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Slovenia introduces mandated domestic reverse charge 2022

22nd January 2022 – Non-residents may no longer charge VAT on local B2B supplies or VAT register – aim is to cut VAT fraud via compulsory Article 194 VAT Directive

Slovenia’s National Assembly has completed this week its approval of the adoption of Article 194 of the EU VAT Directive for the VAT Act, which mandates the shift of VAT compliance obligations from foreign B2B sellers to their resident customers. This simplification means VAT is not charged by the vendor, and the customer instead records the transaction as a ‘reverse charge’ with no cash payment.

However, if the non-resident business has a Slovenian VAT registration for other purposes, including intra-community supplies – then they should use this number a remain responsible for the VAT obligations.

Slovenia already operated the domestic reverse charge on a range of VAT fraud-sensitive sectors, including:

  • construction work, including maintenance, repairs, cleaning, construction, demolition of immovable property
  • staff hire for above
  • immovable property with option to tax
  • certain scrap materials
  • carbon trading certificates

Slovenia’s VAT Gap was recently estimated at €298 million per annum, just over 7% of revenues.

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The anti-fraud measure is popular across the EU. However, a generalised domestic VAT fraud measure has failed to be taken up.

VAT Calc’s tax engine, VAT Calculator, is built on all the EU VAT Directive articles and local law implementations. This includes the ‘may provisions’, including Article 194. This means every time there are changes like this, there is no extra costs, planning or demands on ERP teams and reliance on external advisors. So whether you are needing VAT checked for invoicing or VAT reporting, you are up-to-date.

EU VAT General and Domestic Reverse Charge rule by country

Country General RC (art 194) Domestic Reverse Charge (art 199)
Domestic goods * Immoveable Property Installation Construction Scrap metal Mobile Phones Gas & electrcity Carbon Trading
Austria Yes Yes Yes Yes Yes Yes Yes Yes
Belgium Yes Yes Yes Yes - - Yes Yes
Bulgaria - - Yes - Yes - Yes -
Croatia Yes Yes Yes Yes Yes - Yes Yes
Cyprus - - Yes Yes Yes Yes Yes -
Czech Republic Yes - Yes Yes Yes Yes Yes Yes
Denmark - - Yes - Yes Yes Yes Yes
Estonia Yes Yes Yes - Yes - Yes -
Finland Yes - Yes Yes Yes - Yes Yes
France Yes - Yes Yes Yes - Yes Yes
Germany - Yes Yes Yes Yes Yes Yes Yes
Greece Yes - - - Yes Yes Yes Yes
Hungary  - Yes Yes Yes Yes - Yes Yes
Ireland - Yes Yes Yes Yes - Yes Yes
Italy Yes Yes Yes Yes Yes Yes Yes Yes
Latvia - - Yes Yes Yes Yes Yes -
Lithuania Yes - Yes Yes Yes - Yes -
Luxembourg - - - - - - Yes Yes
Malta Yes - Yes Yes - - Yes -
Netherlands Yes Yes Yes Yes Yes Yes Yes Yes
Poland Yes - Yes Yes - - Yes -
Portugal Yes Yes Yes Yes Yes - Yes Yes
Romania Yes Yes Yes - Yes Yes Yes Yes
Slovakia Yes Yes Yes Yes Yes Yes Yes Yes
Slovenia Yes Yes Yes Yes Yes - Yes Yes
Spain Yes Yes Yes Yes Yes Yes Yes Yes
Sweden  Yes - Yes Yes Yes Yes Yes Yes
Non-EU
Norway - - - - - - - -
Switzerland Yes - Yes - - - Yes -
UK - - Yes - - Yes Yes Yes
* Further local rules on the VAT status of the supplier and their customer need to be considered to determine if RC applies

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