The Ministry of Finance was rather busy releasing VAT rulebooks with the purpose of further clarifying new rules in place for the supply of services introduced by recent amendments to the VAT Law.
The Arm's length interest rates for loans in euros and dinars have decreased, while rates for loans in Suisse francs and US dollars have slightly increased.
VAT Treatment of Supplies Related to Real Estate
The new rulebook on the services provided in connection with real estate gives a list of services which are deemed to be related to real estate, and therefore subject to the Serbian VAT - if the relevant real estate is located in Serbia. Listed services are subject to VAT irrespective of whether they are provided to a resident or to a non-resident.
Some of the listed services are commonly considered to be related to real estate matters (land surveying, construction, supervision of construction, lease etc.). However, the list also contains services which were regarded as consulting services before VAT Law amendments (e.g. assessment of the characteristics of immovable property for the purpose of assessing energy efficiency), or services related to works on movable property (e.g. installation or maintenance of the equipment that was installed in the facility as its inseparable part).
Legal services, such as the drafting of construction agreements, the sale or lease of real estate located in Serbia, are also deemed to be services provided in connection with real estate - and thus subject to Serbian VAT, if the real estate is located in Serbia. On the other hand, legal advisory and tax advisory services in relation to real estate are not deemed to be related to real estate from the VAT perspective, and these services will be subject to VAT only if they are provided to a Serbian service recipient.
VAT Exemptions for Transportation Services
The new rules in place for supply also affect transportation services. The amendments to the rulebook on VAT exemptions were issued in order to clarify the VAT exemption procedure for transportation services relating to import, export, and the transit of goods, and they are aligned with the new rules in place for supply.
The place of supply for transportation services is generally the registered seat of the service recipient. The VAT exemption is prescribed for service fees related to the transport of imported goods from foreign countries to the first delivery place in Serbia, instead of service fees for the transport from the border to the first delivery place. In connection to the export of goods, the fee for transport from a Serbian loading point to a foreign country is exempted, instead of the fee for transport to the Serbian border.
The new rules will simplify the administration of the VAT for transport services.
Arm's length Interest Rates for 2017
The new arm's length interest rates for loans provided to Serbian companies, or by Serbian companies, are as follows:
- 6.46% for short term loans in RSD,
- 6.39% for long term loans in RSD,
- 3.98% for short term loans in EUR,
- 4.25% for long term loans in EUR,
- 7.08% for long term loans in CHF,
- 4.61% for short term loans in USD,
- 5.72% for long term loans in USD.
The interest rates are applicable for the purpose of determining the deductibility of interest expenses, as well as for the attribution of interest income for tax purposes in the year 2017.