Guide for VAT registration in Serbia

Foreign companies and foreign physical persons that practice taxable traffic in Serbia or in Belgrade have a legal obligation to hire VAT representative and do the process of registration for the VAT through VAT representative. This obligation started on October 15, 2015. In other words, non-residents or foreign entities who do taxable traffic in Serbia can choose their tax representative, and after that enter the VAT system to register for taxpaying.

Taxable traffic is related to done traffic of goods and services that must be accounted and the VAT must be paid (when the place of traffic is Serbia). Also, it is related to traffic which is tax- free with the right on the tax return of previous tax.

The obligation of hiring a tax representative is prescribed by the VAT Law. The way and the procedure for hiring the tax representative of foreign entities in Serbia are described in details by the Rulebook about the way and procedure of approving the VAT representation.

The obligation for all foreign persons to choose their tax representative is introduced so that foreign companies and foreign physical persons could legally and easily do business in Serbia.

What is VAT representative and who can be VAT representative?

The tax representative of a foreign person in Serbia is an authorised person who in the name and on behalf of that foreign entities does all the work related to the VAT. Per the Law, foreign entities can only have one tax representative.

Tax representative can be:

• A legal entity
• An entrepreneur
• A physical person

To do all the things related to the VAT in the name of foreign entities in Belgrade or Serbia, VAT representative must meet certain conditions:

• He must have a registered headquarter or residence in the Republic of Serbia
• He must be in the VAT system for at least 12 months before applying for approval of VAT representation of  a concrete foreign person,
• On the day of applying he mustn’t have any payable and unsettled debts for public revenues
• He isn’t convicted for tax criminal acts.

When it comes to a foreign company that has a regular business unit in Serbia (a branch office), it is important to mention the fact that the branch office can’t be tax representative of a foreign entities in Serbia. A permanent business unit is an organizational part of a legal entity that in Serbia can do business in the name of foreign company. Per the VAT Law, the branch office of a foreign company in Serbia can’t be tax representative for the traffic done outside the branch.

On the other hands, when it comes to a subsidiary company with headquarter in the Republic of Serbia is different. The subsidiary company that has registered business residence in Serbia and it is set up like a law entity can be tax representative of a foreign entities. This means that it can be VAT representative of a parent company or any other related company. Of course, it is certain conditions must be met.

If you need VAT representative HLB T&M Consulting as a bookkeeping and tax advisory firm from Belgrade offers services of tax representative for foreign entities in Serbia.

Foreign entities who are obliged to register to the VAT system of Serbia

Foreign entities who do taxable traffic in Serbia must be a part of the VAT system in Serbia, without regard to the amount of traffic in the previous 12 months and must choose VAT representative. So, independently from the amount of traffic from the previous 12 months, a foreign entities must register in the VAT system if he does the traffic of goods and services for which:

• is obliged to account and pay the VAT,
• can achieve right on withholding tax

According to the explanation of the Ministry of finance  a non-resident, a foreign company or a foreign entities must register in the VAT system if they do taxable traffic of services and goods in the Republic of Serbia because it is supposed that the traffic is done in Serbia. Also, per the Law, he is obliged to register for the VAT if he offers services and goods to persons who:

• aren’t in the VAT system,
• domestic and foreign entities (if it comes to legal entities, entrepreneurs or physical persons)

Who is considered a foreign entities for obligatory registration in the VAT system?

Per the VAT Law, non-residents or foreign entities are those persons who don’t have a registered business headquarter in the Republic of Serbia (legal entities). When it comes to physical persons, it is related to foreign entities who don’t have a residence in Serbia.

Additionally, it should be emphasized that only a foreign entities who is part of the VAT system in his country where he has a registered business headquarters can enter the VAT system of Serbia (residence for foreign physical persons). If a foreign company is not registered in the VAT system of their country, it can’t be registered in the VAT system in the Republic of Serbia. (if it has the obligation to offer services to the company that isn’t in the VAT system.

Non-residents who aren’t obliged to register for paying the VAT

A foreign entities (who does the taxable traffic in the Republic of Serbia) isn’t obliged to choose the VAT representative and become part of the VAT system in these cases:

• when he sells goods or provides services exclusively to the VAT payers
• when he does the taxable traffic to the Republic of Serbia and its authorities, the authorities of territorial autonomy and local government, as well to the other authorities or legal entities set up by the Law intending to work as state administration or local government (entities from Article 9, paragraph 1. of the VAT Law)
• when provides services of busing

Getting the status of VAT representative in Serbia

VAT representative of foreign entities gets this status when the tax authority (Tax administration) issues the Decision that approves VAT representation. It is necessary to previously apply for tax representation together with the additional documentation.

