On the one hand, new laws on fiscalization and electronic invoicing in the Republic of Serbia are certainly indicators of the digitalization expansion, but on the other, they cause numerous doubts - from questions about the economic entities that the new provisions apply to, to the ones regarding the obligations that have been prescribed.
LAW ON FISCALIZATION
The new Law on Fiscalization has been effective since 1 November 2021, except for a few articles that were applied with its entering into force. However, the sanctioning of taxpayers who violate the provisions of the Law on Fiscalization began only on 1 May 2022, when the previous Law on Fiscal Cash Registers had ceased to be valid.
The goal of this transitional period was for economic entities to gradually get acquainted with and adapt to new rules and procedures in the fiscalization system.
The Law introduced an extension of the notion of taxpayers, which now applies to all entrepreneurs and companies engaged in retail trade, except for persons who are, according to the Decree on Activities that do not have an obligation to record retail trade through electronic fiscal device, exempted from these obligations.
The most important change is the introduction of an Electronic Fiscal Device (EFD) - a hardware and/or software solution enabling taxpayers to issue fiscal invoices. The fiscal data is automatically forwarded to the Fiscalization Management System of the Tax Administration who is able to have a very effective control of retail activities. The QR code that appears on each fiscal invoice contains accurate data and enables a customer to check if the invoice is issued in accordance with the law. Apart from cash registers, EFDs can also be computers, tablets, and mobile phones.
A portal for Electronic Fiscalization Services (EFS) has been released so that the taxpayers can manage all significant activities related to E-Fiscalization. Apart from legal representatives, the access to the ESF is allowed to the persons authorized by a taxpayer (e.g. accountants). The legal representative can give authorization by submitting a filled in authorization form, i.e. PEP form. Those who submitted the authorization clearance for the item 4.1 of the form (it prescribes the scope of authorization for the use of all electronic services) before 30 October 2021, are not obliged to submit it again with the purpose to give authorization for the annexed item 4.6 (it prescribes the authorization for the access to the portal of the Tax Administration E-Taxes).
LAW ON ELECTRONIC INVOICING
Unlike the Law on Fiscalization, which refers to the persons who perform retail trade (B2C - Business to Customer) and issue fiscal invoices via an EFD, the Law on Electronic Invoicing applies to economic entities that perform wholesale trade (B2B - Business to Business) and issue electronic invoices, via the Electronic Invoicing System (EIS).
The Law on Electronic Invoicing entered into force on 7 May 2021. Since then several bylaws were passed as well.
This Law regulates the ways an e-invoice is to be issued, sent, received, processed and archived, as well as its content. The following are to issue electronic invoices:
• private sector entities for their mutual transactions,
• private sector entities for their transactions with public sector entities,
• public sector entities for their transactions with private sector entities,
• public sector entities for their mutual transactions,
• tax attorneys of foreign persons in the Republic of Serbia, for their transactions with private and public sector entities.
Exceptions are prescribed regarding the trade in goods and services at retail, the trade in goods and services financed from the funds of international framework agreements, and the procurement of military and security-sensitive equipment.
According to the Law on Electronic Invoicing, an E-invoice is
• a request for payment based on transactions with a fee,
• any other document that affects the payment, i.e., the amount of payment,
• an invoice for turnover free of charge,
• an invoice for received advanced payments.
These are to be issued, sent, and received through the Electronic Invoice System, in a structured format that enables fully automated electronic data processing.
Furthermore, the EIS is an IT solution used by a Central Information Intermediary to send, receive, recorde, process, archive and manage E-invoices. An I-intermediary is a competent unit of the Ministry of Finance that manages the register of information intermediaries, manages the system of electronic invoices and is responsible for its functioning.
The first log-in to the EIS must be performed by the legal representative of the entity. In accordance with the Article 4 of the Ordinance on the manner and procedure of sign up to the Electronic Invoices System, access and use of electronic invoices, and use of data available in the system electronic invoices, after the registration, the e-invoice issuer may authorize other persons for access through the user interface, including an accountant.
An overview of prescribed deadlines for obligations fulfillment are the following:
For a private sector entity
1 May 2022 - Issue an electronic invoice to a public sector entity
1 July 2022 - Receive and archive an electronic invoice issued by both public and private sector entities
1 January 2023 - Issue an electronic invoice to a private sector entity
1 January 2023 - Record VAT calculations except for transactions in which one of the parties is a public sector entity
For a public sector entity
1 May 2022 - Issue an electronic invoice to a public sector entity
1 May 2022 - Receive and archive an electronic invoice issued by both public and private sector entities
1 May 2022 - Record VAT calculations
1 July 2022 - Issue an electronic invoice to a private sector entity
On 25 May 2022, businessmen, representatives of the Association of the Protector of Entrepreneurs and Businessmen of Serbia and representatives of the Accounting Chamber of Serbia requested a postponement of the application of these two laws. The postponement of the implementation of the Law on Fiscalization, as they proposed, would last until the bylaws have been improved, and of the Law on Electronic Invoicing until 1 January 2023.
The reasons for the delay are technical problems. According to them, businessmen have difficulties with the functioning of EFDs, and some did not even get their delivery of EFDs, even though they applied on time. Also, the EIS is not used in the Tax Administration, nor are the two databases connected, which is crucial. As another problem, they pointed out that there is legal uncertainty in keeping books for hospitality and bakery sectors, since the means of payment for transactions were mistakenly not separated, so cash, cards, checks and instant payment are registered as cash.
Nikola Vuković, Partner
Sara Elmazi Vlajić, Legal Intern
Sources: Web-pages of the Ministry of Finance - Tax Administration, Law on Fiscalization, Law on Electronic Invoicing, Portal Paragraf Lex
*The information in this announcement does not represent legal advice and is provided for general informational purposes only.
*Partner, Senior Associate and Associate refers to Independent Attorney at Law in cooperation with IVVK Lawyers.