VAT Refund for a Foreign Taxpayer

Under the current VAT Law, foreign taxpayers have the right to a refund of the paid VAT. The right to refund (the return of paid VAT) is exercised by submission of a personal application for refund and the traffic related to the supply of movable goods and services in Serbia.

The way and the procedure of VAT refund to the foreign taxpayer have applied based on the current VAT law, the Rulebook on the procedure for realization of the right to a VAT refund prescribed by the Ministry of Finance. The Rulebook became effective on the 1^st of January 2019 and is published in the ‘Official Gazette of RS’ num. 104/18.

A new way of the VAT Refund to the Foreign Taxpayer Becomes Effective on 1^st January 2019

Unlike the previous Rulebook on the procedure for realization of the right to a VAT refund, the new one brings more innovations related to the refund of the VAT. When it comes to foreign companies and taxpayers, the most important innovations are:

#1. The foreign taxpayer applies for a refund electronically to the Tax Administration through the Tax Administration website,

#2. The application for refund is submitted on prescribed form REF 1 (the prescribed application of foreign taxpayer for the VAT refund),

The application form changes are related to two changes: the amounts are expressed in dinars without decimals, and the second one is that there is no SP field or stamp place (it is removed).

#3. A foreign company can have the right to refund VAT only if they don’t perform the traffic of goods and services on the territory of the Republic of Serbia, except for the traffic of services and goods they have permission.

Articles changed by the new Rulebook from 2019 are related to the traffic of foreign companies. It is prescribed that the refund of VAT to the foreign taxpayer can be done under the condition that he doesn’t perform the traffic of goods and services in the Republic of Serbia besides the traffic he has right on. In other words, if the foreign taxpayer (foreign company) performs traffic in Serbia (besides the enlisted ones), it doesn’t have the right to a refund.

The traffic for which the foreign companies can get the return (the right on the refund) is:

• The services of transportation of tax-free goods,
• The services of passengers’ transportation that are under individual taxation,
• The traffic of goods and services for which the VAT is accounted by the VAT payer –recipient of goods and services.

#4.  The application for refund is submitted electronically, and additional documents are submitted with the application for VAT return

The receipts of supplied goods or used services are submitted and must be written in Serbian. Unlike previous years, you don’t have to submit copies and original receipts, only the paid ones and the ones where you see that VAT is paid. For the VAT return, you have to submit these documents:

• Confirmation about registration for the VAT (or any other type of consumption tax) issued by the tax authorities of the country where the foreign company’s or foreign taxpayers headquarter is located (the original and certified translation of confirmation are submitted),
• Paid receipts in the Republic of Serbia by which the VAT is accounted and paid.

#5. The Tax administrations headquarter checks the fulfillment of conditions for the VAT refund for companies and issues the Decision about the refund to the applicant

After applying, the Tax administration headquarters checks if all the conditions for VAT refunds for foreign companies are met. If they are, the Tax administration issues the Decision about the refund within 30 days of applying and then delivers it to the applicant. The decision is delivered electronically. The VAT return or refund deadline is 15 days from the day the Decision is delivered.

The accounting agency and tax consulting HLB T&M Consulting offer expert services in VAT. As a company with perennial experience in working with foreign clients and multinational companies, we can help you to exercise the right to the VAT refund in Serbia and fulfill all the legal obligations – registration in the VAT system of the Republic of Serbia. This way, you will lead our country’s legal and untroubled business.

Conditions for VAT Refund or VAT Return to Foreign Taxpayers

When it comes to the VAT refund, a foreign taxpayer can get the VAT refund and the right on the return of paid VAT under certain conditions. According to the current VAT Law, eight conditions must be met for a foreign citizen to get the VAT return or the refund. It is important to mention that if one of the conditions is not fulfilled, the foreign taxpayer won’t have the right to a refund. This means that all the conditions must be fulfilled.

