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When using payment services or intermediaries for payments (e.g., payment cards, online payments, etc.), there's often a dilemma about how to handle taxes correctly. The VAT treatment also affects the obligation to identify for VAT.
DILEMMA:
First, let's clarify that it's crucial to distinguish between different payment service providers and, even more importantly, the type of services that are actually provided. This is especially important in today's world, where new solutions and so-called Fintech companies are emerging. The treatment of such transactions must be extremely meticulous on the part of entrepreneurs and accountants. It should not be generalized; instead, it should be individualized on a case-by-case basis.
However, there is a "rule of thumb" that can be used as guidance – for what we might call traditional payment services – even if they are provided by Fintech providers, the services may be VAT-exempt (in accordance with Article 44 of the VAT Act). If these are indeed exempt services, entrepreneurs or taxpayers DO NOT NEED to be identified for VAT (not even as atypical taxpayers under Article 78). These services will not be subject to VAT in our country.
SOLUTIONS:
However, there are many "ifs" and much consideration. There are numerous variations of what these services might entail and how they are conducted. The fundamental rule (according to the case law of the EU Court and explanations by the Slovenian Tax Authority) is that the definition of exempt services should be interpreted narrowly. This involves assessing the nature of the service itself and distinguishing services in terms of "money transfers" (financial transactions) from services that also have a physical or technical nature. This will determine whether the service is indeed exempt or if different tax treatment rules apply (e.g., reverse charge).
A very concrete and common example in this regard is renting a POS terminal, which is sometimes considered part of the service itself (e.g., popular providers like SumUp, PayPal, etc.). These services are of a technical nature and are subject to VAT rules (generally meaning reverse charge).
For such services, VAT identification is required (according to Point 4 of Article 78 of the VAT Act).
SUMMARY:
The tax treatment and judgment regarding the obligation to identify for VAT when using financial services from foreign providers are quite complex processes. Therefore, it's even more important to focus on professional content in accounting, while the technical aspect – like manual entry of bank statements from these providers – should be organized as efficiently as possible, including modern tools of digitization. Otherwise, you might see the trees but miss the forest!
