Supply with installation

What it means

Supply with installation is a sale of goods that the supplier also installs or assembles at the customer's site, such as a production line, a lift, a cold room or process equipment. For VAT it is a supply of goods, not a service, where the installation forms part of the delivery.

The place of supply is where the goods are installed or assembled, not where they are dispatched from. If a German manufacturer supplies and installs a line in a Slovak factory, the place of supply is in Slovakia, so Slovak VAT applies.

A foreign supplier not established in Slovakia often does not charge Slovak VAT, however. If the customer is a Slovak VAT payer, the reverse charge applies and the customer accounts for the tax, which spares the supplier from registering.

How it works in practice

A Slovak VAT payer receiving a supply with installation from a foreign company calculates and declares the VAT itself through self-assessment and can deduct it at the same time. The supplier's invoice should mention the reverse charge, but the customer's obligation applies even without it.

If the customer is not a VAT payer, such as a municipality or a private individual, the foreign supplier must register for VAT in Slovakia and declare the tax itself. The same applies in reverse to Slovak firms installing abroad, under that country's rules.

Contractually, a supply with installation is often covered by a contract for work or a sales contract with an installation obligation. The acceptance protocol is important because it fixes the moment of supply, from which the tax point and warranty start.

What to watch out for

If installation takes a long time, for example more than six months on a construction site, the supplier may create a permanent establishment in the country of installation and owe income tax there. For long projects this should be assessed before signing.

Workers carrying out installation in another country are posted workers, subject to posting rules including notifications, the A1 form and the host country's minimum pay conditions. Non-compliance leads to fines that can exceed the profit on the contract.