When construction and assembly work is supplied between two VAT payers in the same country, the domestic reverse charge applies — the supplier invoices without VAT and the customer accounts for the tax. Slovakia governs this under Section 69(12)(j) of Act No. 222/2004 Coll. for works in Section F of the CPA classification; the Czech Republic under Section 92e of Act No. 235/2004 Coll. for works in codes CZ-CPA 41 to 43. In both countries the regime applies only between VAT payers and only where the place of supply is domestic.
What is the domestic reverse charge?
Normally the supplier of a good or service charges and remits VAT. Under the reverse charge, that obligation shifts to the customer: the supplier invoices without VAT, and the customer calculates the tax, reports it and — where entitled — deducts it in the same return.
The purpose is to prevent fraud in which a supplier charges VAT but never pays it while the customer reclaims it. Construction, with its long subcontracting chains, was especially exposed, which is why both Slovakia and the Czech Republic apply the reverse charge to building work.
When does it apply in Slovakia?
Under Section 69(12)(j) of the Slovak VAT Act, the reverse charge applies to construction work classified in Section F of the CPA, to the supply of a building or part of it under a works contract, and to goods supplied with installation where that installation is Section F construction work. Both the supplier and the customer must be Slovak VAT payers and the place of supply must be in Slovakia.
Since 1 January 2025 the Slovak standard VAT rate is 23%, so that is the rate the customer applies when self-assessing the tax. If either party is not a VAT payer, the reverse charge does not apply and normal VAT invoicing is used.
When does it apply in the Czech Republic?
Under Section 92e of the Czech VAT Act, the reverse charge applies to construction and assembly work corresponding to CZ-CPA codes 41 to 43 — buildings, civil-engineering works and specialised construction work. Again, both parties must be VAT payers and the place of supply must be in the Czech Republic.
The Czech standard VAT rate is 21%, which the customer uses to self-assess. The mechanics mirror the Slovak system; only the legal basis, the classification codes and the rate differ.
How is the invoice issued and what does the customer do?
The supplier issues an invoice without VAT and must state that the reverse charge applies — in Slovakia the wording “prenesenie daňovej povinnosti”, in the Czech Republic “daň odvede zákazník”. The taxable base is shown, but the tax itself is added by the customer.
The customer self-assesses: it calculates VAT at the applicable rate, reports it as its own liability and, if it uses the work for taxable activities, claims the corresponding deduction in the same return. For a customer with full deduction rights, the transaction is cash-neutral.
How is it reported?
Both parties report the transaction — in Slovakia in the VAT control statement (the supplier in part A.2, the customer in part B.1), in the Czech Republic in the control statement (the supplier in part A.1, the customer in part B.1) under subject-of-supply code 4 for construction and assembly work. Because both sides report the same supply, the figures should match; a mismatch is a common trigger for a query from the tax office.
What are the most common mistakes?
Across both countries, the recurring errors are the same:
- applying the reverse charge when the customer is not a VAT payer,
- charging VAT when the reverse charge should have applied, leaving the customer unable to deduct,
- misclassifying the work (for example, a pure supply of materials without installation),
- omitting the mandatory reverse-charge wording on the invoice.
VAT charged in breach of the rules is not deductible, so it pays to assess the regime before issuing the first invoice and to confirm the classification for recurring contracts.
Unsure whether the reverse charge applies to a particular contract in Slovakia or the Czech Republic, or facing a mismatch query on your control statement? We are happy to review the regime and set your invoicing up correctly.
FAQ
When does the reverse charge apply to construction work?
It applies where the work falls under Section F of the CPA in Slovakia (Section 69(12)(j)) or CZ-CPA 41 to 43 in the Czech Republic (Section 92e), the place of supply is domestic, and both the supplier and the customer are VAT payers. If any condition is missing — for instance the customer is not a VAT payer — normal VAT invoicing applies instead.
Who pays the VAT under the reverse charge?
The customer reports and pays the VAT, not the supplier. The supplier issues an invoice without VAT and states that the reverse charge applies; the customer self-assesses at the standard rate (23% in Slovakia, 21% in the Czech Republic) and, where entitled, claims the matching deduction. For a fully deducting customer the transaction is cash-neutral.
How is the reverse charge reported?
Both parties report the same supply. In Slovakia the supplier uses part A.2 and the customer part B.1 of the VAT control statement; in the Czech Republic the supplier uses part A.1 and the customer part B.1 of the control statement, under subject-of-supply code 4. Because the two sides mirror each other, the figures should match, or the tax office may issue a query.