Each VAT payer in Serbia is obliged to issue an invoice when goods and services are traded with other legal entities. On the other hand, there are cases in which there is no obligation to issue VAT invoices, so the companies that are in the VAT system then do not have to issue an invoice in which they will show this tax.
The invoice issue is made at the moment when the goods are delivered to the buyer, regardless of whether it is delivered on the business premises of the supplier or the buyer. The service receipt is delivered after the service is performed.
The VAT invoice is the basic and most important document of each taxpayer of value-added tax. This business document is important for calculating and paying this tax in one tax period, which may be monthly or quarterly.
The invoice displays a calculated tax on the value of the turnover. And depending on the value of turnover, whether it is about selling a product or providing a service, a taxpayer who is in the VAT system can exercise the right to deduction of the previous tax.
A company registered in the VAT system can calculate this tax on a monthly or quarterly basis.
Obligation for VAT management
The obligation to keep VAT records is prescribed by the Regulation on the form, content, and method of keeping records on value-added tax, which defines the form, content, and method of keeping records.
As of January 1, 2018, the company registered in the VAT system in Belgrade / Serbia is obliged to keep the VAT records. Records were introduced for the proper calculation and payment of value-added tax.
Records are based on received and issued invoices. This obligation includes the following:
- the company in the VAT system is obliged to calculate VAT and keep tax records,
- the company is obliged to make a review of the calculation of value-added tax,
- the company is obliged to submit a review of VAT calculation together with any tax return for this tax.
The VAT calculation review is submitted to the Tax Administration, together with the tax return. In the case that for a certain period of time a legal entity does not submit a calculation review at the same time as a tax return, it will be considered that the tax return is not filed.
The VAT calculation review form has over six pages and it is necessary to enter a great number of data into the corresponding fields. We recommend that a verified bookkeeping agency complete the VAT calculation, fill out the tax return of VAT, and enter the data into the calculation review form.
Due to numerous legal regulations, limitations and electronic tax returns, this is usually part of services provided by an accounting firm in Belgrade that performs the full scope of bookkeeping services including VAT management.
Status of value added tax (VAT) taxpayer in Serbia
In order for a legal entity to obtain the status of a VAT taxpayer, he should realize a total turnover of more than 8.000.000 dinars during the previous 12 months. The VAT obligation begins on the following day or the next day from the date of the obligation to record and pay.
Additionally, a company can itself chose to pay VAT, and then the obligation begins from the date on which the taxpayer is identified.
1. When is there an obligation for issuing a VAT invoice?
If a company in the VAT system and during its operations realizes a taxable turnover, it is obliged to issue a VAT invoice in the following situations:
- for taxable and realized profit, in accordance with the Law on VAT,
- for the turnover of goods and services deemed not executed (in accordance with Article 6 of the Law on VAT),
- the turnover of goods and services that are exempt from VAT, with the right to deduction of the previous tax (transport services and other services related to import and export of goods, turnover with diplomatic and consular representatives, for the turnover, realized on the basis of donations and other turnovers in accordance with the Law on VAT, Article 24),
- turnover of certain goods in accordance with Article 25 of the Law on VAT.
VAT invoices issued prior to the occurrence of the turnover are improper. Companies that are in the VAT system do not need to issue VAT invoices before the completed turnover.
When an advance account is issued, this rule does not apply. The company has an obligation to issue an advance VAT invoice when it comes to advance payment. In this case, the fee or part of the fee is paid before the turnover is made, so the company is obliged to issue an advance payment for certain goods and services.
2.When is there no obligation to issue a VAT invoice?
Legal entities are not obliged to issue VAT invoices in the following situations:
- having a turnover with natural persons (other than entrepreneurs) who are not VAT taxpayers,
- for the turnover of goods and services for which the tax exemption is prescribed without the right to deduct the previous tax,
- turnover made without financial compensation,
- make the sale of goods or services that are not subject to VAT (turnover executed abroad and other activities that are not subject to VAT taxation)
- they have a decision of the Tax Administration, which establishes the obligation to pay VAT.
2.1 Issue of VAT invoice to natural persons
When a company operates with citizens, that is, natural persons, it doesn’t have the obligation to issue a VAT invoice to them. This rule does not apply when, say, LLC does business with an entrepreneur, because then he has an obligation to issue an invoice.
When a legal entity sells its products or performs services to natural persons, it is obliged to issue a mandatory fiscal account.
2.2 Turnover without fees and turnover for which tax exemption is provided
The company that makes the turnover-free of charge – sells products or performs services for free, is not obliged to issue a VAT invoice. It can certainly issue it, but it does not have to, regardless of whether the turnover is taxable.
The VAT taxpayer is not obligated to issue a VAT invoice when he executes a turnover for which the tax exemption is prescribed without the right to deduct the previous tax.
2.3 Companies that aren’t in the VAT system
Legal entities that are not registered in the VAT system, that is, aren’t taxpayers of the VAT, aren’t obliged to issue invoices in which VAT is shown.
Regardless of whether the account recipient is a taxpayer or not, a legal entity that does not exceed 8.000.000 dinars for 12 months and is not a VAT payer, does not disclose this tax in their accounts.
Value-added tax (VAT) representative in Serbia
In certain cases, foreign companies operating in the Republic of Serbia without a representative office, can choose their VAT attorney /proxy in Serbia and be recorded for the obligation to pay VAT. In this case, the amount of turnover in the previous 12 months is not a limiting factor, but this obligation is for every foreign legal entity that carries out taxable turnovers in our country.
A foreign company may only have one tax attorney and that may be a natural person, an entrepreneur or a legal entity, i.e. LLC.
An authorized tax attorney must meet the requirements:
- must have a residence in the Republic of Serbia,
- the taxpayer must be registered as a VAT taxpayer at least 12 months before submitting a request for an attorney,
- must not have due and unpaid liabilities for public revenues.
The tax attorney of a foreign legal entity cannot be its related legal entity or its permanent business establishment.
In this case, the attorney is a VAT taxpayer and performs all business on behalf of and for the account of a foreign legal entity. It is obliged to calculate VAT and submit tax returns, issue invoices, pay VAT and others.
A foreign company needs a tax attorney in our country. It is recommended to consult professional accounting outsourcing companies and tax advisors from Serbia who can help with these accounting services and provide support in optimizing VAT.
