Extra-EU Firm Charging VAT to EU Companies
Thread poster: Cedomir Pusica

Cedomir Pusica  Identity Verified
Serbia
Local time: 07:38
Member (2009)
English to Serbian
+ ...
Oct 10, 2012

Hi all,

I am registered in Serbia and as of recently I am obliged to include VAT on all invoices to Serbian clients. That is fine. What bothers me is charging VAT to all foreign clients as well, according to my accountant. She looked through all regulations and laws and could not find any exemption (lawyers, accountants, for example, are exempt from charging VAT to foreign entities).

I believe there is the EU Directive regarding no-VAT on sales of translation services outside EU, and while I think it would be just to have reciprocity here, it seems not to be the case.

Are you familiar with it? Have you ever bought translation services from outside EU and been charged VAT?

Thank you!

Cedomir


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Heinrich Pesch  Identity Verified
Finland
Local time: 08:38
Member (2003)
Finnish to German
+ ...
I don't think so Oct 10, 2012

Of course I don't know about Serbia, but when I invoice non-EU customers I do not charge VAT, and for EU-customers there is a special method circumventing VAT. I believe you charge VAT only to domestic customers.

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Cedomir Pusica  Identity Verified
Serbia
Local time: 07:38
Member (2009)
English to Serbian
+ ...
TOPIC STARTER
That's what I thought too... Oct 10, 2012

... but then my accountant said that I MUST charge VAT. I would be quite disappointed if this turns out to be true, since, as you mentioned, EU companies/individuals would not charge me VAT.

This is why I've decided to bring up the issue here and hope that someone would know the answer.

Thanks in any case!


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Annamaria Amik  Identity Verified
Local time: 08:38
Romanian to English
+ ...
Ask another accountant Oct 10, 2012

You should ask another Serbian accountant. Indeed, EU countries don't charge VAT to other EU countries (at least not for translation services), but not sure about non-EU countries - I believe they are governed by their own tax rules, not EU tax rules.
Normally, you don't charge VAT on export, especially because the client who actually pays that VAT cannot claim it back.


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Sheila Wilson  Identity Verified
Spain
Local time: 06:38
Member (2007)
English
+ ...
Is this the actual EU VAT, or Serbia's own tax? Oct 10, 2012

Serbia isn't a member of the EU yet, is it? What we know as VAT within the Eu has all sorts of confusing (to me, anyway) rules about what to do when goods/services cross into other EU countries. But I don't think that applies to Serbia, does it?

I don't know if this is an authoritative site, but it clearly says that exports out of Serbia are VAT-free.: http://www.worldwide-tax.com/serbia/ser_other.asp


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Alex Lago  Identity Verified
Spain
Local time: 07:38
Member (2009)
English to Spanish
+ ...
Sheila is right Oct 10, 2012

Sheila is right when she says Serbia is not part of the EU yet, therefore no EU directives apply in Serbia, you have to follow Serbian law.

People sometimes confuse VAT with a European tax, this is not correct a lot of countries that aren't part of the EU have VAT, like Serbia for instance.

So you have to follow Serbian law and therefore unless you have any reason to doubt your accountant's competency (if you do I suggest finding a new CPA asap) then you should listen to their advice.

[Edited at 2012-10-10 13:27 GMT]


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Cedomir Pusica  Identity Verified
Serbia
Local time: 07:38
Member (2009)
English to Serbian
+ ...
TOPIC STARTER
... Oct 10, 2012

Thank you Sheila and Alex,

That's right: Serbia is not part of the EU. However, I don't see it as just that foreigners should pay VAT that they cannot claim back. The accountant's notice came as a surprise to me. I will check the website Sheila suggested and try to communicate it to the accountant (so far, she proved to be very knowledgeable).

I'll certainly write to our Ministry of Finance, although their opinions are not binding.


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Extra-EU Firm Charging VAT to EU Companies

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