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