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Latest amendments to VAT Act
Place of supply of services
For the purpose of aligning with the legislation of the European Union, the general rule with respect to the place of supply of services has been amended, and will depend on whether the service has been provided to a person who is or is not a taxpayer.
The latest amendments to the VAT Act (December 2016) introduce the new rule stating that services are deemed to be supplied at the place where the service recipient has established his business for B2B services. This provision has fundamentally changed the rule for determining place of supply in the Serbian VAT system. Also, the VAT Act now defines the term of taxpayer solely for the purpose of applying the rules on place of supply of services. Article 12 prescribes who will be regarded as the recipient of services, depending on whether the service provider is a taxpayer or not.
If the service provider is a VAT payer, the taxpayer – recipient of services is deemed to be:
¬ Any person who performs his activity continuously, regardless of the purpose of that activity;
¬ Legal entities, state bodies, local government bodies, established in the Republic of Serbia;
¬ Foreign legal entities, state bodies, local government bodies, registered for the payment of consumption tax in a foreign country.
When the service provider is a foreign person who is not registered for VAT in the Republic of Serbia, the taxpayer – recipient of the service is deemed to be:
¬ Any person who performs his activity continuously, regardless of the purpose of that activity;
¬ Legal entities, state bodies, local government bodies.
VAT representative
Until December 31st 2016, foreign person was obliged to appoint VAT representative for performing supplies of goods or services on Serbian territory, except services provided electronically and passenger transport services.
Amendments to Article 10a of the VAT Act specify that a foreign person who makes taxable supplies in Serbia will be obliged to appoint a fiscal representative and register for VAT, regardless of the value of taxable supplies in the last 12-month period. There are now exceptions for registration of foreign persons who make taxable supplies to:
- VAT payers – application of reverse-charge mechanism in this situation,
- persons referred to in Article 9(1) of the VAT Act (the Republic of Serbia, its authorities and legal persons established by the Republic of Serbia) – reverse-charge mechanism will also be applicable in this case,
- in case of supply of passenger transport services by buses, for which VAT base will be computed as the average fee for an individual transport.
Consequently, the amendments applicable as of January 1st 2017, the obligation of foreign person to appoint VAT representative is significantly narrowed and now there are much more cases in which foreign person is not obliged to appoint a VAT representative.
VAT Calculation
Additionally, we would like to remind that as of 1st January 2018 taxable persons have to provide more detailed information (e.g. date of occurrence of the tax liability and the conditions for tax exemptions) divided in the different types of transactions (e.g. supply with right to deduct input VAT, purchase of goods and services etc.) to the tax authorities in the form of VAT calculation together with the VAT returns. Initially, the deadline for submission of VAT Calculation with VAT return was set for January 1st 2017, but the Ministry of Finance announced possible changes due to the discussion with the market participants.