VAT in Serbia is a consumption tax that was introduced in 2005 and is currently 20%. In addition to the stated general VAT rate in Serbia, there is also a special VAT rate of 10% in Serbia. A special VAT rate is prescribed by law for a specific type of goods and services and represents the government’s effort to create the lowest possible tax burden for the poorest part of the population through tax policy.
When it was first introduced, VAT in Serbia was 18%. Seven years later, in 2012, a new rate of 20% was introduced and it remains in effect today. So after a full 12 years, the same rate is in effect with no indication that it will change.
VAT payers in Serbia
VAT payers in Serbia are natural and legal persons who purchase goods and services. The general rule is that VAT in Serbia is indicated on the invoice and paid by the person (natural or legal person) who purchases goods or services. However, the party acquiring the goods or services may itself be registered in the VAT system. If the person acquiring goods or services and is registered in the VAT system in Serbia, he pays VAT in Serbia, but is entitled to a VAT refund.
In this regard, it is necessary to clarify who can be a VAT payer in Serbia and who can be registered in the VAT system. Business entities – companies and sole proprietors – natural persons can be registered in the VAT system in Serbia. Companies and sole proprietors with an annual turnover of less than 68,000 euros have the right to opt for the VAT system, but are not obliged to do so. If they choose to do so, they have the opportunity to reclaim the VAT paid in Serbia. On the other hand, companies and sole proprietors whose turnover exceeds the specified amount are themselves subject to VAT by law in Serbia.
Deadline for payment of VAT in Serbia
The deadline for reporting and paying VAT in Serbia is the fifteenth day of the month for the previous month, i.e. if it is a weekend, then it is the first following working day. There are heavy penalties for late submission of the application. VAT payers can decide whether they want to pay VAT in Serbia monthly or quarterly. Large taxpayers are obliged to pay VAT in Serbia every month. If the company paid more VAT in the previous accounting period, it can use a tax credit or request a refund of the previously paid tax. The refund is made after the tax inspector is convinced of the correctness of the VAT return.
VAT rates in Serbia
As mentioned above, the general VAT rate in Serbia is 20%, while the special rate is 10%. The VAT rate is paid based on the value of the goods or services purchased. In most cases, this is the value indicated on the invoice.
A special rate, i.e. a rate of 10%, is reserved for goods (goods and services) that are of existential or social importance. These are goods that are consumed on a daily basis, such as:
- Bread and other bakery products
- Milk
- Meat
- Sugar
- Flour
- Medicines
- All types of cereals
- Edible oil
- Fresh fruits and vegetables (without additional processing stage)
- Textbooks and newspapers
- Agricultural fertilizers
- Natural gas
- Firewood
- Municipal services
- Passenger transport services
as well as many other goods.
VAT exemptions in Serbia
It is very important to note that VAT in Serbia is paid on the import of goods. In this case, the tax base is calculated by including all dependent import costs (customs, transport, etc.) in the tax base.
In addition, there are other goods and services on which VAT is not paid in Serbia, i.e. persons who are not obliged to pay VAT. These VAT in Serbia include:
- Members of diplomatic and consular missions, including their families
- Non-residents with attached proof
- Members of international organizations, as well as members of their families.
Goods and services exempt from VAT in Serbia are:
- Goods that are exported
- Insurance services
- Medical and dental services
- Services related to education
- All goods imported into free trade zones
- Services in the field of virtual currency transfers and their conversion into traditional currencies
- Land transfers and land leases
- Sale of buildings (with few exceptions)
- Services in the field of culture, science, religious services and sports services.
tax deduction
For those who plan to start a business in Serbia, it can be very important in which situations the input VAT in Serbia can be used, i.e. the tax deduction can be made. From a business point of view, this is certainly an important point if the company has high office costs or costs for the purchase of raw materials.
The tax deduction can thus be used, for example, for rental services, the purchase of any type of fuel, electricity costs, telephone services, as well as accounting services, consulting services, procurement of raw materials and the like. Of course, it can also be used for the purchase of equipment (accessories) used for the purpose of conducting business activities and located in the company, as well as for the needs of furnishing and renovating business premises.
The tax paid on the purchase of raw materials purchased by companies that are also subject to the VAT system can be deducted.
Accounting Aspects of VAT in Serbia
From the point of view of the person filing the tax return, i.e. the accountant, it should be noted that the VAT return can be amended a maximum of two times.
If the sole proprietor is acting, he is obliged to issue tax receipts with the VAT paid in Serbia, prepare daily and monthly reports on the turnover of goods, properly archive them and present them to the tax inspector in the event of a tax inspection. Penalties for closing the establishment and fines are provided for failure to file a tax return.
If the taxpayer has not had a turnover of more than 8 million dinars in the last 12 months and is in the VAT system, it is possible to submit an application for exit from the system, i.e. deletion from the VAT payer’s records.
If we talk about the elements and possibilities of VAT refund, some of which have already been mentioned when we talked about the tax credit, a natural person who has purchased real estate, i.e. an apartment, for the first time can submit an application for a tax refund.
The right to a refund is available to:
- humanitarian organizations
- diplomatic and consular missions
- traditional churches and religious organizations
- foreign VAT payers for goods purchased in the Republic of Serbia, if the VAT amount exceeds 200 euros in dinars at the average exchange rate of the National Bank of Serbia
- transport companies.