Measures to curb illegal activity and abuse of the VAT system by businesses are being proposed to take effect from 1 October 2011, with further provisions coming into force on 1 January 2013 and 1 January 2014.

These changes to the Commercial Code are intended to:

  • stop illegal practices that distort competition and damage the business climate,
  • prevent abuse of the VAT system,
  • increase the legislative deterrent for VAT fraud
  • improve tax collection and thereby increase the state revenues derived from VAT,
  • create a more conducive climate for legal business activity

The first change precludes anyone with tax arrears from setting up a limited liability company. Foreign entities are exempt.

Applications to register the company in the commercial register must include a certificate to that effect from the tax authority. The certificate must be sought by the founder director (either a person or entity) based in Slovakia. This will be issued by the tax administrator within three business days unless the aggregate tax arrears exceed €170.

The second change precludes anyone with tax arrears from transferring, dividing or acquiring a majority share in a limited liability company. A majority share is any holding of shares carrying at least 50% of all votes (whether due to weighted voting rights under the company’s Memorandum of Association or because the holding represented half or more of the registered capital).

Both parties to the share transfer (if based in Slovakia) must obtain a certificate from the tax authority. Transferees and transferors that are foreign entities (or are not taxpayers under the Tax Code) must attach to their applications a written declaration that are not required to provide a certificate.

This means that the transfer of a majority share will be completed not, as previously, on delivery of the share transfer agreement to the company, but instead when the change of shareholder is registered in the commercial register.

Law: The Act No 246/2012 Coll. on the amendment of the Act No. 222/2004 Coll. on VAT and certain other acts