Slovenia introduces reverse charge on supplies made by non-established companies starting January 2022

National Assembly approved the measure on 27 December, 2021, implementing reverse charge option for non-established companies from Article 194 of the EU VAT Directive starting 22 January 2022.

17 January, 2022


Slovenia introduces reverse charge on supplies made by foreign companies, according to the option from Article 194 of the EU VAT Directive (2006/112/EC). Non-established companies no longer have to charge VAT on their domestic B2B supplies in Slovenia if conditions are met for the reverse charge mechanism, introduced in the country. The measure will enter into force on 22 January 2022.

You will find in the table below the conditions that must be fulfilled in order to correctly apply new reverse charge mechanism approved in Slovenia:

  • Supplier requirements
    Not established and not VAT registered in Slovenia.
  • Customer requirements
    Taxable person with a VAT number in Slovenia (irrelevant if the customer is established or not established in Slovenia)
  • Scope
    All supplies of goods and services located in Slovenia

It is worth noting that to apply reverse charge on supplies made by non-established businesses in Slovenia, the customer must have a Slovenian VAT number. It is not relevant if the customer is established or not in Slovenia, but only if he has a VAT number identification.

Nevertheless, from a customer perspective, the fact of simply making purchases (or receiving services) from a non-established company in Slovenia does not arise the obligation for a VAT registration in the country.

Many companies will benefit from the implementation of this reverse charge, avoiding a VAT registration in the country in case they do not perform any other taxable transaction in Slovenia, or opting for a VAT de-registration in case already VAT registered only for those type of B2B sales to companies with a VAT number.

What is reverse charge and how applies?

In the context of anti-fraud measures, Article 194 of the EU VAT Directive allows Member States to implement in their national legislations the reverse charge mechanism when the taxable supply of goods or services is made by a non-established business: “Member States may provide that the person liable for payment of VAT is the person to whom the goods or services are supplied.”

You can learn more about Reverse Charge mechanism on our article about this topic.

 

In practice this means that VAT liability of a domestic supply made by a non-established company is shifted from the supplier to the customer, who will be responsible for accounting the VAT on that transaction.

This measure will facilitate that foreign companies do business in Slovenia, because they might even avoid VAT registration in Slovenia if requirements are met to apply domestic reverse charge.

If reverse charge applies you should issue an invoice without VAT – in accordance with the invoicing requirements from your country of establishment, and your client will self-assess the VAT amount. This self-assessment made by the customer implies that at the time of preparing his VAT return, the customer will manually calculate the VAT amount and report it as due and as deductible (both) in his VAT return. 

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