Tax Alert, June 2016
New Ministry of Finance rulings
New Ministry of Finance rulings
Several Ministry of Finance rulings have been published in the past period, aimed at clarifying and elaborating on the implementation of provisions of the Law on Value Added Tax (hereinafter “VAT Law”), Law on Corporate Income Tax, the Law on Personal Income Tax and Law on Excise Duties.
Value added tax
Obligation to calculate VAT when supplying oil derivatives to subcontractors via an oil tank located at the construction site
When a VAT payer (a construction company) has on its construction site an oil tank containing oil derivatives that are used to supply subcontractors, it is considered that the taxpayer performs a supply of oil derivatives to its subcontractors, for which the VAT payer is obliged to calculate and pay VAT in accordance with the VAT law.
(Ministry of Finance Ruling, no. 430-00-51/2016-04 as of April 11th 2016)
Determination of the tax debtor for the supply of regular carpentry maintenance services
In case a VAT payer performs regular carpentry maintenance services to the National Assembly, this supply is not considered to be a supply in the field of construction. Hence, for such a supply, the obligation to calculate and pay VAT lies with the VAT payer performing the supply.
(Ministry of Finance Ruling, no. 011-00-437/2016-04 as of April 4th 2016)
Determination of the tax debtor for the unloading of pallets of goods, unloading and lifting such goods and loading debris on a truck for transport
When a VAT payer provides services that involve the unloading of pallets of goods (e.g. construction materials), unloading and lifting those goods on the upper floors of buildings via a telehandler, as well as loading debris on a truck for transport to the city dump, reverse charge does not apply.
(Ministry of Finance Ruling, no. 011-00-437/2016-04 as of April 20th 2016)
Determination of the tax debtor for the supply of metalworking services
When a VAT payer performs the supply of goods and services in the field of construction to persons referred to in Article 9 paragraph 1 of the VAT law, in this particular case – to the National Assembly, reverse charge applies. In regards to the aforementioned, and in this particular case, metalworking services are considered to be activities classified as 43.99 - Other specialized construction activities.
(Ministry of Finance Ruling, no. 413-01-127/2016-04 as of May 19th 2016)
Right to deduct input VAT based on a customs declaration (JCI form) in which the VAT payer is listed as the owner of goods, regardless the fact that VAT was paid by the shipping agent, who will recharge the paid amount to the foreign supplier
A VAT payer listed as the owner of goods in a JCI from, or as a person with similar rights of disposal over the goods, has the right to, subject to other requirements, deduct import VAT, regardless of the fact that VAT was paid by the shipping agent, who will recharge the paid amount to the foreign supplier.
(Ministry of Finance Ruling, no. 430-00-111/2016-04 as of May 19th 2016)
Obligation to calculate VAT for the supply of electricity to a nonresident if its registered seat is located abroad
If the registered seat of the recipient of electricity, or his permanent establishment to which the supply is made, are located abroad, the supply of goods is considered to be performed abroad regardless of whether the supply was performed to a VAT-payer.
Accordingly, when a VAT payer supplies electricity to a nonresident VAT payer performing supplies of electricity on an organized electricity market in Serbia, and whose seat is located abroad, the place of supply is deemed to be abroad, meaning that the supply is not subject to VAT.
(Ministry of Finance Ruling, no. 413-00-00038/2016-04 as of April 11th 2016)
Explanation regarding a foreign entity’s fiscal representative and VAT registration
The VAT Law prescribes the obligation for foreign persons performing supplies in Serbia to register for VAT and appoint a fiscal representative in Serbia. The VAT Law does not impose sanctions for not registering for VAT. In this case, the recipient acts as tax debtor and declares VAT.
However, a foreign person does not have to appoint a fiscal representative when performing supplies in Serbia, as the foreign person has the opportunity (not an obligation) to register for VAT.
A foreign person that performs supply of goods and services in Serbia is not subject to penalties (sanctions) for not appointing a fiscal representative and therefore for not registering for VAT. In the case a foreign person does not register for VAT, the VAT Law prescribes that the other person shall have the status of tax debtor.
(Ministry of Finance Ruling, no. 011-00-1180/2015-04 as of May 23rd 2016)
Obligation to pay withholding tax on the annual membership fees
When a resident legal entity, as part of its activities (which include creating and updating the register of bone marrow donors) as a user of Global register of bone marrow donors, pays to a nonresident legal entity an annual membership fee, said fee is not subject to withholding tax.
A nonresident legal entity’s revenue received from a resident legal entity based on fees for processing samples of potential donors, whereby said service is provided abroad, is not subject to withholding tax.
(Ministry of Finance Ruling, no. 011-00-350/2016-04 as of April 22nd 2016)
Obligation to pay withholding tax on fees for product quality analysis rendered abroad
Revenue realized by a nonresident legal entity from a resident legal entity based on fees for product quality analysis services (in particular case – malt and barley), is not subject to withholding tax, bearing in mind that said service is provided outside of Serbia (in a foreign laboratory) and that the quality certificate is issued abroad.
(Ministry of Finance Ruling, no. 011-00-0431/2016-04 as of April 12th 2016)
Obligation to pay withholding tax on fees for market research and agency services
Revenue realized by a nonresident legal entity from a resident legal entity based on fees for market research for export of goods or services of a resident legal entity (for example – analysis of competition and potential buyers), as well as fees for agency services (so as to ensure the placement of the resident’s goods and services abroad), is subject to withholding tax.
(Ministry of Finance Ruling, no. 430-00-179/2016-04 as of May 16th 2016)
Personal income tax
Obligation to calculate and pay income tax and social security contributions based on a final court decision
Earnings that an individual realizes based on the remuneration assigned by a final court decision due to underpaid salaries, represents that individual’s income, which is subject to personal income tax, as well as subject to social security contributions. The payer of the income – employer, is obliged to calculate and pay personal income tax and social security contributions, i.e. to withhold personal income tax and contributions, regardless for which period of time such a payment is made.
(Ministry of Finance Ruling, no. 011-00-104/2016-04 as of April 6th 2016)
Excise treatment of wine
Wine, domestic or foreign, as agro-food product, obtained by total or partial alcohol fermentation of fresh grapes, pomace or grape wine varieties, in accordance with the regulations governing the field of production, processing and trade of wine, is not subject to excise duties.
However, mixtures of juices or refreshing non-alcoholic beverages and refined ethyl alcohol or alcoholic beverages or plant extracts or alcoholic beverages obtained by fermentation (wine, apple wine – cider, pear wine – perry and other), which contain more than 1,2% of alcohol, but up to 15% of alcohol, are considered to be low-alcohol beverages, which are subject to excise duties.
Fruit wines and mixed fruit wines, in accordance with regulations governing quality and other requirements for alcoholic beverages, as a category of alcoholic beverages made by fermentation, without adding mixtures of fruit juices or refreshing non/alcoholic beverages, are not subject to excise duties.
(Ministry of Finance Ruling, no. 434-00-00016/2016-04 as of April 11th 2016)