Serbia is preparing a broad revision of its value-added tax framework that would tighten the connection between tax registration, electronic invoicing and corporate reporting from 1 January 2027. The proposed changes leave the headline VAT thresholds and most exemptions intact, but introduce stricter deadlines, more automated tax filings and a considerably stronger digital audit trail for companies, entrepreneurs and agricultural producers.
The most consequential change is not a new tax rate. It is the gradual transfer of control over VAT calculations from company accounting departments towards a system in which the Tax Administration can reconstruct—and, in some circumstances, submit—a taxpayer’s return using information already available through Serbia’s electronic tax and invoicing infrastructure.
The changes remain a legislative proposal and should not be treated as enacted rules until the parliamentary procedure has been completed and the final text published in the Official Gazette. Under the proposed timetable, however, most provisions would apply from 1 January 2027, while the Ministry of Finance would have to adopt the necessary secondary legislation by 15 December 2026.
The reform builds on changes adopted in late 2025 and introduced during 2026, including expanded use of the Electronic Invoicing System, or SEF, more detailed rules for correcting invoices and the planned introduction of preliminary VAT returns. For businesses, the emerging framework means that invoicing, accounting records, contractual documentation and tax reporting can no longer operate as loosely connected processes.
The threshold for mandatory VAT registration would remain unchanged at RSD 8 million, equivalent to approximately €68,000, measured against turnover during the preceding 12 months. New businesses would continue to assess the threshold using expected turnover for the following year.
Keeping the threshold unchanged avoids an immediate expansion of the VAT population. In real terms, however, inflation gradually reduces the economic value of a fixed nominal threshold. A growing number of micro-enterprises may therefore enter the VAT system even without substantial growth in the volume of their business. This is particularly relevant for professional services, construction subcontractors, transport operators, small manufacturers and agricultural businesses whose nominal revenues have risen with prices.
Equipment and buildings used for conducting business would remain outside the calculation of turnover for small-taxpayer status. The proposal would additionally clarify that compensated investments in business premises are also excluded. That distinction may become important in construction, concession, leasehold-improvement and investor–contractor arrangements in which one party finances or performs works on an asset owned or used by another.
Companies and farmers entering the VAT system voluntarily would face a revised minimum participation period. Instead of being required to remain registered for at least two years, they would remain in the system for the calendar year in which they entered and the following calendar year.
The practical duration would therefore depend on the registration date. A taxpayer entering in January could remain covered for almost 24 months, while one entering in December could potentially leave after approximately 13 months, subject to satisfying the statutory conditions. This makes the timing of voluntary registration more relevant to business planning, particularly for start-ups and seasonal businesses expecting substantial input VAT on initial investment.
Voluntary registration can strengthen cash flow during an investment cycle because the business may deduct VAT paid on eligible equipment, construction works and services. It can also make a supplier more commercially acceptable to larger VAT-registered customers. The trade-off is a heavier compliance burden, stricter invoice controls and the possible need to charge VAT to customers unable to deduct it.
The procedure for leaving the system would become more formalised. A taxpayer whose turnover during the preceding 12 months remained below RSD 8 million could apply for removal from the VAT register. The taxpayer would determine the date on which its VAT activity ceased, although that date could be the first day of the tax period in which the conditions for deregistration were met.
The application would have to be submitted within five days of the cessation date. The Tax Administration would then issue a formal deregistration certificate where the conditions had been satisfied.
This certificate would become part of a stronger link between the VAT register and Serbia’s general business-registration system. A company or other registered entity could no longer be deleted from the relevant business register before the Tax Administration confirmed that it had first been removed from the VAT register.
The measure is designed to prevent companies from disappearing from the corporate registry while tax obligations, VAT credits or unresolved reporting periods remain open. It will also affect mergers, demergers, liquidations and other status changes. Where a taxpayer ceases to exist because of a corporate reorganisation, its legal successor would have five days to notify the Tax Administration. VAT deregistration could then be completed ex officio.
For transaction advisers, investors and lenders, VAT clearance will consequently become a more visible element of corporate restructuring and exit documentation. Due-diligence procedures will need to examine not only outstanding tax liabilities but also whether final returns, corrections, input-tax adjustments and deregistration certificates have been completed.
The existing division between monthly and quarterly taxpayers would remain. Companies with annual turnover above RSD 50 million, or about €427,000, would generally continue submitting monthly VAT returns, while those below that threshold would remain quarterly taxpayers.
Businesses voluntarily moving from quarterly to monthly reporting would be required to retain the monthly regime until the end of the calendar year following the year in which they requested its termination. Requests to change or cancel an approved tax period would be submitted between 20 and 31 December.
Monthly reporting can improve the timing of VAT refunds for exporters and companies undertaking capital-intensive investment. It nevertheless compresses the closing timetable and places greater pressure on invoice approval, SEF reconciliation and supporting documentation. For companies operating through several sites or project companies, the difference between monthly and quarterly reporting can materially affect working-capital management.
The standard deadline for a VAT return would remain 15 days after the end of the relevant tax period. Taxpayers leaving the system, including entities disappearing through a corporate reorganisation, would have to submit their final return within 15 days of the cessation of VAT activity.
A more significant intervention would apply when a registered taxpayer failed to submit a return on time. The Tax Administration would be authorised to submit a return ex officio using the preliminary VAT return already generated from available data. Such a return would contain only information on output VAT.
