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Serbian VAT for non established businesses- Everything you need to know

Ivana BlagojevicTax AdvisorWebinarNovember 19, 2015

WHO IS THIS WEBINAR FOR:

• Any business not established in Serbia, which has business operations with/in Serbia. In precise, any business not established in Serbia, which:

• Supplies goods and services in the territory of Serbia (VAT representation and VAT registration), or

• Buys goods and services in the territory of Serbia (VAT refund).

WHEN ARE GOODS AND SERVICES SUPPLIED IN THE TERRITORY OF SERBIA?

• In order to determine whether a non established business has the obligation to register for VAT in Serbia and to appoint a VAT representative, it is necessary to assess whether the place of its supplies is in Serbia.

• Serbia is the place of supply of goods, if:

• The goods are located in Serbia in the moment of dispatch or transport• The goods are installed, in case the goods are installed directly or indirectly by

the supplier• the goods are located in Serbia, but are supplied without dispatch or

transport.

• Serbia is the place of supply of services if so prescribed by the Serbian VAT Act (deemed place of supply).

• Basic principle: the place of supply of services is the place where the service provider has established its business, unless otherwise provided for in the VAT Act.

COMPLIANCE OBLIGATIONS FOR NON ESTABLISHED BUSINESSES, WHICH SUPPLY GOODS AND SERVICES IN SERBIA

• Registration for VAT purposes

• Appointing of a Serbian VAT representative

WHO CAN BE A VAT REPRESENTATIVE OF A NON ESTABLISHED BUSINESS?

• A Serbian taxable person, which:

• Has its registered seat in Serbia• Is registered for VAT at least 12 months before the application for the VAT

representation• Has settled all its tax obligations• Has not been convicted of a tax crime

• A Serbian taxable person applies for the VAT representation of a non established business by submitting a request to the Serbian Tax Administration supported by the following documentation:

• Confirmation that the non established business is registered for VAT in the country of it establishment

• Notarised (and possibly apostilled) power of attorney for the Serbian VAT representative.

• The Tax Administration approves the VAT representation within 15 days from the submission of the request.

OBLIGATIONS OF A VAT REPRESENTATIVE

• The Serbian VAT representative of a non established business is the alter ego of the non established business in Serbia when it comes to VAT compliance.

• The Serbian VAT representative:• Registers the non established business for VAT in Serbia. • Submits periodical VAT returns for the non established business. • Issues VAT invoices for the non established business.• Pays the VAT for the non established business.

• The Serbian VAT representative is jointly and severely liable for all VAT obligations of the non established business in Serbia!

• Important! If a Serbian VAT representative loses its ‘license’, the non established business is exposed to risk of losing its VAT registration in Serbia!

Q: SO, IS VAT REGISTRATION AND REPRESENTATION OF A NON ESTABLISHED BUSINESS IN SERBIA MANDATORY?

• Basic rule from the VAT Act: a non established business supplying goods and services in Serbia is obliged to appoint a VAT representative.

• But, the Serbian tax laws do not provide for a direct penalty for the non established business in case it does not register for the Serbian VAT and appoint a VAT representative.

• The Serbian VAT Act itself provides for taxation schemes in case the non established business does not appoint a VAT representative and does not register for VAT.

• Accordingly, VAT registration and appointment of a VAT representative in fact not mandatory.

• But, increased risk for those non established businesses, which have a rep office or a branch in Serbia!

Q: WHY REGISTER THEN?

- The VAT registration is useful for non established businesses world wide, which supply goods and services in Serbia, since it enables them to refund all possible input VAT charged to them by their Serbian suppliers.

SERBIAN VAT REFUND FOR NON ESTABLISHED BUSINESSES

• Serbia grants refund of VAT charged on supply of movable goods and services only under the VAT reciprocity principle. Reciprocity is established with:

• The UK• The Netherlands• Denmark• Slovakia• Belgium• Turkey (as of February 24, 2015)• Germany• Austria• Slovenia• Bosnia and Hercegovina• Montenegro• FYR Macedonia• Croatia (only for fairs)

CONDITIONS FOR THE VAT REFUND

• Non established businesses are entitled to refund of VAT charged on movable goods and services, if:• The VAT was entered on an invoice drawn up in accordance with the VAT Act

and the invoice was paid;• The requested refund of VAT exceeds EUR 200 in RSD equivalent calculated

according to the average exchange rate of the National Bank of Serbia valid on the day of the submission of the VAT refund request;

• The conditions, under which a taxable person established in Serbia would have the right to deduct the VAT on supply on such movable goods and services, are met;

• The taxable person established outside of Serbia carries out in Serbia only transport of goods exempted from VAT (transport relative to import of goods, transport relative to free trade zones, transport relative to export of goods) or international passengers’ bus transport subject to VAT on the section carried out in Serbia, and no other taxable activities.

NECESSARY DOCUMENTATION FOR THE VAT REFUND

• The certificate of VAT registration or registration for another form of consumption tax, issued by the tax authority of the state where the taxable person is established (original and certified translation into Serbian).

• Originals and copies of paid invoices for purchased movable goods and services, based on which the VAT was calculated and paid.

• Bank excerpt as the proof that the invoices have been paid.

• The above list of documents is not exhaustive. Also other documents might be requested by the Tax Administration from time to time.

THE VAT REFUND PROCEDURE

• Upon receipt of the VAT refund request, the Tax Administration examines whether the conditions for the VAT refund are met, issues a decision and sends it to the taxable person along with the original invoices.

• The VAT is refunded in the currency of the state where the taxable person is established by converting the RSD amount of the refund into the foreign currency according to the selling exchange rate of the National Bank of Serbia valid on the day of the refund. The conversion expenses are deducted from the refunded VAT. The refund can be paid to the account of the taxable person in Serbia and abroad.

Q: Is it necessary to have a Serbian tax representative in this procedure?

• No, but highly useful, since the procedure implies communication with the Tax Administration before and during the VAT refund procedure and additional registrations (e.g. local tax identification number) might be necessary.

DEADLINES

• The VAT refund request must be submitted until June 30 of the current year for VAT charged in the previous year.

• The Serbian Tax Administration passes a decision within 30 days from the submission of the VAT request.

• The VAT refund is refunded within 15 days from the delivery of the VAT refund decision.

• The prescribed deadlines might not be upheld in practice.

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