Serbian legislation does not provide for consignment stock; a suggested replacement for consignment stock would be a customs warehouse. In our article we present two possibilities: goods withdrawn from a customs warehouse by a customer and by a foreign legal entity.
Goods withdrawn from customs warehouse by customer
In accordance with Article 10a, paragraph 1 of the Serbian Law on Value Added Tax (VAT), a foreign person who trades in goods and services in the Republic of Serbia is obliged to appoint a tax proxy.
Yet according to Article 10a, paragraph 2 of the Serbian Law on VAT, a foreign person who only performs taxable sale of goods and services in the Republic of Serbia for VAT taxpayers is not obliged to appoint a tax proxy.
In case that customer imports goods to Serbia, the foreign legal entity will not perform taxable sale of goods in Serbia, so there is no obligation for the foreign legal entity to appoint a tax proxy.
As Serbian legislation does not regulate consignment stock, the foreign legal entity may store the goods in a customs warehouse until the goods are withdrawn by the customer. The stock of the goods in the customs warehouse is defined in detail by the Serbian Customs Law. In accordance with Article 128 of the Serbian Customs Law, foreign goods which are not subject to import duties and commercial policy measures can be subject to customs warehousing.
Bearing the above in mind, the goods in the customs warehouse are not subject to VAT. In accordance with Article 3 of the Law on VAT, the subject of VAT shall be imports of goods into the Republic of Serbia. When the goods are withdrawn from the customs warehouse by the customer they are cleared through customs and imported into Serbia. The customer is obliged to pay the VAT calculated by customs within eight (8) days of the date on the customs document.
Our conclusion is that a foreign legal entity storing goods in a customs warehouse, where goods are withdrawn by the customer, does not have an obligation to register for VAT or pay VAT.
Goods withdrawn by foreign legal entity
In line with the afore-mentioned Article 10 of the Serbian Law on VAT, a foreign person trading in goods and services in the Republic of Serbia is obliged to appoint a tax proxy.
Furthermore, according to Article 10a, Paragraph 2 of the Law on VAT, a foreign person only performing the taxable sale of goods and services in the Republic of Serbia to VAT taxpayers is not obliged to appoint a tax proxy. In short, a foreign legal entity is not liable to register for VAT if the goods will be sold to VAT taxpayers in Serbia.
As mentioned above, goods in a customs warehouse are not subject to VAT. When the goods are withdrawn from the customs warehouse by the foreign legal entity, they are subject to VAT. In this case the foreign legal entity is obliged to pay the VAT calculated by customs within 8 days of the date on the customs document.
In summary, a foreign legal entity who stores goods in a customs warehouse and then imports them into Serbia is not obliged to register for VAT but has to pay VAT at the time of the import.
If you would like to know more about the customs warehouse or other taxation issues in Serbia, please visit the homepage of WTS Serbia.
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