VAT is a general consumption tax charged and paid on the supply of goods and services. It is ultimately borne by the final consumer.

The applicable VAT rates are:

Standard rate: 20%
Reduced rate: 10%
The reduced rate applies to essential goods and services, such as basic food products (bread, milk, flour), medicines, prosthetic devices, dialysis materials, newspapers, textbooks, natural gas, etc.

VAT Exemptions
VAT exemptions are divided into the following categories:

Exemptions with the right to deduct input VAT, as provided for in Article 24 of the VAT Law.
Exemptions without the right to deduct input VAT, as provided for in Article 25 of the VAT Law.
VAT exemptions on the import of goods, as provided for in Article 26 of the VAT Law.
Right to Deduct Input VAT
In order for a taxable person to be entitled to deduct input VAT, the following conditions must be met:

A valid supporting document must be available.
The invoice must have been received and recorded in the relevant tax period for which the VAT return is submitted.
The input supply must be related to the taxable person’s business activities.
Special VAT Schemes
Special VAT schemes apply to:

Small taxable persons;
Farmers;
Travel agencies;
Transactions involving second-hand goods;
Transactions involving works of art.
VAT Tax Periods
The VAT tax period may be monthly or quarterly. Quarterly tax periods are divided into four quarters:

January–March: the VAT return must be submitted by 15 April.
April–June: the VAT return must be submitted by 15 July.
July–September: the VAT return must be submitted by 15 October.
October–December: the VAT return must be submitted by 15 January.
On the 15th day of the month, two obligations must be fulfilled:

Submission of the VAT return (PPPDV) electronically through the eTaxes portal.
Payment of the calculated VAT amount in the prescribed manner.
Changing the VAT Tax Period
The VAT tax period may be changed. A taxpayer subject to quarterly VAT reporting may voluntarily switch to monthly reporting, but only during the period from 20 December to 31 December of the current year, with the change taking effect in the following calendar year.

VAT Registration – Entrepreneurs and Companies
A lump-sum taxed entrepreneur (paušalac) who does not exceed the VAT registration threshold is not registered for VAT purposes and is not required to submit a VAT return (PPPDV). Such an entrepreneur must not issue invoices showing calculated VAT.

If the entrepreneur exceeds the prescribed threshold, they become subject to mandatory VAT registration from the following day.

A limited liability company (DOO) or an entrepreneur maintaining business books may become VAT-registered from the date of establishment, voluntarily, or through mandatory registration once the prescribed threshold is exceeded.

POPDV Form – VAT Calculation Overview
The POPDV form is a VAT calculation overview used to record supplies of goods and services subject to VAT. It contains information on all relevant transactions and changes.

The form is submitted together with the VAT return and serves as the basis for reporting the aggregate amounts in the VAT return.

Main POPDV Sections
8a – Incoming invoices showing VAT.
8b – Incoming invoices without VAT.
8v – Incoming invoices issued by VAT-registered persons on which VAT has not been stated.
8g – Foreign entities.
Foreign entities without a VAT obligation;
Domestic entities that are not VAT taxpayers;
Purchases of goods and services outside the Republic of Serbia.