VAT on vegetables differs in Slovakia. Sometimes different parts of the same vegetable attract different rates of VAT. (source: Sme)
Some caps, or brackets, triggering liability for income and payroll taxes in Slovakia, have remained the same for years, increasing the amount of red tape that entrepreneurs and companies have to deal with. This problem placed first among all 51 "bureaucratic nonsenses" nominated for the 12th annual Bureaucratic Nonsense survey, Lukáš Ivan, chair of the Slovak Association of Young Entrepreneurs, announced.
“In terms of topics, the nominations pointed mainly to duplicate data provided to the state, unnecessarily required documents or various problems in labour law, accounting and taxes,” said Ivan, as quoted by the SITA newswire.
Entrepreneurs and the professional public nominated a total of 51 issues from various areas for the survey. In terms of the ministries under whose competence the individual issues fall, the largest number of nominations went to the ministries of finance, labour and health. Among the identified issues were also shortcomings in the digitisation of the state, and outdated regulations in the field of employment.
In the Bureaucratic Nonsense of the Year 2023 survey, 1,129 votes were cast in an online poll lasting from December 18 to 31, 2023. The problem that "won" thanks to significantly increasing the administrative burden on companies received 18 percent of the votes.
The winner
The VAT turnover cap in 2024, the annual gross income above which an entrepreneur must register as a VAT payer, has remained unchanged since 2004 – but prices have risen and entrepreneurs now reach the limit much earlier. VAT registration typically means significantly increased record-keeping, accounting and reporting requirements. Businesspeople also have to depreciate small assets more frequently, as the given caps have remained the same for 15 years. The long-unchanged amount, €200, for the levy exemption from agreements for working students and pensioners also adds to the administrative burden.
“The winner of the latest edition of the survey is the growing bureaucracy resulting from the state’s reluctance to realise fixed amounts in tax and levy regulations,” said Ján Solík, president of the Association of Slovak Entrepreneurs. “The main decisive factor is that this problem and the increasing administrative burden is felt by almost every company.”
Other nonsenses
In second place came regulation relating to employment. In some cases, employees are also entitled to holiday pay for time they have not actually worked. For example, this is the situation where vacation leave accrues to parents during maternity (or paternity) leave.
Third place went to the state’s inability to ensure the exchange of data between two registries, even ones which are managed by the same ministry. If an entrepreneur fails to notify the trade register within 15 days of a change in the data of, for example, a responsible representative, he or she risks a fine. However, this information is already held by the register of natural persons, which also falls under the same ministry. However, they are not interlinked.
The different VAT rates for related products ranked high, too. For example, parsley (haulm) has a different VAT rate to root parsley with haulm, and celeriac has a different VAT rate to celery stalks.
“The chaos in VAT on so-called healthy foods is a good example of the consequences of adopting legislation without a comment procedure through parliamentary proposals,” said Martin Krajčovič, president of the Association of Entrepreneurs of Slovakia. “On the one hand, the state wants to support more domestic products on the shelves, on the other hand, it will reduce VAT on a number of foods that do not come from domestic production.”
There is a lot to choose from
“Despite the fact that this is the 12th edition of Bureaucratic Nonsense, there was no shortage of nominations,” said Ivan. “This year’s finalists illustrate a wide range of problems, from the state’s inability to digitise processes, to outdated regulations, to the chaotic rules that are the practical consequence of bypassing the standard legislative process when passing laws.”
