From January 1, 2023, the System of Electronic Invoices (“SEF”) became mandatory for all private sector entities that are liable for VAT, which means that from the aforesaid date they are required to register for using the respective service, as well as to send all invoices for goods and services to other entities that use electronic invoices through this service.

What does the law prescribe?

Pursuant to the Law on Electronic Invoicing (Official Gazette of RS no. 44/2021, 129/2021 and 138/2022) (“the Law”), the provisions of this regulation relating to the obligation to issue and store electronic invoices from transactions between private sector entities apply from January 1, 2023.

In this respect, according to the legal definition, a private sector entity is a subject liable for VAT, except for a public sector entity (which is defined as an entity from the state sector, in terms of the law regulating the budget system, as well as a public company, in terms of the law governing the legal status of public enterprises, regardless of whether it is included in the state sector).

What about private sector entities that are not subject to VAT?

It follows from the above that private sector entities that are not liable for VAT do not have the obligation to register and use SEF. However, there are certain exceptions to this rule, namely:

• From May 1, 2022, the obligation of a private sector entity to issue an electronic invoice to a public sector entity is in force. Consequently, although in terms of the Law such private sector entity is not obliged to use SEF, in case it issues invoices to public sector entities, it shall be obliged to register on SEF as a voluntary user, and to use it for the purposes of issuing and receiving electronic invoices to all SEF users.
• In addition to the above, private sector entities that are not liable for VAT and that do not issue invoices to public sector entities can voluntarily register, i.e., use SEF for issuing other invoices in connection with their business electronically.

What if one party is obliged to use SEF, and the other is not?

According to the above-mentioned provisions of the Law, SEF is required for:

• issuing invoices to public sector entities; and
• issuing invoices in relations between private sector entities that are in the VAT system.

For other economic entities from the private sector, which have not voluntarily registered with SEF, invoices will be issued, i.e., sent and received as before – in paper form or via e-mail.

In connection with transactions between SEF users and other entities, it should be taken into account that individual VAT records are filled out in all situations where the SEF user is a tax debtor in terms of the Law on Value Added Tax.

The list of SEF users is available on this link.

Other doubts

On the website of the Ministry of Finance (еФактура), it is possible to ask questions in order to eliminate doubts regarding the registration and use of SEF, while the said ministry has also published answers to the most frequently asked questions on the same website. In addition to the aforesaid, the Union of Employers of Serbia recently held an online consultation with representatives of the Ministry of Finance, in order to provide answers to the questions regarding the implementation of the Law.

Thus, for example, the Ministry of Finance clarified that an invoice sent through SEF represents a credible document in terms of the Law on Enforcement and Security, regardless of its status, i.e., whether it was accepted or rejected by the recipient. If the issuer considers that such invoice is correct, it may initiate the enforcement procedure based on it.

Furthermore, according to the instructions of the Ministry of Finance, associations are not obliged to invoice membership fees through SEF, provided that it is only a membership fee that is charged in order to acquire the status of a member in the association. However, if there is another turnover (service) at the same time, an electronic invoice must be issued. In addition, the question is to how to proceed in case of collection of annual membership fees.

On the other hand, banks are obliged to submit electronic invoices via SEF for every commission collected with respect to transactions through a business account (to legal entities and entrepreneurs), given that a commission is, by its definition, a fee for a performed banking service, and accordingly represents a transaction in terms of the Law.

One of the novelties is that now advance invoices are issued for each payment according to the pro-invoice, even in situations where the advance payment was received in the same tax period for which the final invoice is issued.

With the beginning of the application of the SEF to users from the private sector, numerous doubts arose regarding the proper application of the provisions of the Law, which will undoubtedly be resolved only in practice.

This article is to be considered as exclusively informative, with no intention to provide legal advice. If you should need additional information, please contact us directly.