New Serbia digital VAT: seven ways it will affect you

From April 1, 2017, international digital businesses with Serbia-based consumers will see an impact on operating costs, regulatory burdens, and resource management as Serbian VAT rules extend to cover their digital supplies.

Here are seven difficulties that any international digital business with consumers in Serbia should be aware for:

1. Tax advice

Before you can think of making any inroads in relation to compliance with Serbia’s extension of VAT to cover cross-border digital supplies there is the significant cost in sourcing expert tax advice in relation to the law change. These costs can potentially run into the thousands of euro. In addition, there may be translation costs as the new Serbian rule change is not available in English.

2. Tax agent

The new rules specifically state that affected digital businesses must appoint a local VAT representative in Serbia.

3. No threshold

The extension of Serbian VAT law to cover cross-border supplies has followed the European Union (EU) regulations by having no threshold. This means that if a business makes one digital sale to a Serbian consumer then they become liable to register, to file, and to settle VAT with the Serbian tax authority.

4. Exchange rate

There is a complex procedure involved in getting access to the Serbian tax authority’s exchange rate API feed. It involves downloading a document and physically posting it to the Serbian tax authority, a requirement and process that further eats into time and resources.

5. Trading in Serbian dinar

Trading in Serbian dinar (RSD) is an additional cost. As the VAT liabilities will be in in RSD there is a significant fee for managing the FX exposure to the currency.

6. Fines

Penalties for various levels of getting things wrong range from from RSD 10,000 (approx. €80) to RSD 2 million (the equivalent of €16,000). The penalty interest on VAT due beyond statutory deadlines is 14.25%.

7. Invoicing

Affected digital businesses are required by law to issue an invoice for every sale that they make to Serbian-based consumers. This requirement adds more complexity to back-office systems and resources. The invoices need to have the correct tax rate used and the amount of tax (in RSD) calculated on the base amount.

Partner with Taxamo

Hand Taxamo all your Serbian VAT liabilities so you don’t have to:

• Register with the Serbian Tax Administration
• Hire a Serbian tax agent to settle your VAT
• File Serbian VAT returns
• Settle your Serbian VAT liabilities in Serbian Dinar to the Serbian Tax Administration
• Comply with local VAT rules

Taxamo aims to support every country which brings in destination based VAT for digital sales.

We know every business is different, we use this knowledge to create bespoke solutions for each partner. By partnering with Taxamo you get full access to the Serbian digital market.

We look after your global tax liabilities so you can continue to sell your services.

Contact us now for more details on how we can help you