Rapidly expanding area of e-commerce is legally regulated on European level and by the member states, including Slovakia. Thus, if you consider expanding your business by an eShop aimed at Slovak customers you should verify all your legal obligations and avoid the risk of possible penalties. We would like to draw your attention to the changes in the taxation of e-shops from July 1, 2021.
Legal form of business
An eShop can be run based on trade permission issued to a natural person – entrepreneur, i.e. by the registration in the Trade register or by a business company or registered branch of foreign legal entity registered in the Trade and the Commercial registers.
In order to run an eShop compliant with the Slovak legislation, you will need a comprehensive documentation, such as general commercial terms and conditions, return/complaints procedure, delivery conditions, information on alternative dispute resolution, complex documentation regarding data protection in compliance with the General Data Protection Regulation (GDPR) and the Act on Personal Data Protection (the Act on PDP), including publishing the specified information on the eShop website.
The scope of information duties that the operator of eShop shall provide to customers, even before the conclusion of the contract, is very broad. The most important information are the identification details of the trader, detailed information on the nature of goods, the total price of the goods including additional fees, such as delivery or VAT fees, instruction on liability for damage, etc.
So called Omnibus Directive applicable in EU member states from May 28, 2022 sets new rules for price promotion, according to which in case of discounts the consumer has to be informed of the prior price of the goods as the lowest one applied to those goods over the 30-day period prior to the promotion being applied.
New Act on Consumer Protection
Besides, the Parliament has adopted a new Act on Consumer Protection dated on July 20, 2023, which should replace the current Act on Consumer Protection as well as the Act on Consumer Protection in the Sale of Goods or Provision of Services under a Contract Concluded at a Distance or a Contract Concluded Outside the Seller’s Premises, but it will also affect other legal acts.
This new Act on consumer protection has not yet entered into force and effect, because the President has sent it back to Parliament with observations. When Parliament overrides the President’s veto, we will be looking at new consumer protection legislation. The changes that this draft will bring will be linked to updating the information requirements for contracts concluded at a distance or away from the trader’s premises, a new regulation of the information obligations of providers of online marketplaces, as well as the introduction of new definitions of digital content, digital services or things with digital elements, etc.
It also includes the aforementioned regulation on price reductions to ensure that consumers are not misled about the amount of the actual discount.
A consumer, due to the fact of concluding the contract by the means of distance communication, has additional rights, that it should be informed about by the eShop operator. Besides the information duties about which the trader is obliged to inform the customer, the Act also provides the right to withdraw from the purchase contract within 14 days after receiving purchased goods without giving a reason for withdrawal.
Consumers’ personal data protection
Every eShop shall ensure that the personal data of its customers is protected under standards provided by the GDPR and the Act on PDP. Besides, the trader is obliged to disclose information on how the personal data is being processed and that the personal data for the marketing purposes (if the person didn’t order anything from the eShop yet) can be processed only after the prior express consent of customers, while they are entitled to withdraw this consent at any time. Any breach of personal data protection shall be notified to the Slovak Personal Data Protection Office within 72 hours after they become aware of the breach.
Obligation to issue an invoice
In case of distance selling of goods only to natural persons, i.e. non-taxable persons, the trader is not obliged to issue an invoice. In such case, they are obliged to pay the VAT and record it in the evidence of VAT and in the so-called control sheet. When selling goods to other EU member states, it is necessary to examine invoice duty and the VAT application according to the legislation of the concerned member state of the customer.
Please note, that in case of distance selling of goods to other EU member states, a special One-Stop-Shop (OSS) scheme for the VAT purposes is valid from July 1, 2021. This scheme is voluntary, so if the eShop decides to apply it, it may benefit from a certain administrative simplification (i.e. it won´t be obliged to register in other EU member states and it will submit only one specific local tax return for all deliveries of goods to other EU member states).
Changes in eShop operation due to an amendment to the VAT Act
An amendment to the Value Added Tax Act in the area of distance selling of goods entered into force on July 1, 2021. More information about the amendment can be found in our News Flash. If you run an e-shop that delivers goods to natural persons (non-entrepreneurs) to other EU states, this amendment applies to you, as well.
If the total value of the goods sold at distance without VAT to other EU countries doesn’t exceed the threshold of EUR 10,000, the trader must tax the goods sold at distance to another member state by the tax of the member state in which the transport begins (usually, the state where the supplier is established).
If the e-shop exceed the threshold of EUR 10,000, the goods will be taxed in the country where the transport ends, i.e. in the country of the customer. The traders will have an opportunity to register in the One-Stop-Shop scheme and submit only a single tax return in the country of their residence for all supplies to the EU. If the trader doesn’t register in this scheme, he will be obliged to register in the respective member states and submit tax returns there.
Please note, that if the trader wants to apply the OSS scheme, he is obliged to notify the Tax Office via electronic means in advance.
Operating an eShop? Be prepared for the new VAT changes!
We are ready to provide you with consultancy support and solutions for your e-commerce regarding the VAT changes valid from July 1, 2021. If you are running an eShop, we offer you a consultancy with our expert, that includes:
- Analysis of the situation described in advance
- Discussion on tax or legal aspects of the e-commerce changes with one selected expert
Online cash register (E-kasa)
If an entrepreneur accepts cash from the customers (except in case of mail-order) he has to record such income through E-kasa connected to the Financial Directorate of the Slovak Republic as of July 1, 2019 (before this date electronic cash register was sufficient).
What to watch out for when operating an eShop in Slovakia
Nowadays, having your own e-shop is considered as a competitive advantage for your business. However, before you launch your e-shop, you should check whether it meets the conditions stated by the Slovak legislation. To simplify this procedure, we prepared an overview thanks to which your e-shop will meet these conditions.
Establishing an eShop – basic conditions:
- The company is obliged to extend the scope of its activities by NACE from 47.91 – Mail order or internet sales.
- Information on the personal data processing must be prepared in accordance with the GDPR Regulation.
- You don’t need to use cash register in case the money from customers is collected:
- via bank transfer
- via a courier company that issues a receipt on the basis of invoice issued by your company (the courier company has the right to collect the money together with the receipt and transfer the money to your account according to the contract).
In such cases, the supporting document for these deliveries is an invoice with all the fundamentals regulated by the fiscal law.
- The fundaments that must be included on your eShop (see below):
The name of the company that runs the eShop and name of your company, including all identification and contact information
The total value of goods
General terms and conditions
Information on warranty (warranty conditions, warranty period, etc.), complaint procedure, options for withdrawal from the contract, delivery conditions and conditions for alternative resolution of consumer disputes
Information on personal data processing, including the purposes of data processing, the legal basis, retention periods, the recipients of the personal data and the rights of the concerned persons