Changes to Invoicing in Serbia
Draft Law on Electronic Invoicing
At the session held on 25 March 2021, the Government of the Republic of Serbia adopted the Draft Law on Electronic Invoicing (the „Draft“), which was sent to the National Assembly of the Republic of Serbia for adoption.
Constitutional basis and reasons for adopting the Draft
The constitutional basis for the adoption of this Draft is contained in the provisions of Article 97, paragraph 1, item 6), 11) and 17) of the Constitution of the Republic of Serbia, according to which the Republic, among other things, regulates and ensures the legal position of economic entities, control of legality of disposition of funds of legal entities and other economic relations of general interest to the Republic.
The reasons for adopting the Draft are to establish visibility in terms of a wide range of transactions between public sector entities, between private and public sector entities, as well as private sector entities in the system of electronic invoices, as well as to improve legal certainty and consistency of national legal framework.
Subject of regulation
Draft regulates the issuance, sending, receiving, processing, storage, content and elements of electronic invoices, in transactions between public sector entities, between private sector entities, i.e. between public entities and private sector entities and other issues relevant to electronic invoicing.
In accordance with the Draft, the electronic invoice includes the following documents:
- request for payment based on transactions with a fee,
- any other document that affects the payment, i.e. the amount of payment,
- an invoice issued for turnover free of charge,
- invoice issued for advances received.
The Draft also states the elements that the electronic invoice usually contains, and the plan is to regulate in more detail by the act of the Minister of Finance the cases when certain elements can be omitted, cases when there is an obligation to state additional elements, form and manner of submitting accompanying documentation.
The obligation to issue an invoice exists for:
- private sector entities on the basis of mutual transactions;
- private sector entity on the basis of a transaction with a public sector entity;
- public sector entity on the basis of a transaction with a private sector entity;
- public sector entities on the basis of mutual transactions;
- tax representative of a foreign person in the Republic of Serbia, in terms of regulations governing value added tax, based on transactions with private and public sector entities.
While the obligation to issue an electronic invoice does not exist for:
- retail trade and received advance for retail trade in accordance with the law governing fiscalization;
- a contractual obligation directed towards the beneficiaries of funds from international framework agreements;
- procurement, modernization and overhaul of weapons and military equipment, procurement of security-sensitive equipment, as well as related procurement of goods and services.
The Draft also introduces the obligation to electronically record the calculation of value added tax in the system of electronic invoices. This obligation will be incurred by the tax debtor in accordance with the Law on Value Added Tax (“Official Gazette of RS”, No. 84/2004, 86/2004, 61/2005, 61/2007, 93/2012, 108/2013, 6/2014, 68/2014, 142/2014, 5/2015, 83/2015, 5/2016, 108/2016, 7/2017, 113/2017, 13/2018, 30/2018, 4/2019, 72/2019, 8/2020 and 153/2020), which is a VAT payer, as well as a public sector entity, a legal entity, or an entrepreneur who is not a value added tax payer, except in certain cases.
In accordance with the Draft, the electronic invoice is considered a credible document in terms of the Law on Enforcement and Security (“Official Gazette of RS”, No. 106/2015, 106/2016 – authentic interpretation, 113/2017 – authentic interpretation and 54/2019). In order to be considered a credible document in this sense, it needs to be sent via an electronic invoicing system.
Draft prescribes fines for violations related to electronic invoices up to:
- RSD 2,000,000 for legal entities and public sector entities,
- up to RSD 150,000 for the responsible person within the legal entity and
- up to RSD 500,000 for entrepreneurs.
Start of application
Draft envisages that the system of electronic invoices can be used by the subject of the public sector and the subject of the private sector after the establishment of technical-technological conditions. This is the possibility to use the electronic invoicing system even before it becomes mandatory, but at the same time it is prescribed when such an invoicing system is mandatory.
The obligation of a public sector entity to receive and keep an electronic invoice issued in accordance with this Draft, as well as the obligation to issue an electronic invoice to another public sector entity, applies from 1 January 2022.
The obligation of the public sector entity to electronically record the calculation of VAT, applies from 1 January 2022.
Obligation of a private sector entity to issue an electronic invoice to a public sector entity, in accordance with this Draft, applies from 1 January 2022.
The obligation of a private sector entity to receive and keep an electronic invoice issued by a public sector entity, as well as electronic invoices issued by a private sector entity, applies from 1 July 2022.
The provisions of this law relating to the obligation to issue and keep electronic invoices in transactions between private sector entities applies from 1 January 2023.
The obligation of electronic recording in connection with transactions referred to in Article 4 of this Draft, except for transactions in which one of the parties is a public sector entity, applies from 1 January 2023.