Many domestic businesses – whether individuals or companies – face the question of whether to register as a VAT payer. In this article, we explain clearly who is required to register for VAT and how to apply for voluntary registration, and we also consider the potential advantages and disadvantages.
The obligation to register as a VAT payer applies to every taxable person with a registered office, place of business or establishment in Slovakia – or, failing that, with a residence or habitual abode in Slovakia – that reaches turnover of €49,790 over the preceding 12 consecutive calendar months. To understand properly who must register for VAT, we first need to explain what a taxable person is. A taxable person is any entity that independently carries out any economic activity, regardless of its purpose or results. This chiefly covers individuals and legal entities engaged in business, as well as those carrying out other economic activities from which they derive income.
A taxable person may nevertheless apply for voluntary VAT registration before reaching the €49,790 turnover threshold. The tax office assesses each application individually, depending on the activity carried out by the applicant. It is sufficient for the taxable person to demonstrate credibly that it intends to carry out economic activity in the near future. In other words, for voluntary VAT registration, preparation for future taxable transactions is itself treated as economic activity.
Let us now take a closer look at who benefits from applying for voluntary VAT registration. One reason to register is that VAT payers are entitled to deduct VAT where:
- they buy goods, materials or services from VAT payers
- their customers are also VAT payers
On the other hand, some business owners prefer not to register so that they are spared unnecessary paperwork and charges. Because they can offer services or goods at lower prices, non-payers can be strong competitors to businesses that are VAT-registered.
As well as VAT registration, we can provide our clients with tax advice, and we will gladly advise you on accounting and company law matters too. Beyond European destinations, we also have experience with offshore jurisdictions such as Belize, St. Vincent, Hong Kong and Dubai. We focus on delivering an exceptional standard of service to clients who demand quality and reliability. For more information, please get in touch using our contact form.