Entering the VAT system

When is VAT registration mandatory?

When your turnover over the preceding 12 months exceeds RSD 8,000,000. The threshold is measured on a rolling basis — not by calendar year — so it can be crossed on any day. The registration application is then filed no later than the deadline for the first subsequent periodic VAT return.

Important: only turnover with a place of supply in Serbia counts towards the threshold. Services whose place of supply is abroad — typically IT and similar services supplied to foreign companies — do not count towards the RSD 8 million. For someone working exclusively with a place of supply abroad, this threshold plays no role at all, regardless of income.

For flat-rate taxpayers this matters especially: entering the VAT system automatically ends flat-rate taxation and forces a move to full bookkeeping, independently of the RSD 6 million limit.

Voluntary VAT registration

You can join the system before reaching the threshold, voluntarily — but you must then remain in it for at least two years. It usually pays off when your customers are themselves VAT payers and you have significant input costs carrying VAT (equipment, goods, rent): the input tax deduction then reduces your real cost. For predominantly export services — for example IT work for foreign clients — the calculation is specific, because the place of supply is often abroad; we cover this on our IT accounting page.

What awaits you inside the VAT system

• Periodic returns — new registrants file monthly, in the current and the following year; later a quarterly period may be possible.
• E-invoicing (SEF) — mandatory issuing and receiving of electronic invoices through the e-Faktura system.
• Rates of 20% and 10% — with correct treatment of exemptions and the place of supply for cross-border services.
• The right to deduct — VAT on input invoices reduces your liability, provided the documentation is in order.
• More accounting work — VAT records and deadlines, which is why VAT status feeds into the bookkeeping fee.

Frequently asked questions

Is the RSD 8 million threshold measured by calendar year?

No — it is measured on turnover over the preceding 12 months, on a rolling basis. That means you can cross it on any day of the year, so turnover needs to be monitored continuously.

I work exclusively for foreign clients — does the RSD 8 million threshold apply to me?

No. Only turnover with a place of supply in Serbia counts towards the threshold for mandatory registration. Services whose place of supply is abroad do not count, so no obligation to register arises on that basis, regardless of income. How the place of supply is determined for your particular services is something we check case by case.

Can a flat-rate taxpayer be VAT registered?

No — flat-rate taxation and VAT are mutually exclusive. Entering the VAT system automatically ends flat-rate taxation and means moving to full bookkeeping.

When does voluntary VAT registration pay off?

Most often when your customers are predominantly VAT payers and you have significant input costs carrying VAT — equipment, goods, rent — so the input tax deduction outweighs the burden. The decision is made by calculation, bearing in mind that you must stay in the system for at least two years.

How often are VAT returns filed?

New registrants file monthly in the current and the following calendar year. Later, taxpayers with lower turnover may move to a quarterly period.

Note: this content is informational and does not constitute tax advice.