Flat-rate entrepreneurs and VAT

Flat-rate entrepreneurs in Serbia are in principle exempt from VAT until they cross the statutory turnover threshold.

Threshold for mandatory VAT registration

Since 2024: 8.000.000 RSD of total turnover in the last 12 months.

Note: The threshold was raised from the previous 6,7 million RSD as of 01.01.2024.

When do you become a VAT payer?

Mandatory — when your turnover in the last 12 months exceeds 8.000.000 RSD:

You must register for VAT within 15 days of crossing the threshold
From the registration date, you charge VAT on all invoices

Voluntary — you may register before reaching the threshold if:

You work with companies that are VAT payers and want to deduct input VAT
You import goods or use services from the EU

VAT rates

Rate	Applies to
20%	Standard rate — IT services, consulting, most services
10%	Food, medicines, books, hotel services
0%	Exports, international services

VAT on services to foreign clients

If you provide services to a foreign client (outside Serbia), that turnover does not count toward the VAT threshold and is invoiced without VAT (exempt under Article 24 of the VAT Act).

Example: a Serbian developer working for a US company — that income is not in the VAT base.

Flat-rate entrepreneur + VAT = end of flat-rate status?

Yes. A VAT payer cannot be a flat-rate taxpayer. Upon entering the VAT system:

You register for taxation on actual income (instead of flat-rate)
You keep full accounting books
You file monthly/quarterly VAT returns

Advice

If you are close to the 8 million threshold, consult a tax advisor before crossing it — there are legal ways to optimize your revenue structure.

VAT and Flat-Rate Entrepreneurs — When VAT Is Payable