Special scheme for construction

Pursuant to the provisions of the Value Added Tax Act (“Official Gazette of BiH”, no. 09/05, 35/05, 100/08 and 33/17; “VAT Act “), the special scheme for construction is applied in cases when the obligation to pay VAT on trade of goods and services in relation to construction of immovable assets is transferred from the first subcontractor to the main contractor.

Terms of existence of the special scheme for construction

The special scheme for construction exists only if following two conditions are met cumulatively:

  • Simultaneous turnover of goods and services
  • Turnover is created between the main contractor and his first subcontractor.

Special scheme for construction

The special scheme is related to construction works, which include:

  1. Demolition services,
  2. Services on buildings,
  3. Services on all buildings built from construction material, build on land or in land, or alternative services performed on objects using construction equipment (i.e. tunnels, bridges, streets),
  4. Installation of windows and doors, floor installations (covering), elevators, escalators, and heating systems
  5. Installation of elements for buildings or other objects (restaurants, shops, window frames),
  6. Installation of lighting systems,
  7. Cleaning that changes the surface (e.g.: sandblasting),

whose total value (not individual provided by the cooperant) exceeds the amount of KM 25,000.00.

Participants of the special scheme for construction

  • The participants of the special scheme for construction are the subcontractor and contractor, who are jointly and independently responsible for paying VAT, until the evidence that the invoiced VAT amount is paid to ITA is received.
  • The contractor, who concludes the contract with the investors for construction works on the immovable property, employs a subcontractor, who, in addition to supplying goods for construction works, provides services in relation to supplied goods, affecting in that manner the performance of construction works.
  • The main contractors engage the subcontractors usually for executing construction works, and they send invoices for the performed works to the investor every month.
  • The first subcontractor of the main contractor in the project calculates VAT on the executed turnover of goods and services and issues the invoice to the main contractor. The main contractor performs payment of the VAT by the special scheme for construction to ITA with reference to the VAT number of the subcontractor, prepares the Report for specialscheme for construction and together with the payment slip, as a proof of payment for VAT according to special scheme of construction, delivers it to the ITA and the subcontractor.
  • Based on the received Report from the main contractor, the subcontractor acquires the right to deduct the input VAT in his VAT return for the month for which the VAT was paid, provided that the VAT was paid up to the expiry of the deadline for filing the VAT return.
  • The main contractor has the right to deduct input VAT in the same period as the subcontractor.

Deadline for filing of the Report on special scheme for construction

The deadline for paying the VAT liability under the special scheme for construction is 10th of current month for the previous month, ie the deadline for filing the VAT return.