In order for a non-resident entity to register for VAT in Serbia, and exercise the same rights and obligations as a resident VAT payer, the non-resident should appoint a VAT representative in Serbia. VAT representative of a non-resident entity can be a person that fulfils the following conditions:
- With permanent residence permit / registered seat in Serbia;
- With minimum 12 months period of VAT registration prior to applying for a VAT representative;
- Without any unpaid outstanding tax liabilities on the day of application; and
- With no conviction for criminal tax offence.
A request for approving a VAT representative is to be submitted to the Tax Authority Headquarters. The Headquarters decides on the submitted request within 15 days. Together with the ZPPDV application form, the VAT representative shall also submit the following:
- Proof of residence / registered seat of the VAT representative;
- Certificate of Non-Conviction for criminal tax offence;
- Certificate of VAT registration of the foreign entity in its domicile country; and
- Power of Attorney, notarized by the court or a public notary, confirming that the VAT representative has been authorized to execute all obligations related to the VAT Law on behalf of a foreign entity.
Tax Authority is obliged to publish a register of VAT representatives on its website. In the name and for the account of the foreign entity, a VAT representative submits the VAT registration form, calculates VAT, issues invoices, submits tax returns, pays for VAT, etc. In the event of revocation of the VAT proxy, all legal consequences of deleting a foreign entity from the VAT records shall occur, unless the foreign entity appoints another VAT representative with the Tax Authority Headquarters within 15 days upon the date of such revocation.
The Rulebook, however, remains unclear on the number of important issues for the practical application of the VAT representative concept, such as:
- There is no defined procedure to be applied by the recipients of goods and services when collecting/making payments of the calculated VAT by VAT representative – whether the calculated VAT is to be paid to the VAT representative in dinars, or it should be paid directly to the foreign entity in foreign currency/dinars and how the procedures of VAT refund and transfer of the refunded VAT to the foreign legal entity will be exercised in practice;
- Judging by the application form for appointing a VAT representative, obtaining a non-resident Tax Identification Number is a prerequisite for a foreign entity to appoint a VAT representative. Given that foreign legal entities may obtain a non-resident’s Tax Identification Number in Serbia only upon appointment of a tax proxy in accordance with the Law on Tax Procedure and Tax Administration, a foreign legal entity is practically obliged to appoint two tax proxies – a general tax proxy, and another one for VAT purposes only;
- Whether the foreign company is obliged to have a non-resident’s bank account and to use it for payment of its VAT liabilities as well as for VAT refund to be made by the Tax Authorities; and the like.
In view of the above uncertainties, we expect in the following period that the Ministry of Finance/Tax Authorities will be in a position to resolve these practical concerns by issuing more specific guidance and instructions on how tax payers should act in practice.