At the end of 2016 the Serbian Parliament adopted important changes to the VAT law. As of 1 January 2017 foreign e-service suppliers are obliged to register for VAT in Serbia if they provide services for non-taxpayers.
Additionally, as of 1 April 2017 the general place of supply rules for services will be changed.
VAT registration obligation for foreign e-service suppliers
As of 1 January 2017 foreign suppliers are required to register in Serbia in case they supply e-services to non-taxable customers. If a foreign supplier has to register in Serbia as a consequence of e-service supplies to non-taxable persons, it will also be liable to account for local VAT on any B2B supplies which it makes. It means that once a foreign supplier is VAT registered in Serbia, it has to account for local VAT on its services, regardless whether they are supplied to a non-taxable or taxable person.
Changes in the place of supply of services rules
As of 1 April 2017 the place of supply rules for services will be completely changed. The purpose of these changes was to align the Serbian rules with the equivalent EU rules.
According to the adopted changes from 1 April 2017 the general place of supply of services rule will depend on the tax status of the service recipient, i.e. whether it is considered as taxable person or non-taxable person from a VAT point of view. (Prior to the changes the place of supply of the services was determined based on the establishment of the service provider, regardless the taxable status of the service recipient).
Based on the new rule, similar to the EU regulation, if a service is supplied to a taxable person the place of supply is the place where the service recipient is established.
If a service is supplied to a non-taxable person, the rule remained the same, i.e. the place of supply of the service is the place where the service provider is established.
Additionally, the amendments have introduced a definition of “taxable person” exclusively for the purpose of the application of rules related to determining a place of supply of services. In the light of these rules every person is considered as taxable person that permanently performs business activity, regardless of its goal.
In addition to the general rule, several exceptions still apply to the place of supply of some specific services (e.g. services connected to immovable property, transportation of passengers, etc.).
If you have any questions in that regard, please do not hesitate to contact Jovana Stojanovic, Senior Manager PwC Serbia on +38 111 330 2100 or firstname.lastname@example.org.
Bildquelle: Erich Westendarp / pixelio.de