News Flash

December 14, 2015

VAT Reverse-charge mechanism

when providing construction works
in Slovakia as of January 1, 2016

News Flash I Accace Slovakia I Reverse-charge mechanism when providing construction works

VAT Reverse-charge mechanism when providing

construction works in Slovakia as of January 1, 2016
In our recent issue of News Flash, we have informed you about changes introduced in the area of VAT as
of 1 January 2016. One of the most important changes is an introduction of so-called reverse-charge in
provision of construction works.

Reverse-charge mechanism
Taking effect in 1 January 2016 a taxpayer who
is the recipient of a supply from another
taxpayer shall be obliged to pay the tax
attributable to:

the supply of construction works that

belong under section F of the statistical
classification of products by activity
according to Guideline of European
Commission (EU) No. 1209/2014 of 29
October 2014 amending Regulation
(EC) No. 451/2008 of the European
Parliament and of the Council
establishing a new statistical
classification of products by activity
(CPA) and repealing Council Regulation
(EEC) No. 3696/93
(hereinafter referred to as CPA
classification),
the supply of construction or its part
under any contract for work or another
similar contract that belong to section F
of the CPA classification,
the supply of goods with installation or
erection, if the installation or erection is
a construction work that belongs under
section F of the CPA classification

New guideline in this matter

In this matter, we would like to draw your
attention to the new Guideline on Classification
of construction works into section F of statistical
classification of CPA that has been issued by
the Financial Directorate of the Slovak Republic
recently.
We are ready to provide you with the English
version of the Guideline upon request.
Section F Constructions and construction
works contain the following divisions:

(hereinafter referred together to as construction

works).

Conditions of reverse-charge
Inland reverse-charge from the provider of
taxable supply to the recipient will apply in
provision of construction works only in case, if
the following conditions are met:

the subject of delivery are construction

works belonging under the section F of
classification CPA,
the place of delivery of goods or
services is within the Slovak Republic,

supplier and recipient are tax payers

inland, i.e. they are registered for tax
purposes pursuant to 4, 4b, 5 and 6 of
the Act on VAT.

41 Buildings and building construction

works (groups: residential buildings,
non-residential buildings, construction
works for residential and non-residential
buildings new works, additions,
alterations and renovation works)
42 Constructions and construction
works for civil engineering (groups:
roads and railways; construction works
for roads and railways, construction and
construction works for engineering
infrastructure, other civil engineering
projects and construction works for
other civil engineering projects)
43 Specialised construction works
(groups: demolition and site preparation
works, electrical, plumbing and other
construction installation works, building
completion and finishing works, other
specialised construction works).

In the light of practical experience resulting from

the application of reverse charge to the recipient

News Flash I Accace Slovakia I Reverse-charge mechanism when providing construction works

of a supply in the building sector, in the context

of classification, the cases of works the
character of which can be linked to division 43 or
division 33 of the CPA classification prove to be
of concern. They involve installation works,
repairs or maintenance of different devices that
are firmly attached to buildings.
Please note that if more supplies are subject of
a delivery within the established contractual
relationship, for the correct tax regime of value
added tax will be important to find out if there is
single composite supply with one tax base or
several different supplies.
In case of the single composite supply, it is
crucial to determine what is the main supply and
which supplies are ancillary to the main supply.
Reverse-charge will apply to the supply as the
whole only if based on the agreed contractual
conditions it is clear that there is only single
composite supply and the main service, which
determines the character of provided supply, is
a service of construction Works classified in the
section F of classification CPA.
Otherwise if a single composite supply is
a subject of the contractual relationship, where
the main supply does not belong to the section F
of the classification CPA, the normal tax regime

will apply to the supply as a whole, and this also

in case when within this supply, constructions
works that belong to the section F of
classification CPA, are provided as ancillary to
the main supply.
In case of several different supplies which do not
constitute one inseparable economic supply,
reverse charge will apply only by services of
construction works which belong to the section F
of classification of production and normal regime
will apply to other single services.
If a taxpayer received a payment before the
delivery of construction works before 1
January 2016, the normal tax regime will
apply to the received payment, i.e. the
supplier of construction works will be obliged to
pay the tax on received payment (pursuant to
69 par. 1 Act on VAT), and this also in case the
delivery of construction works will be done in
2016.
After the delivery of construction works in
2016, the reverse-charge will be applied to a
recipient of supply, a taxpayer, from the
difference of the total tax base for
construction works and tax base from the
granted payment by which the tax duty has
arisen to the supplier before 1 January 2016.

Disclaimer
Please note that our publications have been prepared for general guidance on the matter and do not represent a
customized professional advice. Furthermore, because the legislation is changing continuously, some of the
information may have been modified after the publication has been released. Accace does not take any responsibility
and is not liable for any potential risks or damages caused by taking actions based on the information provided
herein.

News Flash I Accace Slovakia I Reverse-charge mechanism when providing construction works

Contact
Katarna Balogov
Tax Manager
Katarina.Balogova@accace.com
Tel: +421 2 325 53 000

About Accace
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