New VAT rates from January 1, 2025
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April 14, 2025
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From January 1, 2025 fundamental changes are taking place in Slovakia in the area of value added tax (VAT), which will affect the prices of a wide range of goods and services. These legislative amendments are part of the government's consolidation package aimed at improving the state of public finances. In this article, we bring you an overview of these changes.
New VAT rates from 1.1.2025
- Basic VAT rate of 23 % (increase from original 20 %)
- Reduced VAT rate of 19 % (replaces previous 10 % rate)
- Reduced VAT rate of 5 % (left over from the previous period)
Overview of goods and services according to new rates
Basic VAT rate 23 %
- Goods and services that do not fall under reduced rates,
- examples:alcoholic beverages, tobacco products, electronics, clothing, luxury goods, entrance fees to sports facilities and swimming pools, restaurant services - serving alcohol
Reduced VAT rate 19 %
- Other foods(except basic foodstuffs),
- energy services:electricity and gas for households,
- gastronomic services: serving soft drinks in restaurants.
Reduced VAT rate 5 %
- Basic foods:like bread, milk, meat, fruits and vegetables,
- medicines and medical devices,
- books, textbooks and printed matter,
- accommodation services,
- restaurant services – serving meals.
Application of VAT rates when transitioning to the new year
The key factor in determining the correct VAT rate is the date of tax liability.
- Tax liability upon delivery of goods arises on the day of delivery of the goods.
- Tax liability when providing a service arises the date of termination of service.
Examples:
- Goods delivered by 31.12.2024: The original VAT rate (20 % or 10 %) will apply.
- Goods delivered from 1.1.2025: The new VAT rate will apply (23 %, 19 % or 5 %).
Accepting payment before delivering goods or services
If payment is received before the goods or services are delivered, the tax liability arises on the date of receipt of payment. The VAT rate is therefore determined according to the date of receipt of payment.
- Payment received in 2024: The original VAT rate will apply.
- Payment received in 2025: The new VAT rate will apply.
Practical example:
- A deposit paid in December 2024 for goods delivered in January 2025 will be taxed at a rate of 20 %.
- The remaining payment upon delivery in 2025 will be taxed at a rate of 23 %.
Correction of the tax base after a change in the VAT rate
When correcting the tax base (for example, when returning goods or making complaints), the VAT rate applicable at the time of the original delivery will apply. If the correction concerns supplies before and after 1.1.2025, the rates will be applied proportionally according to the original tax obligations.
Practical examples of applying new rates
Delivery of goods before rate change
The company delivered the goods on December 29, 2024, and issued the invoice on January 3, 2025. The VAT rate of 20 % will apply, because the tax liability arose on the date of delivery of the goods in 2024.
Providing service through the turn of the years
The hotel provided accommodation from 30.12.2024 to 2.1.2025. The tax liability arises on 2.1.2025. The VAT rate of 5 %, valid on the date of termination of the service, will apply.
Acceptance of deposit and delivery of goods after rate change
A customer paid a deposit of €10,000 in November 2024 for the construction of a house. The deposit will be taxed at a rate of 20 %. The remaining payment upon completion of the construction in March 2025 will be taxed at a rate of 23 %.
Correction of tax base when making a claim
If the customer returns part of the goods that were delivered both before and after January 1, 2025, the seller must correct the tax base proportionally according to the original VAT rates.
Conclusion
The changes in VAT rates from 1 January 2025 represent a significant legislative change. Businesses and consumers alike should consider these changes in their plans and prepare for them in advance. Thorough information and early preparation can help minimize negative impacts and take advantage of potential opportunities that the changes bring.