bears joint responsibility for fulfilling all tax obligations under the VAT Act. This joint and several liability strengthens legal certainty and contributes to more effective supervisory activity on the part of the tax administrator.
Conclusion
The tax administrator expects the proposed legislation to improve, in particular, the efficiency of VAT collection. The tax office will gain an effective statutory instrument to intervene where it identifies a group of entities that, by formally splitting their activities, avoid registration and subsequent payment of VAT.
As with all laws prepared under time pressure, this law also contains several practical shortcomings, which will mean that not all changes will function in line with how the Financial Directorate envisaged the functioning of the law. It is therefore possible that the Act will be further amended. We will keep you informed about any further changes. If you do not want to miss future updates in this area, subscribe to our newsletter.
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