The draft of the new Value Added Tax (VAT) Law, which would come into force on the day Serbia joins the European Union, represents one of the most significant steps in aligning the country’s tax system with EU rules.
It establishes an entirely new framework for the calculation and collection of VAT, providing detailed regulations governing the taxation of supplies of goods and services, as well as trade between Serbia and EU member states.
Under the proposed legislation, VAT will remain one of the most important sources of revenue for the state budget, with its calculation and collection carried out exclusively in accordance with the provisions of the law. The legislation is accompanied by several annexes defining specific economic activities, electronic services, goods eligible for storage in tax warehouses, works of art, collectors’ items and special arrangements for agriculture.
One of the most significant changes concerns Serbia’s adaptation to the rules of the EU single market. To that end, the law introduces precise definitions of the territory of the Republic of Serbia, the European Union, member states, third countries and so-called third territories.
Special provisions apply to certain territories that geographically belong to EU member states but are treated differently for tax purposes. These include Spain’s Canary Islands, Mount Athos in Greece, the Åland Islands in Finland, as well as several Italian and German territories that enjoy special tax status.
The law also clarifies the treatment of certain European territories in international trade. For example, transactions with Monaco will be treated as transactions with France, while supplies involving the Isle of Man will be regarded as transactions with the United Kingdom. Similar rules will apply to transactions involving the British Sovereign Base Areas of Akrotiri and Dhekelia in Cyprus.
With regard to the scope of taxation, the new law identifies four principal categories subject to VAT: supplies of goods for consideration within Serbia, acquisitions of goods from EU member states, supplies of services for consideration, and imports of goods.
Particular attention is given to the rules governing the purchase of goods from other EU member states. Following Serbia’s accession to the EU, such transactions will no longer be treated as conventional imports but as intra-EU acquisitions of goods, resulting in a different tax treatment and new obligations for businesses.
The law also provides a detailed definition of what constitutes a new means of transport, as special VAT rules apply to such purchases. A motor vehicle will be regarded as new if it is sold within six months of its first use or has travelled no more than 6,000 kilometres. For vessels, the threshold is three months from first use or no more than 100 hours of navigation, while aircraft will be considered new if sold within three months of first use or after no more than 40 hours of flight time.
These provisions are particularly important for individuals and companies purchasing vehicles from other EU member states, as the tax treatment of the transaction will depend on the status of the means of transport.
In addition to vehicles, the law devotes particular attention to excise goods. This category includes energy products, tobacco products, alcohol and alcoholic beverages, all of which will be subject to special rules when acquired from EU member states. The aim is to ensure compliance with EU excise legislation and prevent potential abuses in cross-border trade.
The law also provides for certain exemptions. VAT will not be charged on certain acquisitions of goods from the European Union where the supply of those goods within Serbia would itself be exempt from VAT. Exemptions also apply to purchases of second-hand goods, works of art, collectors’ items and antiques where those goods have already been taxed under special arrangements in the member state from which they originate.
Special concessions are provided for certain categories of taxpayers, including farmers operating under a special taxation scheme and legal entities that are not entitled to deduct input VAT.
Another important change concerns the threshold for small-scale acquisitions from the European Union. Certain taxable persons and legal entities that are not VAT taxpayers will not be required to account for VAT on acquisitions from EU member states provided that the total value of such purchases during the current and previous calendar year does not exceed the dinar equivalent of €10,000.
However, the law allows such entities to opt voluntarily to account for VAT. In that case, they must notify the Tax Administration in advance, and their decision will remain binding for at least two calendar years.
(Biznis.rs, 02.06.2026)