Guide for VAT Registration in Serbia

Foreign companies and physical persons that practice taxable traffic in Serbia or Belgrade have a legal obligation to hire a VAT representative and do the registration process for the VAT through a said 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 enter the VAT system to register for taxpaying.

Taxable traffic is related to done traffic of goods and services that must be accounted for, 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 previous tax return.

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

 

What is a VAT Representative and Who Can be a VAT representative?

 

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

Tax representatives 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, the 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 specific 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 with a regular business unit in Serbia (a branch office), it is important to mention that the branch office cannot be a tax representative of a foreign entity in Serbia. A permanent business unit is an organizational part of a legal entity that, in Serbia, can do business in the name of a foreign company. Therefore, per the VAT Law, the branch office of a foreign company in Serbia can’t be a tax representative for the traffic done outside the branch.

On the other hand, it is different for the subsidiary company with headquarters in the Republic of Serbia. The subsidiary company that has a registered business residence in Serbia and is set up like a law entity can be a tax representative of a foreign entity. This means it can be a VAT representative of a parent company or any other related company. By all means, certain conditions must be met.

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

 

Foreign Entities Who are Obliged to Register in the VAT System of Serbia

 

Foreign entities who do taxable traffic in Serbia must be a part of the VAT system in Serbia, no matter the amount of traffic in the previous 12 months, and must choose a VAT representative. So, regardless of the amount of traffic in the last 12 months, a foreign entity must register in the VAT system if it does the traffic of goods and services for which:

• Is required to account for and pay the VAT,
• Can achieve the right to withhold tax.

According to the explanation of the Ministry of Finance, a non-resident, a foreign company, or a foreign entity 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 Entity for Obligatory Registration in the VAT System?

 

According to the VAT Law, those who don’t have a registered business headquarters in the Republic of Serbia (legal entities) are considered non-residents or foreign 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 entity that is part of the VAT system in the country with 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 should offer services to a company that isn’t in the VAT system).

 

Non-residents Who Aren’t Obligated to Register to Pay the VAT

 

A foreign entity (that 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 the following cases:

• When one sells goods or provides services exclusively to the VAT payers
• When one does the taxable traffic to the Republic of Serbia and its authorities, the authorities of territorial autonomy and local government, as well as 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 one provides services of busing

 

Getting the Status of a VAT Representative in Serbia

 

A VAT representative of foreign entities gets this status when the tax authority (Tax Administration) issues the Decision that approves VAT representation. Therefore, applying for tax representation and additional documentation is necessary.

The application for VAT representation is submitted to the Tax Administration on the prescribed ZPPPDV form. The data tax representative fills in the form that consists of the following:

• Title or name and surname of the foreign person,
• Name and surname of an authorized person in the foreign legal entity
• The address of headquarters or the residence of a 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 the 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 authorized person in the legal entity – representative
• The address of headquarters or representative’s residence
• Resident’s TIN or UPIN
• UPIN or, in the absence of UPIN, the legal entity authorized person’s passport number – representative
• The place and date of application submission

The complete documentation submitted to the Tax Administration Headquarters for the approval of VAT representation is as follows:

• ZPPPDV form (The application for the approval of VAT representation),
• The address or the proof of residence, or the representative headquarters
• The evidence that the representative wasn’t convicted of 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 authorized to do all the work related to the obligations and exercise the rights that foreign entities have as the VAT payer.

Before applying for the approval of a tax representative, a foreign entity 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, it can be registered in the VAT system.

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

The Tax Administration issues the decision to approve the VAT representation of 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 so that the authorized tax representative can do all the work related to the VAT in the name of foreign entities.  Foreign entities’ authorization or full power isn’t considered relevant tax full power.

HLB T&M Consulting as a VAT representative can help you legalize your business in Serbia. As the representative, we gather the business documentation and fill in the applications in the name. Then, 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 a 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 following:

• The submission of the registration application
• Accounting for the VAT,
• Issuing the receipts,
• The submission of tax applications,
• Paying the VAT,
• Has joint and several liabilities for foreign entities’ 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 VAT, the tax in written form informs the tax authorities about the changes (within five days after the change)

Accounting for the VAT and the submission of the tax applications – The tax representative keeps the records about the traffic in Serbia and then accounts for 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 the tax period)

Issuing the receipts – The 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 that a foreign person, as a member of the VAT system, issued the receipt.

Paying the VAT- The 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 to the VAT return.

Joint and several liabilities – A tax representative of foreign entities has joint and several responsibilities 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 is available for all queries related to tax advising and VAT representation 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. In other words, tax representation ends when:

• The tax authorities cancel the approval for tax representation to a person convicted of a particular tax crime,
• The tax authorities receive notifications about the withdrawal (denial) of full power by a mandatory.

When the tax representation ends, the foreign entities are removed from the VAT system. If the foreign entities are removed from the VAT system, the tax representation for the VAT representative ends.

If the foreign entity 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.

Suppose 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). In that case, a 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, respectively, from the traffic in the Republic during the last 12 months.

 

The Services of a 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 as tax advisors and VAT representatives include submission of applications for 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 VAT accounting. Our team of experts will send their answers within the shortest deadline.