The application for VAT representation is submitted to the Tax Administration on the prescribed ZPPPDV form. The data tax representative fills in the form are these:

• title or name and surname of the foreign person,
• name and surname of an authorised person in the foreign legal entity
• the address of headquarters or the residence of foreign person,
• the number under which the foreign person is registered for the VAT paying at the authorities in the country where he has headquarter or residence and the name of authority
• TIN or EBS the authorities assigned to the foreign entities by the Republic’s authorities,
• title, or representative’s name and surname
• name and surname of authorised person in the legal entity – representative
• the address of headquarters, or representative’s residence of
• resident’s TIN or UPIN
• UPIN or in the absence of UPIN, the number of passport of the authorised person in the legal entity – representative
• the place and date of application submission

The complete documentation submitted to the Tax Administration Headquarter for the approval of VAT representation is:

• ZPPPDV form (The application for the approval of VAT representation),
• the address or the proof of residence, or representative headquarters
• the proof that representative wasn’t convicted for any tax crime,
• the document that confirms that the foreign entities gave the full power is the VAT taxpayer in the country where he has headquarter or residence
• The certified full power (by a notary, a court) by which the representative is authorised for doing all the work related to the obligations and exercising the rights that foreign entities has as the VAT payer.

Before applying for the approval of tax representative,a foreign entities must apply for the TIN. This application is also submitted to the Tax administration headquarters, but on the special PR-1 form (The application for registration of legal entity and business units). When the Tax administration issues the TIN to a foreign legal entity, then it can be registered in the VAT system.

The full power form must include that VAT representative of the foreign entities is authorised to do every job related to fulfilling the obligations and exercising all the right that the non-resident has as the VAT payer. In case that full power is not written in the Serbian language, its translation must be submitted to the TA by the authorised translator for that foreign language.

The Tax Administration issues the Decision with which they approve the VAT representation of the foreign entities. The deadline for making and issuing the decision is within 15 days from the day of submission. The legal entity is registered for the VAT only when the headquarter issues the Decision with which they approve tax representation that the authorised tax representative can do all the work related to the VAT in the name of foreign entities.  The authorisation or full power given by foreign entities isn’t considered as relevant tax full power.

HLB T&M Consulting as VAT representative can help you legalise your business in Serbia. As the representative we gather the business documentation, fill in the applications in the name and on behalf of the foreign entities, we submit the form to the Tax administration and do everything related to the VAT rules.

What are the obligations of VAT representative ?

The tax representative of a foreign person does all the obligations in the name and on behalf of the foreign person (the obligations that the foreign person has as a part of the VAT system). The most important and basic obligations include:

• the submission of registration application
• accounting the VAT,
• issuing the receipts,
• the submission of the tax applications,
• paying the VAT,
• has joint and several liability for foreign entities’s obligations,
• other obligations.

The submission of registration application – When TA issues the Decision by which they approve the tax representation of the foreign entities, the tax representative submits to the TA EPPDV application (application for recording the VAT payers). If it comes to some data changes that are significant for accounting and paying of VAT, the tax in written form informs the tax authorities about the changes (within 5 days after the change)

Accounting the VAT and the submission of the tax applications, – The tax representative of a foreign person is keeping the records about the traffic in Serbia and then accounts the VAT for the foreign person. Also, he fills prescribed forms and submits the tax application with the review of the VAT accounts to the tax authorities (15 days after the end of tax period)

Issuing the receipts – Tax representative issues a receipt for every traffic of goods or services that the foreign person provides in the territory of the Republic of Serbia per the Account policy. He issues the receipt irrespective of the fact if a foreign person as the member of the VAT system issued the receipt.

Paying the VAT- Tax representative in the name and on behalf of the foreign entities pays the VAT and in case that tax credit is shown (the right on withholding tax) it applies for the VAT return.

Joint and several liability – Tax representative of a foreign entities has joint and several responsibility for all the obligations of the foreign entities (he is responsible for the removal from the VAT system, paying off taxes and debts, for fines and rates according to the VAT).

HLB T&M Consulting stands at your disposal for all the questions related to tax advising and VAT representative in Serbia.

The end of tax representation

A tax representative loses his status when the decision about VAT representation issued by the tax authorities elapses. Tax representation ends when:

• the tax authorities cancels the approval for tax representation to a person convicted for certain tax crime,
• the tax authorities receive the notifications about the withdrawal (denial) of full power by a mandatary.

When the tax representation ends, the foreign entities is removed from the VAT system. In case the foreign entities is removed from the VAT system, the tax representation for VAT representative ends.

If the foreign entities regularly hires another representative within the deadline of 15 days from canceling the approval for tax representation then he isn’t removed from the VAT system. On the other hand, the foreign person is removed from the VAT system, if the Tax administration declines the application and doesn’t approve the tax representation to the other representative.

If the foreign entities who do the traffic of goods and services to the VAT payer have entered the VAT system of the Republic of Serbia (even if he wasn’t obliged), tax representative of foreign entities can apply for removal from the VAT system. He can do that instead of the foreign entities because he wasn’t obliged to register, irrespectively from the traffic in the Republic during the last 12 months.

The services of VAT representative in Serbia

If you provide services in Serbia or do the traffic of goods in Serbia, HLB T&M Consulting accounting agency can be your tax representative and business associate. Our services of tax advisor and VAT representative include: submission of application for the VAT registration, monthly accounts, preparation of documents, submission of tax applications, keeping records, the VAT payment and other activities related to the VAT rules.

Contact our legal advisors to get detailed information about the VAT representative service in Serbia and the VAT accounting. Our team of experts will send their answers in the shortest deadline.