Ex Officio VAT Group – Introducing Mandatory VAT Grouping in Slovakia

• Under the existing regime, voluntary VAT groups can be formed by interconnected taxable entities (e.g., shared HQ, business, or establishment). They file and pay VAT under a single VAT number, streamlining intra-group transactions. [financnasprava.sk], [taxsummaries.pwc.com], [fiscal-req…ements.com]

2. New Proposal: Ex Officio VAT Group Registration

• A draft amendment to the VAT Act proposes granting the tax authority the power to register interlinked entities as a VAT group ex officio—i.e., automatically, without the group’s request—if it suspects VAT circumvention through fragmentation of businesses.
• This includes cases where activities and revenues are split across related legal entities with common ownership to avoid the VAT registration threshold (€50,000). [danovky.sk], [kpmg.com], [vatupdate.com]

3. Rationale: Curbing VAT Evasion ️

• The policy targets avoidance behaviors such as:
  • Dividing economic activities and invoicing across related parties (e.g. multiple s.r.o. or individual traders sharing the same owner).
  • Keeping turnover below the VAT threshold through artificial structuring to avoid VAT obligations.
• Under the new rules, the tax authority can combine these entities into a single taxpayer to close this loophole. [kpmg.com], [vatupdate.com], [danovky.sk]

4. Ex Officio Group Formation Process

• Detection: Tax authorities identify entities with financial, economic, or organizational interconnections used to sidestep VAT registration.
• Notification: The entities receive a preliminary notice and are invited to explain their structure.
• Decision: If they fail to rebut the concerns or do not respond, the tax office proceeds with automatic VAT group registration.
• Group Setup: A new VAT group number is issued, existing individual VAT numbers are revoked (including special suffix “EX” if applicable), and a group representative is appointed.
• Rights & Penalties: Members retain rights to appeal; the group must report updates, with failure potentially resulting in penalties up to €10,000. [accace.com], [vatupdate.com], [danovky.sk]

5. Accounting & Compliance Implications

• After grouping, intra-group supplies are not subject to VAT, requiring updated VAT accounting and invoicing procedures.
• The appointed group representative must handle VAT reporting, changes in membership, and ensure ongoing compliance.

6. Timeline

• The amendment was submitted to Parliament in late 2025 and, if approved, is expected to apply from 1 January 2026. [danovky.sk], [accace.com], [kpmg.com]
• It is currently under legislative review and may undergo further technical refinements during its passage.

Key Takeaways

• For interlinked micro-entities intentionally kept under the VAT threshold via split operations, this proposal creates a tangible risk of enforced VAT grouping.
• Group formation is avoidable only by ensuring operational and financial independence, backed by clear documentation.
• Entities suspected of non-compliant structuring will face streamlined grouping and tighter VAT enforcement.