February 2023

Amendments to the VAT rulebook

Ministry of Finance published the Rulebook on Amendments to the VAT Rulebook in the Official Gazette from January 31st, 2023. The Rulebook is in application from February 1st, 2023 and prescribes numerous new rules as well as updates of existing articles, especially in terms of harmonization of VAT Rulebook with rules on electronic invocing rules. The most significant changes refer to the following categories:

• Calculation of VAT in case of free of charge supplies from foreign legal entities
• Change of tax debtor upon payment of an advance
• Determining VAT base in case of supplies of goods and services between related parties and supplies of goods and services that constitute shares to the company
• Adjustment of the VAT base based on the subsequent fulfillment of conditions for tax exemption
• Tax exemption based on the export of goods
• Other tax exemptions with the right to deduct input tax
• (Non)existence of the obligation to issue invoices
• Issuance of invoices, i.e. electronic invoices
• Documents on VAT base adjustment usage
• Tax debtor status upon a change in the status of the participant from the moment of the advance payment
• Obligation to internally create a reverse charge invoice
• The content of the internally created reverse charge invoice created by the tax debtor for the supply of another person
• New SNPDV and LNPDV forms;

Other amendments

The Government of the Republic of Serbia has published non-taxable amounts for purposes of personal income tax.

Starting January 24th, 2023, the Rulebook on the procedure, method, deadlines, content and form of the application by which the taxpayer reports business space and business premises in which the taxpayer stores or places goods, as well as the space and premises in which taxpayer performs activities, thereof applies.

The Ministry of Finance announced the details of updates regarding the Electronic Invoicing System, and the Internal Technical Instruction.

The following sections describe the most important amendments:

Rulebook on Amendments to the VAT Rulebook

The most significant amendments to the VAT Rulebook are listed below:

• Article 11a is added, which defines the obligation to calculate VAT in case of free of charge supplies from foreign legal entities, whereby the taxpayer calculates VAT on each free of charge supply of services by foreign entities at the prescribed tax rate and pays the calculated VAT in accordance with the VAT Law.
• Paragraph 7 and paragraph 8 of Article 24 of the VAT Rulebook, which stipulate the rules regarding the procedure in the event of change of tax debtor upon payment of an advance, are deleted.
• Article 47a is added and refers to the determination of the tax base for the supply of goods and services that constitute equity stakes the company, as well as the supply of goods and services between persons who are considered related parties in accordance with the VAT Law. "The market value, based on which VAT base for the supply of goods and services from Article 17, para. 5 and 6 and Article 17b of the Law, is determined, is considered to be the total amount that the buyer of goods, ie. the recipient of services would pay at the time of the supply of goods and services to an independent supplier for supplies in the Republic of Serbia. An independent supplier referred to in paragraph 1 of this article is considered to be a person who is not a related party in accordance with article 17b paragraph 2 of the Law to the supplier of goods and services referred to in paragraph 1 of this article.

If the market value cannot be determined for specific goods or services, the market value is determined for similar goods or services. Similar goods, i.e. services from paragraph 3 of this article are considered goods, i.e. services that belong to the same type of goods, i.e. services for which no market value can be determined and whose characteristics are essential for determining the market value identical to the characteristics of the goods, i.e. services for whose market value cannot be determined.

If the market value cannot be determined even for similar goods, i.e. services, the market value is considered to be:

1)     For supply of goods, an amount that is not lower than the purchase price of those or similar goods, and if that price is unknown, the total amount of costs determined at the time of delivery;

2)     For supply of services, an amount that is not lower than the total amount of the determined costs of providing the service borne by the taxpayer.

The total amount of determined costs for the supply of goods or services referred to in paragraph 5 of this article is considered to be the cost price of those or similar goods or services."

• The amendment to Article 55 of the VAT Rulebook limits the conditions under which VAT base is adjusted. Namely, in case of subsequent fulfillment of the conditions for obtaining tax exemption with the right to deduct input tax, VAT base is adjusted only in the case of supply of goods and services prescribed in Article 24, paragraph 1, points 2, 3 and 4 of the VAT Law, which refer to the following:

1) supply of goods that the taxpayer or a third party, on the taxpayers’ behalf, sends or ships abroad;

2) turnover of goods that the foreign recipient or a third party, on the recipients’ behalf, sends or ships abroad;

3) supply of goods that the passenger sends abroad in personal luggage, for non-commercial purposes, if:

• the traveler does not have a place of temporary or permanent residence in the Republic,
• the goods are shipped before the end of three calendar months after the end of the calendar month in which the goods were supplied,
• the total value of the delivered goods is equal to or greater than RSD 6,000, including VAT,
• the VAT taxpayer has evidence that the passenger shipped the goods abroad;

Article 80 closely defines the conditions for achieving tax exemption with the right to deduct input tax in terms of sending or shipping goods abroad, and as such is updated in terms of specifying the definition of export declaration in electronic form, i.e. in terms of further harmonization in accordance with the electronic invoicing rules.

