The Author of the Article
To keep in mind
This article explains the application of the reverse charge mechanism for VAT in Slovenia. It clarifies who is subject to the mechanism and the types of supplies it applies to.
Here are 2 key takeaways:
- Reverse charge for foreign suppliers: The reverse charge mechanism applies to domestic supplies of goods or services made in Slovenia, but the supplier must be a non-established and non-VAT registered foreign company.
- Customer responsibility for VAT: Under the reverse charge, the responsibility to pay VAT shifts from the supplier to the recipient of the goods or services (the customer) who is VAT registered in Slovenia.
Optional reverse charge for non-resident suppliers (art. 194 of the VAT Directive)
The EU VAT systems is essentially based on fractionised payments, VAT being collected at each stage of the production and distribution chain after offsetting the input VAT paid on purchases against output VAT received on sales. According to the main rule laid down by Article 193 of VAT Directive, the person liable for the payment of this VAT is the person supplying goods or services. The liable person is the person who is held to pay VAT to the Treasury
Member States in which the VAT is due may provide for that the person liable for the payment of VAT is the person acquiring the goods or services where the transaction is carried out by a supplier who is not established in the country in which VAT is due. Such reverse charge is regulated by national regulation.
What are the rules in Slovenia?
Slovenia introduced (2022) reverse charge on supplies of goods and services made by foreign companies, according to the option from Article 194 VAT Directive (art. 76 (3) of SLO VAT Act).
The reverse charge VAT system applies provided the following conditions are met:
- The supplier is a foreign company (EU or non-EU) which is not established and not VAT registered in Slovenia
- The customer is a VAT taxable person who is registered for VAT in Slovenia (regardless of whether or not he is established in Slovenia).
Let's take an example
A French company purchases goods from a Slovenian supplier and resells them to a German company having a Slovenian VAT number. The goods remain in Slovenia.
The French company would then not be required to register for VAT purposes in Slovenia and should issue an invoice without applying Slovenian VAT to its German client. VAT incurred on its purchase would be recovered through the electronic procedure laid down by Directive 2008/9.
The VAT expert's eye
The application of the reverse charge is not an option for foreign companies. They need to know if they qualify for the reverse charge.
Local tax authorities may refuse to refund local VAT when the reverse charge has not been applied or conversely reclaim VAT when the reverse charge has been applied incorrectly.
Ensure Smooth Slovenian VAT Compliance: Expert Guidance on the Reverse Charge Mechanism
Understanding and navigating the reverse charge mechanism for VAT in Slovenia can be a challenge, particularly for foreign businesses. Misinterpreting the rules can lead to errors in VAT reporting and potential penalties.
Our team of experienced Slovenian tax advisors can help you navigate the intricacies of the reverse charge mechanism and ensure smooth VAT compliance. Here's how we can assist you:
- Reverse charge applicability assessment: We'll analyze your business activities in Slovenia and determine if the reverse charge mechanism applies to your transactions.
- Accurate VAT calculations: We'll ensure your VAT calculations are accurate, considering the reverse charge rules, to avoid potential discrepancies.
- Compliance strategy development: We'll develop a comprehensive VAT compliance strategy tailored to your specific needs in Slovenia, including reverse charge scenarios.
- Ongoing support and updates: We'll provide ongoing support and keep you informed of any changes to Slovenian VAT regulations, including the reverse charge mechanism.
By partnering with European VAT Desk, you can gain peace of mind knowing your Slovenian VAT compliance is handled by professionals. Contact us today for a free consultation and ensure you leverage the reverse charge mechanism effectively.
We offer a free video conference to assess your situation and provide you with a tailored solution.