VAT Rates in Serbia: What Goes at 20%, What at 10%, and Where Businesses Slip

Serbia has two VAT rates: the general rate and the special, reduced rate. Sounds simple, but a wrong rate on an invoice is one of the mistakes the tax authority spots most easily and collects most reliably, with interest. Here is how the rate system works and where businesses most often get it wrong.

Two rates

• The general 20% rate applies to most supplies of goods and services: it is the default whenever the special rate is not explicitly prescribed.
• The special, reduced 10% rate applies only to goods and services the law explicitly lists, such as basic foodstuffs and certain other categories.

The key rule: the reduced rate is an exception to be proven, not assumed. If an item or service is not explicitly on the statutory list, the general rate applies.

There are also VAT-exempt supplies

Besides the two rates, the law recognizes VAT-exempt supplies, with or without the right to deduct input tax, for example exports or certain activities. An exemption is not the same as a reduced rate and has its own proof rules.

Where businesses get it wrong

• Mixed assortments. Retail and hospitality often sell items at both rates in the same transaction: the sales system must classify every item precisely.
• Bundled services. A service accompanying a product does not automatically inherit its rate: what is the principal supply and what is ancillary is assessed by rules, not by price-list logic.
• Regulatory change. The reduced-rate list changes over time. The rate that applied when you started is not guaranteed to be the same today, so we verify specific items at the time of invoicing.

Why this matters for your margin

Charge 10% where 20% applies and you owe the difference, with interest. Charge 20% where 10% applies and you are more expensive than competitors for no reason. Correct rate classification is literally money, which is why it is part of our accounting service.

Not sure about your items?

Send us your price list or assortment: a message is enough to start, or book a conversation right away. We will go through your items and tell you exactly what goes at which rate and why.