Bought a business without a tax schedule? The law presumes a full deduction

When purchasing individual assets, the buyer selects the specific property it acquires. The sale of a business or an independently organised part of one is governed differently: under § 477 of the Commercial Code, the rights and obligations covered by the sale pass to the buyer, and creditors’ consent is not required for the transfer of obligations. It cannot therefore be assumed that the buyer of a business may select only the advantageous items. Tax risks are a particular trap whose cost may become apparent only years after the transaction.

A business sale is not a taxable supply

Under § 10(1) of the VAT Act, selling a business or an independently organised part of it, or contributing it in kind to a company or cooperative, is not regarded as a supply of goods or services if the acquirer is a VAT payer or becomes one under § 4(1)(d).

The transaction is therefore not invoiced with tax, unless the exception under § 10(2) applies (see below). That is intentional: assets the buyer will continue to use for business should not be taxed simply because ownership changes.

The transfer must genuinely concern a business or an independently organised part of one. An arbitrary bundle of assets does not satisfy that condition and constitutes an ordinary supply of goods with all the consequences.

The benefit comes with succession

The same provision states that the acquirer is treated as the legal successor for VAT purposes of the taxable person selling or contributing the business, to the extent of the tangible and intangible assets transferred.

Succession involves obligations as well as rights. The buyer must continue input tax adjustments for capital goods, monitor any change in their use and, where applicable, adjust or repay the tax.

To do this, the buyer needs to know how the seller dealt with those assets.

The seller’s duty and the presumption if it is not met

The Act addresses this. Under § 54b(2), the seller of a business, and likewise a company divided by a partial division, must notify the acquirer of the tax relating to the capital goods, the tax deducted and any adjustments made.

Then comes § 54b(3):

Unofficial English translation:

If the acquirer of a business or part of a business, or the VAT payer to whom another VAT payer’s capital goods have passed through a partial division or cross-border partial division, does not have the information under paragraph 2, it is presumed that input tax deduction on acquisition of the capital goods was claimed in the year in which the legal successor acquired those goods, at 100% of the taxable amount, which is the fair value of those capital goods under separate legislation.

In practice, if the buyer lacks the data, the law presumes a full deduction based on the asset’s fair value, claimed in the year of acquisition. The input tax adjustment is then assessed as if the buyer had deducted 100% of the tax on the asset’s fair value in that year. If the buyer later changes the asset’s use or sells it exempt from VAT (§ 54 and § 54a), an obligation to repay tax may arise from that amount, even though the buyer never deducted it.

This is a legal presumption, not a penalty. It cannot be rebutted by arguing that the seller failed to provide the documents.

What the agreement needs

A business sale agreement that ignores this transfers an unquantifiable risk to the buyer. It should therefore include:

• A schedule of capital goods information, covering the relevant tax, deductions and adjustments.
• A seller obligation to deliver it by closing, not “later”.
• A seller representation that the information is complete and correct.
• Retention or another mechanism that gives the delivery obligation practical force.

The same logic applies to a partial division. Under § 10(3) of the VAT Act, assets passing to a successor company are likewise not treated as a supply of goods or services if the successor company is a VAT payer or becomes one under the provisions listed in § 10(3), and the dividing company has the same notification obligation. Delivery of the information should therefore be addressed in the transformation project itself.

Two related points

Registration may arise directly by operation of law. Under § 4(1)(d) of the VAT Act, a taxable person becomes a VAT payer on the date of acquisition if it acquires in Slovakia tangible assets and intangible assets forming part of the acquired business of a VAT payer or of an independently organised part of that business. The seller’s status, the nature of the acquirer and the transferred assets therefore all matter; the acquisition of just any business does not automatically trigger registration. If the buyer does become a VAT payer, it must apply for VAT registration within five working days (§ 4(2)(d)).

The buyer’s profile can change the entire treatment. Under § 10(2), the exemption does not apply where the acquirer exclusively or predominantly makes exempt supplies under §§ 28–41, for example a buyer in financial services, insurance or healthcare, or a residential landlord. However, this exception does not cover the sale of a business by a VAT payer that itself exclusively or predominantly makes such exempt supplies. Both parties’ profiles are therefore among the first matters to verify in an asset deal.

---

We are not tax advisers and do not file tax returns. We do, however, structure the agreement and schedules so the buyer actually receives the seller’s tax information, rather than discovering the gap at the first inspection. See company sales and purchases or legal due diligence.