This creates a potentially serious cash-flow exposure. The authority-generated return may recognise VAT charged on sales while excluding deductible input tax that the company failed to document or confirm. A business missing the deadline could therefore face an artificially high payable balance, interest and enforcement exposure, even where its underlying net liability was substantially lower.
The mechanism changes the commercial meaning of a missed filing deadline. It is no longer simply an administrative delay that can be corrected once the accounting team completes its work. It can produce an immediate tax assessment based on an incomplete and potentially unfavourable dataset.
Businesses will need to reconcile SEF data, internal invoices, customs documentation, credit notes, advance payments and reverse-charge transactions before each filing deadline. ERP and accounting systems should be capable of identifying differences between company ledgers and the preliminary return early enough for corrections to be made.
The proposal also addresses companies that register late or cross the VAT threshold during a tax period. A person becoming VAT-registered partway through the same period could be required to submit two separate returns: one covering the period during which it acted as a tax debtor without being registered and another covering transactions after formal VAT registration.
Late registrants would be allowed to correct VAT for earlier periods in their first return after registration. The correction would, however, be treated as the rectification of an error affecting the tax liability. The rules governing amended tax returns—and potentially misdemeanour or criminal responsibility—could therefore become relevant.
Companies approaching the RSD 8 million threshold will need rolling turnover controls rather than relying on year-end financial statements. In project-based sectors, a single milestone invoice, advance payment or variation order can move a business above the limit. Monitoring should cover the preceding 12 months continuously, not merely turnover within the calendar year.
Changes to registration information affecting VAT calculation or payment would have to be reported electronically within five days. That obligation may capture changes in business activity, tax status, addresses, organisational structure or other registered information with consequences for tax administration.
The proposal would also introduce an annual electronic disclosure accompanying the final VAT return of the year. Taxpayers would report transactions with non-VAT-registered suppliers of secondary raw materials and related services, as well as transactions with agricultural producers outside the VAT system.
This is particularly relevant for metals recycling, waste management, construction materials, manufacturing supply chains and agricultural processing. These sectors frequently involve fragmented suppliers, variable documentation and transactions where the purchaser has additional tax-accounting responsibilities.
For agricultural producers, the mandatory registration threshold would remain RSD 8 million. Farmers below it would continue operating outside the VAT system unless they opted to register voluntarily. They would not charge VAT, show it on invoices or deduct input tax while remaining outside the system.
VAT-registered purchasers acquiring agricultural or forestry products and qualifying services from eligible farmers would continue calculating a VAT compensation payment equal to 8 per cent of the transaction value. The proposal specifies that this amount must be paid into the farmer’s current or savings account, strengthening the traceability of the payment.
Where the transaction value later changes, the buyer would issue a new receipt for an increase or a reduction document where the value falls. This aligns agricultural VAT documentation more closely with the broader system of invoice corrections and creates a clearer audit trail between the original supply, payment and subsequent adjustment.
Most existing VAT exemptions would remain. Exemptions would continue covering financial and capital transactions, payment services, loans, deposits, securities, investment and voluntary pension funds, insurance services and transactions in virtual currencies where conducted under digital-asset legislation.
Land transactions, land leases, specified real-estate transactions, residential leases, healthcare, education, social care, cultural and religious services, public broadcasting, gambling and certain non-profit sports activities would also remain within the exempt categories.
The wording for postal services would be narrowed and clarified. The exemption would explicitly apply to universal postal services and associated supplies provided by the designated public postal operator, rather than functioning as a broader exemption for postal activity.
The proposal would preserve the restriction preventing an exemption from being applied to the sale of goods where the seller had obtained only a partial deduction of input VAT when acquiring them. Companies disposing of vehicles, machinery, property or other fixed assets will therefore need to reconstruct the original VAT treatment before determining the tax status of the sale.
VAT refunds would remain available when deductible input tax exceeds output VAT. A taxpayer could request payment or carry the balance forward as a tax credit. The proposed reform would retain the refund deadlines of 45 days for ordinary taxpayers and 15 days for businesses predominantly exporting goods.
For exporters, the statutory 15-day period remains commercially important because VAT accumulated on domestic inputs can otherwise become a significant working-capital burden. The effectiveness of the shorter period still depends on complete documentation, consistent customs and invoice data, and the absence of issues triggering a tax review.
Advance payments will require particular attention during the transition. Where an advance or part of the consideration is paid before the new provisions begin to apply, the existing VAT rules would continue governing the transaction even where the underlying supply is completed after the new regime takes effect.
Contracts spanning 2026 and 2027 should therefore identify the VAT treatment of advances, milestone payments, retention releases, price adjustments and final acceptance certificates. This is especially relevant for EPC contracts, construction projects, equipment supply, long-term services and real-estate development, where invoices and taxable events can fall into different regulatory periods.
Deregistration proceedings initiated by 31 December 2026 would be completed under the existing rules. Late or amended returns relating to periods ending in December 2026—or the fourth quarter of 2026—would also remain subject to the transitional framework.
The Ministry of Finance would have until 15 December 2026 to issue implementing regulations, leaving a relatively short period for businesses and software providers to incorporate the final technical requirements before the proposed 1 January 2027 start.
The reform leaves Serbia’s basic VAT architecture largely intact, but substantially increases the operational importance of accurate, timely and digitally consistent records. By 2027, the decisive compliance question will be less about whether a transaction has been entered somewhere in the accounts and more about whether the same transaction is recorded consistently across the contract, invoice, SEF entry, payment record, VAT ledger and tax return.