Article 87 closely defines the conditions for obtaining  tax exemption with the right to deduct input VAT regarding the entry of goods into the free zone by the VAT taxpayer - the user of the free zone, and as such is updated in terms of specifying the definition of the declaration in electronic form.

Article 92 closely defines the conditions for obtaining a tax exemption with the right to deduct the input tax for the supply of goods that are in the procedure of customs warehousing, and as such is updated in terms of specifying the definition of the declaration in electronic form.

Article 95a is added, which closely defines the conditions for achieving tax exemption with the right to deduct input tax from Article 24 of the VAT Law: "Should the supplies from Art. 87, 90, 93 and 94 of this Rulebook, require an electronic invoice to be issued in accordance with the law regulating electronic invoicing, the competent customs authorities, in accordance with this rulebook, certify a printed copy of the electronic invoice (external view) which is confirmed by a signature or seal by the person who issued such invoices in accordance with the law governing the electronic document.".

Articles 96, 97 and 98 which closely define the conditions for obtaining a tax exemption with the right to deduct the input tax for refinement, repair or installation services, are updated in terms of specifying the definition of the declaration in electronic form.

Article 136 closely defines services in accordance with Article 25 paragraph 2 point 11) of the VAT Law, which refer to the tax exemption without the right to deduct input tax on supply of social care and protection services, child protection and youth protection, services provided by institutions of social protection, as well as the directly related supply of goods and services by entities registered to perform those activities: "Services, in accordance with Article 25, paragraph 2, item 11) of the Law, are considered social care and protection services, child protection and youth protection, services of social protection institutions: centers for social work, institutions for accommodation of beneficiaries and institutions for day care and home assistance, provided that the service providers are registered to perform these activities and have the approval of the competent authority for providing these services, in accordance with the regulations governing social protection and social security of citizens.".

Article 164, paragraph 1, item 1 defines that the VAT taxpayer does not have the obligation to issue an invoice from Article 42 of the VAT Law for the supply of goods and services to individuals, with the exception of entrepreneurs, who are not liable for VAT, except for the supply for which a fiscal invoice is issued in accordance with the regulations governing fiscalization. Additionally, paragraph 2 of this article defines that the VAT taxpayer does not have the obligation to issue an invoice from Article 42 of the VAT Law for the supply of goods and services for which, in accordance with Article 25 of the Law, a tax exemption is prescribed without the right to deduct the input tax unless this regulation provides otherwise for transactions for which there is an obligation to issue an electronic invoice in accordance with the law governing electronic invoicing and transactions for which there is an obligation to issue a fiscal invoice in accordance with the law governing fiscalization.

Article 165 stipulates that in case when the taxpayer receives an advance payment in the same tax period when performing supplies of goods and services for which the taxpayer received an advance payment, there is only an obligation to issue an invoice for the supplies performed, except for the received advance payment for supplies for which there is an obligation to issue a fiscal invoice in accordance with the regulations governing fiscalization, ie. the obligation to issue an electronic invoice.

Article 166 stipulates that in case where the tax debtor is the recipient of goods and services in accordance with the provision of Article 10, paragraph 2 of the VAT Law, the tax debtor is not obliged to issue an advance invoice in accordance with Article 42 of the VAT Law, except based on the received advance payment for transactions for which there is an obligation to issue an electronic invoice.

Article 167 stipulates that in case of the transfer of services, which is considered the transfer, assignment and provision for use of copyrights and related rights, patents, licenses, trademarks, as well as other intellectual property rights, there is no obligation to provide information on the date of supply of services, except in electronic invoices in which the date of issuance of the electronic invoice is stated as date of supply of services.

Article 181 stipulates that electronic invoices are an exception to the rule that if the invoice is issued on the day when the supply of goods or services was performed, the invoice for that supply does not have to contain information about the date of supply of goods or services.

Paragraph 3 is added to Article 182, which defines the content of the document on the increase or decrease of the fee, i.e. VAT base, when the fee for that supply is adjusted after the supply of goods and services has been completed: "The provisions of paragraph 1 of this article shall also be applied in the case where the advance payment for which an advance invoice was issued ceases to be considered as an advance for the supply of goods or services, completely or in part, except in case when the charged advance or part of the advance becomes a fee or part of the fee for the supply of goods or services."

Article 188, paragraph 3, which closely defines the procedure for issuing invoices in the event of a change of tax debtor upon payment of an advance, is amended in the following manner: "With the exception of paragraph 2 of this article, if after the payment of an advance there is a change of tax debtor in accordance with the Law, the VAT taxpayer who performed such supply issues an invoice in which the total amount of the base is stated, without VAT, and the recipient of the goods or services calculates VAT for that transaction in accordance with the Law." Also, paragraph 4 is added, which reads: "The VAT payer from paragraph 3 of this article has the right to cancel the advance invoice, as well as to correct the calculated VAT, if the taxpayer has the recipient's document confirming that the recipient has corrected the deduction of the input tax, i.e. that the taxpayer did not use VAT on the advance invoice as input tax."

