Simplification of VAT charging and payment of VAT at the import of goods

Draft Act amending the VAT Act (ZDDV-1)

The fundamental objective of the Draft Act is the simplification of charging and paying the VAT on import of goods into Slovenia. According to the Draft Act, the VAT shall no longer be paid as an import duty, resulting in an administrative simplification of VAT charging as well as a financial relief on the part of importers since the import VAT financing will no longer be necessary.

The Draft Act is amending Article 77 of the VAT Act in part which sets out the method of charging VAT on import. The proposed simplification of charging VAT on the import of goods for taxable persons identified for VAT purposes in Slovenia takes the burden off of importers as they will no longer be required to pay the VAT on the importation of goods, but will instead make the payment of VAT through a VAT return for the tax period in which the goods were imported. The charging of VAT on the import of goods thus only presents an administrative operation of the VAT return, meaning that the importers will not have to provide the funds for the actual payment of the import VAT at the time of import.

The proposed simplification offers clear advantages in particular for the large importers and net exporters, as they will no longer have to burden the financial costs of the import of goods, as the charging of VAT will only constitute an administrative operation through the VAT return. The simplification will, however, not apply to small traders, foreign taxable persons not identified for VAT purposes in Slovenia and non-taxable persons, who will continue to be liable for payment of the VAT as if it were an import duty.

The Act is foreseen to come into force on 1 January 2016, whereas the proposed simplification is to be applicable with effect from 1 July 2016 onwards.

The Draft Act also provides for a transitional period or transitional regulation in cases where goods are imported prior to the implementation of this change and the VAT return is to be subsequently submitted in July 2016 when the new regulation will have already entered into force. For these goods, the taxable person will have to charge the VAT according to the existing regulation, i.e. as if the VAT were an import duty, despite the fact that the VAT return, which will also disclose the VAT from the import of goods, will subsequently be submitted in July 2016. The same will apply to taxable persons completing VAT returns on a quarterly basis.

The proposed simplification is a much-anticipated step towards facilitating the business of taxable persons, which has been in place in some western Member States for quite a while now.