The conditions under which the refund is done are:

1. The VAT refund is performed to the foreign taxpayer – a foreign company or foreign citizen who applies for the refund must be in his home country registered as the VAT payer (or registered for any other form of consumption tax),
2. You have to apply for the refund (it isn’t done automatically or by choice, but you have to apply for a VAT refund). The application is submitted by the authorized person to the Tax Administration for the total traffic of bought goods or used services in the Republic of Serbia,
3. The VAT for the traffic of movable goods or services must be shown in the receipt together with the other obligatory elements of the receipt,
4. The VAT must be accounted for and shown on the receipt and also must be fully paid (the invoice must be paid),
5. The amount of VAT for which the application for refund is submitted must be higher than 200 Euros (in the dinar counter value according to the exchange rate of the NBS on the day of submission of the VAT refund application),
6. One of the conditions for the refund is exercising the right of the foreign taxpayer on the return of previous tax and goods he supplied/used in the Republic of Serbia,
7. The foreign citizen or foreign taxpayer in the Republic of Serbia doesn’t perform the traffic of goods and services besides the traffic he has the right on,
8. The country where the foreign country has headquarters and the Republic of Serbia have agreed on the conditions of reciprocity related to the VAT refund (signed a reciprocal contract about the refund of VAT or its return).

All the conditions are equally important, but those that are mostly checked are: if the VAT is shown on the invoice and the receipts for the traffic done are paid.

Suppose your company performs taxable traffic in the Republic of Serbia. In that case, HLB T&M Consulting accounting agency can offer you the services of a VAT representative, including the account and control of the VAT. We can help you gather all the necessary documentation, do everything related to the VAT in Serbia, submit the application for return and exercise your right to a refund.

Refund of VAT and the Condition of Reciprocity

The refund of VAT to the foreign taxpayer can be done only under the condition of reciprocity. Countries with which Serbia has agreed about the conditions of reciprocity (signed reciprocal contract about the refund of VAT) are:

• The Netherlands,
• Slovakia,
• Croatia,
• Denmark,
• Austria,
• Bosnia and Herzegovina,
• Belgium,
• Montenegro,
• North Macedonia,
• Slovenia,
• Germany,
• Great Britain (The United Kingdom),
• Turkey,
• Switzerland.

The complete list of countries is published on the Tax Administration’s website.

The right to return the VAT to the foreign taxpayer can be exercised if the country where the foreign company has its headquarter signed the reciprocal contract with the Republic of Serbia. In other words, the conditions of reciprocity between Serbia and the country from the list mean that the refund to the foreign taxpayer can be done only if his headquarter is in one of the listed countries.

On the other hand, if there is no reciprocity about the VAT refund and even if all the other conditions are fulfilled, the foreign company won’t get the VAT refund. If the headquarter is in some other country that is not enlisted as the country with the signed reciprocal contract, it is treated that the condition is not fulfilled.

Submission of the Application for VAT Refund for a Foreign taxpayer in Serbia

The application for the VAT refund to the foreign taxpayer is submitted once a year electronically, at the latest to 30.06 of the current year, for all the supply of goods and services in Serbia performed during the previous calendar year. The authorized person must apply electronically to the Tax Administration via the ‘ePorezi’ web portal. The authorized person must also sign the application.

When the authorized person submits the application for the VAT refund, the Tax Administration headquarter checks the fulfillment of conditions. After that, they issue the Decision about the refund sent to the applicant. The deadline for making the decision is 30 days from the day of submission. After that, the VAT is refunded 15 days after the decision is delivered.

The refund of VAT to the foreign taxpayer is performed on the business account, using the currency of the country where the foreign company has its headquarters, but accounted in the dinar counter value according to the exchange rate of the NBS on the day of the VAT refund.

HLB T&M Consulting accounting agency, Belgrade’s tax and business consulting company, provides services related to the VAT and does the VAT refund for foreign companies. Contact us or send questions via email; our business advisors are available for additional questions, information, and consultation.