New VAT Rules: No Notification, No VAT Reduction in Serbia

Serbia's fiscal landscape has seen significant adjustments with the latest amendments to the Value Added Tax (VAT) Regulation, which came into effect on April 1st. These changes introduce crucial clarifications regarding the process of issuing and delivering buyer notifications, particularly concerning adjustments to previously paid VAT. This move directly impacts the financial relationship between buyers and suppliers, especially when invoices need correction.

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This notification represents confirmation that the buyer has made the appropriate adjustments to their right to deduct VAT, meaning that deduction has been reduced or not used at all.

The core of the amendment centers on a document that a buyer must provide to a supplier after the supplier corrects a previously issued invoice, either through a credit note or a cancellation. This notification serves as confirmation that the buyer has aligned their VAT deduction rights accordingly, meaning the deduction has been reduced or not utilized at all. For businesses acting as suppliers, this is a pivotal shift. Previously, the right to reduce calculated VAT was more flexible, tied mainly to issuing a corrective document. Now, it is contingent upon receiving the buyer's explicit confirmation of VAT adjustment.

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Namely, the right to reduce calculated VAT is no longer tied only to the issuance of a credit note or cancellation invoice, but also to the receipt of a notification from the buyer. In other words, the supplier can reduce their tax liability only after receiving confirmation that the buyer has corrected the previous tax.

This new regulation aims to standardize practices and reduce ambiguity, which were common under the previous, more flexible system. The amendments precisely define that a notification can only be issued after the buyer receives the document for VAT reduction. Furthermore, while the notification can be in electronic or other appropriate forms, electronic delivery is now mandatory. This standardization is expected to streamline business operations and ensure more consistent application of tax laws across the board. The integration with the electronic invoicing system (SEF) offers practical advantages, enabling users to generate and send these notifications directly within the platform, simplifying the process and minimizing errors.

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The new rules specify that the notification can only be issued after the buyer receives the document by which the reduction is made – whether it is a credit note or a cancellation invoice. It is also defined that this document can be prepared in electronic form or in another appropriate way, but with mandatory electronic delivery.