Serbia: VAT rules are unified, include amendments

The measures have an effective date of 1 July 2021.

The measures have an effective date of 1 July 2021.

The Ministry of Finance in April 2021 adopted a “Rulebook” (as tax legislative measures are referred to in Serbia) regarding measures concerning the value added tax (VAT).

The measures have an effective date of 1 July 2021.

Administratively, the Rulebook reorganizes and unifies the VAT rules that are currently regulated under 27 standalone VAT Rulebooks into one Rulebook. It also includes clarifications and amendments to the VAT rules.

For instance, concerning a “supply” in the construction industry, the Rulebook provides new exemptions so that the following activities will not be considered to be a supply for the construction sector:

  • Repair of equipment that is part of a building
  • Repair of water supply, heating, sewage, and air-conditioning installations
  • Delivery and installation of elements for kitchen, bathroom, and other furniture
  • Delivery and installation of heating and cooling devices
  • Delivery and installation of irrigation systems
  • Delivery of goods and services for landscaping

In particular, the Rulebook notes that for purposes of assessing whether a supply in the construction industry exists, it is necessary to determine whether there is auxiliary and main supply and, depending on the determination of the main supply, the same tax rule will be applied to the auxiliary supply.

Other amendments in the Rulebook concern the VAT treatment of:

  • A transfer of business unit by expanding the rule
  • A supply of goods without consideration (clarified treatment of a free supply of catalogs, brochures, flyers, and similar items intended to inform potential customers about the activities of taxpayers)
  • Replacement of spare parts within a warranty period
  • Treatment of returnable packaging (if the value of packaging is not charged, and the buyer does not return the packaging within the agreed deadline, it is deemed as a new supply of packaging, and a new VAT invoice must be issued for such supply, instead of only a debit note to increase the tax base)
  • Subsequent changes to the VAT base on returns of goods or packaging
  • VAT exemptions (with more precise conditions for exercising tax exemptions with the right to deduct input tax)

The Rulebook also includes measures addressing invoices (such as the transaction date when the invoice date is the same as the transaction date and how to report consideration received as foreign currency).

Read a May 2021 report prepared by the KPMG member firm in Serbia



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