It depends on whether the seller is VAT-registered and when the building received occupancy approval. Supply of a building, including the land beneath it, is exempt if it takes place five years after occupancy approval permitting first use or the start of first use. A VAT payer may opt to tax the transaction, but the law prohibits that for a residential building, an apartment and an apartmán unit in a residential apartment building.
The first question: is the seller VAT-registered?
If a property is sold by an individual who is not VAT-registered and is not acting in the course of business, VAT does not arise. The question arises only when the seller is VAT-registered, typically a company, developer or business owner who held the property as a business asset.
There is one trap for a seller who is not yet registered: receiving a payment before supplying a building or building land can itself trigger a registration obligation. A reservation fee or advance can therefore trigger registration before the purchase agreement is even signed.
The five-year test
Under Section 38(1) of the VAT Act, supply of a building or part of a building, including the building land on which it stands, is exempt if it takes place five years after:
- the occupancy approval permitting the building’s first use for its designated purpose, or the start of first use, whichever occurs earlier;
- occupancy approval permitting a change of use following construction work, if that work cost at least 40% of the building’s value before it began;
- occupancy approval following construction work that substantially changed the conditions of the building’s previous use, again where costs reached at least 40% of its value before the work began.
Section 38(7) applies the same rule to an individual apartment, apartmán unit or non-residential unit.
The building’s value before the work means a value no lower than the open-market price of a comparable building before the work began, rather than its net book value.
The practical consequence is that a substantial renovation may restart the time test. If enough was invested to cross the threshold under paragraph (b) or (c), the period starts again with the new occupancy approval. A sale that would otherwise have been exempt becomes taxable.
The option to tax — and when it is unavailable
After the time test is met, the supply is exempt. Under Section 38(8), however, a VAT payer may opt to tax the supply.
The law excludes this option for the supply of:
- a building intended for housing;
- an individual apartment;
- a rental apartment that is a non-residential unit designated by the building authority for housing or accommodation;
- an individual apartmán unit in a residential apartment building.
An apartmán unit in an apartmán building is not among the exclusions, so the option to tax is available there. The distinction between an apartmán unit in a residential apartment building and one in an apartmán building therefore has a direct tax effect.
If a building serves both residential and other purposes, the VAT payer may tax only the non-residential part and must allocate a proportionate price to it.
Who accounts for VAT if the sale is taxed?
If the seller opts to tax an exempt supply and the buyer is VAT-registered, the buyer is liable to account for the tax. This is the domestic reverse charge under Section 69(12)(c) of the VAT Act. The seller issues an invoice without VAT bearing the wording “reverse charge”.
This has two contractual consequences. First, the purchase price is agreed exclusive of VAT, which the buyer accounts for themselves. Second, the agreement should contain the seller’s express declaration of the option to tax and confirmation that the buyer is VAT-registered. Otherwise, the parties may agree on a price while each understands it differently.
Land
Under Section 38(2), supply of land is exempt except for building land, which is taxable. If building land is supplied together with a building, it follows the building’s tax treatment.
Take care with land bearing a dilapidated building intended for demolition. If the seller arranges demolition and the work began before supply, for VAT purposes there is a single supply whose purpose is to supply unbuilt land—it is not automatically a supply of an old building. This follows from the Court of Justice of the EU judgment in Case C-461/08 Don Bosco. It must then be assessed separately whether the unbuilt land meets the Slovak statutory conditions for building land. Demolition alone does not mean that every parcel must be taxed; land that is not building land is subject to the exemption rule in Section 38(2).
What an exempt sale means for the seller
Exemption is not always advantageous. If a VAT payer deducted tax when acquiring or creating the property and now supplies it exempt, they must adjust the deducted tax under Section 54 of the VAT Act. Construction works constitute a separate capital asset with a separately running adjustment period.
Before agreeing the price of an older property, it is therefore worth calculating both routes: exemption and the option to tax.
Where we address this
We examine the transfer’s tax treatment when preparing the agreement, because it determines both the price and who accounts for VAT. We prepare the purchase agreement and the entire transfer through our complete property transfer service, or review the other party’s agreement through purchase agreement review.
We are attorneys, not tax advisers, and do not file your VAT return. We do, however, identify the regime applicable to the transaction and adapt the agreement accordingly.
This answer provides general information on the law as at 10 September 2026. It does not constitute legal services or replace an assessment of an individual case. The details of your situation may differ. Book a consultation to discuss them.
