Farmers in Serbia are eligible for VAT refunds under specific conditions outlined in the Law on Value Added Tax (VAT). This applies to farmers registered in the VAT system or those recognized as agricultural producers.
Key conditions for VAT refund eligibility
- Flat-rate tax status: Farmers must have the status of a flat-rate taxed farmer. Those not in the VAT system can still receive a flat-rate VAT refund when selling products to VAT-registered customers (such as companies and entrepreneurs). Buyers must compensate them with an additional eight percent on the sale.
- VAT system registration: Farmers registered as VAT payers (typically with an annual turnover exceeding eight million dinars) can deduct prior VAT on purchased inputs (like seeds, fertilizers, and fuel) used in production.
Process for VAT reimbursement
Farmers can claim VAT refunds by regularly submitting VAT returns to the Tax Administration. Additionally, farm owners can voluntarily register in the Register of Agricultural Farms to gain access to incentives and enter the VAT system, as their operations are classified as agribusiness.
Agricultural production framework
Agricultural farming organizes agricultural production, where both legal and natural persons operate as production units. A farmer with a total turnover of goods and services below eight million dinars does not have to calculate VAT or declare it on invoices. Consequently, they cannot deduct previous tax and are not required to maintain records mandated by this law.
Farmers wishing to pay VAT can opt to do so by submitting a declaration to the relevant tax authority. This commitment lasts a minimum of two years, after which they can request to terminate the VAT obligation.
Land and registration criteria
An agricultural holding must consist of at least 0.5 hectares of agricultural land in Serbia. Agricultural production can be conducted by various entities, including companies, cooperatives, institutions, or individual farmers. Even smaller farms can register if they engage in livestock, viticulture, vegetable production, or processing agricultural products.
VAT compensation details
VAT compensation is available to farmers selling agricultural and forest products or agricultural services to VAT-registered buyers. Buyers are required to calculate VAT compensation at eight percent of the value of received goods and services and must pay this VAT to farmers either in cash or via bank transfer.
