VAT group registration

What it means

Group registration joins several connected taxable persons into one entity for VAT. The group gets a single VAT ID, the members’ own numbers are cancelled, and the group representative acts for all of them towards the outside world.

The conditions are a seat, place of business or fixed establishment in Slovakia and financial, economic and organisational links between the members. Supplies between members stop being within the scope of the tax, so intra-group invoicing disappears from the return.

The group exists for VAT only. It has no effect on income tax, bookkeeping, financial statements or social contributions: each member remains a separate legal person with its own tax ID, its own books and its own income tax return. It should not be confused with group taxation of profits, and one member’s profit cannot be offset against another member’s loss this way.

How it works in practice

The representative files the application for all members, and registration is tied to the start of a calendar year: filed by the end of October it takes effect from January of the following year, filed later a year after that. A taxable person can belong to one group only.

The group files one VAT return and one control statement assembled from the members’ data, while each member keeps its own books. The right of deduction is judged for the group as a whole, so a single member with exempt supplies puts the whole group on a pro rata.

Although supplies between members fall outside VAT, they are still invoiced in the books, just without tax. Prices between members remain controlled transactions for income tax, so transfer pricing and its documentation are handled exactly as if the group did not exist.

What to watch out for

Members are jointly and severally liable for the VAT arising while they belong to the group, and that liability survives their departure from it. When one member ends up in insolvency, the group’s arrears are paid by the healthy companies that had nothing to do with its trade.

The group’s return is only as timely as the data of its slowest member. When one member delivers late or with errors, the penalty for late filing or missing records is imposed on the group and so falls on everyone, which is why deadlines and responsibility for the data should be agreed between the members in writing.