Article 189, paragraph 3, is amended to read: "With the exception of paragraph 2 of this article, if after the advance payment there is a change of the tax debtor in accordance with the Law, the VAT payer who performed the supply of goods or services issues an invoice for such supply in which the taxpayer reports the total amount of the base and the amount of VAT, and the recipient of the goods, ie. services, corrects the calculated VAT and VAT that was deducted as a input tax based on the advance payment.".

Article 192, paragraph 1 defines in more detail that a VAT taxpayer can issue one invoice, ie. an electronic invoice for multiple individual supplies of goods or services made to one person. Also, paragraph 4 is added, which reads: "In the electronic invoice referred to in paragraph 1 of this article, the date of issuance of the electronic invoice is specified as date of supply of goods and services."

Article 196 extends the obligation to issue an internally created reverse charge invoice for supply of goods and services carried out in the Republic of Serbia by a VAT taxpayer who is not a tax debtor in accordance with the VAT Law, and not only supplies of foreign persons that are not liable for VAT in the Republic of Serbia. Paragraph 3 is added to the same article, which reads: "The internal invoice from paragraph 1 of this article, depending on whether it is created for supplies, an increase in supply fees, or an advance, in particular contains the following data:

1) name, address and PIB (Tax identification number) of the person that internally creates the reverse charge invoice;

2) date of creation and serial number of the reverse charge invoice;

3) name, address and PIB, or other tax number of the person who performed the supply of goods or services, issued a document on the increase of the fee for supply, or to whom advance payment was made;

4) date of supply, increase of fee for supply, ie. date of advance payment;

5) tax base;

6) the applicable tax rate;

7) amount of calculated VAT.".

• Article 200 defines an exception to the rule in cases where there is no obligation to issue an invoice from Article 42 of the Law based on claims for funds by VAT taxpayers that do not represent compensation for the supply of goods and services, while the same does not apply in the case where there is an obligation to issue an electronic invoice .
• Article 202 defines an exception to the rule in cases where there is no obligation to issue an invoice from Article 42 of the Law based on the transfer of a multi-purpose voucher by a VAT taxpayer, while the same does not apply in the case where there is an obligation to issue an electronic invoice.
• The previous Form SNPDV - Official order for the procurement of goods and services and import of goods, without VAT and Form LNPDV - Order for the procurement of goods and services and import of goods, without VAT, for the personal needs of the right holder, which are printed with the Rulebook on Value Added Tax ("Official Gazette of the RS", no. 37/21, 64/21, 127/21, 49/22 and 59/22) and form an integral part thereof, are replaced by the new Form SNPDV - Official Order for the Procurement of Goods and Services and Import of goods, without VAT and Form LNPDV - Order for the procurement of goods and services and import of goods, without VAT, for the personal needs of the right holder, which are printed with this Rulebook and form an integral part of it.

The Government of the Republic of Serbia has published the non-taxable amounts for the purposes of Personal Income Tax

The amounts were published in the Official Gazette of the RS No. 6/23, dated January 27th, 2023, for payments from February 1st, 2023 to January 31st, 2024. Below is a tabular representation of the new amounts:

Starting January 24th, 2023, the Rulebook on the procedure, method, deadlines, content and form of the application by which the taxpayer reports business space and business premises in which the taxpayer stores or places goods, as well as the space and premises in which taxpayer performs activities, thereof applies.

This Rulebook prescribes the procedure, method, deadlines, content and form of the application by which the taxpayers report to the Tax Administration the business premises and business premises in which taxpayers warehouse or store goods, as well as the premises and rooms in which the taxpayers perform their activities.

The taxpayer submits an evidentiary application in electronic form, through the portal of the Tax Administration, for all business premises and business premises from Article 1. paragraph 2. of this Rulebook, which are located outside the registered seat of the legal entity, entrepreneur, i.e. temporary or permanent residence of the individual, before the beginning of their use.

Registration application is submitted on Form EP IPP - Application for registration of business premises and business premises in which goods are stored or warehoused, as well as premises where the taxpayer performs activities, which is printed with this rulebook and forms an integral part of it.

The Ministry of Finance announced the details of updates regarding the Electronic Invoice System, and the Internal Technical Instruction.

Below we list the introduced changes:

• It is possible to create and send a final invoice that is referenced to one or more advance invoices, regardless of the approval status of the related advance invoices;
• Validation was introduced so that the advance invoice cannot be reversed if it is linked to the final invoice that has not been reversed;
• The possibility of canceling the issued invoice has been abolished; the possibility of reversing the issued invoice is retained;
• It is possible to cancel the invoice in CRF when the invoice is reversed, instead of when it is rejected;
• Changed the labels "Approve"/"Reject" to "Accept"/"Reject", and "Download" to "Download PDF" on the invoice form;
• It is possible that after the invoice rejection action, the recipient of the invoice can subsequently approve the invoice.