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VAT registration in Serbia for non-residents providing digital services

Jul 02, 2020

HBL > Uncategorized > VAT registration in Serbia for non-residents providing digital services

By the end of 2016, the Government of the Republic of Serbia adopted a proposal for a decision that foreign companies, which also sell their digital services in Serbia, are taxed or to pay VAT. It refers only to companies that are not registered in Serbia for performing activities or do not have their representative office.

Officially, this decision began to apply from April 1, 2017, and the amount of VAT that must be paid is 20%. This means the following: for every material and digital product or service sold to customers in Serbia, you are obliged to pay VAT.

The adopted change is in line with EU regulations in order to avoid double taxation and/or non-taxation of services that VAT payers perform among themselves. In the previous years, there was no obligation to record and pay VAT, except in some cases when it was a legal obligation. Also, from this tax can be excluded only products or services that are exempt from liability for VAT.


# Who wins and who loses by introducing liability of VAT registration in Serbia?


The obligation to pay VAT will be most damaging to individuals who use digital services and services from foreign companies (Netflix, Google, Facebook advertising) as services will now be 20% more expensive.

On the other hand, domestic companies that offering digital services to domestic individuals will now become more competitive with foreign companies. Domestic companies have and until now had to charge VAT, and their increase in prices for competition from abroad will certainly have a positive effect on the business.

What about foreign companies? Non-resident companies are obliged to collect additional VAT on their services and this is certainly not a relief in their business. Also, they are obliged to make registration for VAT in Serbia, because otherwise penalties for disrespect the law are from 10,000 to 2,000,000 dinars. Futher more, we present a detailed guide to foreign companies how to accomplish their rights in Serbia.


# How foreign company can accomplish the right to refund the vat in Serbia?


If you are a foreign company that is not registered in Serbia, and which deals with the sale of some products and services to customers in the country, recently you are obliged to pay VAT to the state.

You are obliged to pay VAT if you sell something to companies in Serbia that are not in the VAT system or if you sell to individuals. This means that your costs will be increased by the amount of VAT of 20%. So everything you sell to customers in Serbia will be taxed for you.

However, this change should not scare you, because the solution and the way to avoid this impost really exists. But a bit more about this in the text below.


In order to legally operate, non-resident company in Serbia must be registered for vat. Here’s how.


In order to legally pay the tax in Serbia, you must be registered for tax and registered for VAT for performing your business in Serbia. In fact, this can be done in two ways:

1. to register in Serbia for permanently perform activities or to have a representative office,
2. to engage a VAT proxy in Serbia, who would perform all legal duties about taxes and liabilities for you.

So, there are ways in which you can smoothly perform all transactions and jobs in Serbia, with the possibility of avoiding additional impost. According to the Law, you are obliged to register your company for payment of VAT in Serbia. Otherwise a delict is created, and the legal consequences and sanctions are rigorous.


# What is the VAT representative?


We will explain in the following lines what is the VAT proxy, whether it is legally and how it can help you to get VAT refunds in Serbia.

VAT attorney is a person that you can hire to perform all the work about the tax on behalf of your company. In that case, you do not have the obligation to register your company in Serbia. According to our Law, a foreign company can fully legally hire a tax representative in Serbia, because only in that way can accomplish the right to VAT refund.


# Conditions for VAT proxy


A tax attorney may be a individual, an entrepreneur or a legal entity registered to perform business in Serbia. The conditions for tax representative in Serbia are as follows:

  1. VAT representative must be recorded as a VAT payer at least 12 months before submitting a request for authorization,
  2. VAT representative must have a residence in Serbia,
  3. VAT representative must not have unpaid liabilities for public revenues on the day of submitting the request for obtaining authorization,
  4. VAT representative shall not be convicted for tax offenses.


# Liabilities which have a VAT representative


Practically means the following: If you, as a foreign company carrying out transactions in Serbia have a tax representative, VAT payer, he is also your VAT attorney and in this way you can easily get the right to a tax refund.

VAT proxy in Serbia would be authorized to, on behalf of your company, performs all the work around the tax rights and obligations. He fills tax returns, calculates taxes, issues invoices, has VAT obligations and returns VAT. He is not your registered business unit, but he only performs tax jobs, realizes the rights and obligations he has as a VAT payer.