According to the opinion of the Ministry of Finance no. 011-00-01091/2022-04 of 1 December 2022, a natural person – adult citizen of the Republic of Serbia with residence in the territory of Serbia, who purchases his/her first apartment, shall be eligible for VAT refund for this purchase given that the prescribed requirements are met. The fact that the address passivation of such natural person is indicated in the records of the competent authority shall not affect exercising of right to VAT refund for this purchase.

VAT refund

Namely, VAT refund to the buyer of the first apartment shall be done in accordance with Article 56a of the Law on Value Added Tax (Official Gazette of RS no. 84/2004, 86/2004 – corr., 61/2005, 61/2007, 93/2012, 108/2013, 6/2014 – adjusted RSD am., 68/2014 – other law, 142/2014, 5/2015 – adjusted RSD am., 83/2015, 5/2016 – adjusted RSD am., 108/2016, 7/2017 – adjusted RSD am., 113/2017, 13/2018 – adjusted RSD am., 30/2018, 4/2019 – adjusted RSD am., 72/2019, 8/2020 – adjusted RSD am., 153/2020 and 138/2022 – “the Law“), and Article 276 of the Rulebook on Value Added Tax (Official Gazette of RS no. 37/2021, 64/2021, 127/2021, 49/2022 and 59/2022 – “the Rulebook“), according to which:

1. A natural person – adult citizen of the Republic of Serbia with residence in the territory of Serbia, who purchases the first apartment, shall be eligible for VAT refund for this purchase, based on a filed request, providing that:

• from 1 July 2006 until the date of notarization of the purchase agreement, based on which the first apartment is acquired, he/she did not have in his/her ownership and/or co-ownership an apartment in the territory of Serbia; and
• the agreed price of the apartment, including VAT, is fully paid to the seller’s bank account and/or appropriate account according to the law in case the apartment is sold as mortgaged real estate, or within an enforcement procedure, when the payment of the purchase price, including VAT, is done by payment to appropriate accounts under the law;

2. Accordingly, in terms of Article 56a of the Law, the buyer of the first apartment shall exercise the right to VAT refund on the basis of written request filed to the relevant tax authority on RFN Form, along with the following documentation:

• birth certificate;
• citizenship certificate;
• proof of residence (certified copy of ID card or certificate of residence);
• certified copy of the purchase agreement;
• invoice or other document serving as invoice for the apartment purchase, with expressed VAT;
• proof that the agreed price for the apartment, including VAT, is fully paid to the bank account of the seller (i.e., proof that the amount not less than the VAT amount calculated for the first transfer of right to dispose of the apartment was paid on basis of the agreed purchase price, including VAT, to the bank account of the seller in case of purchasing apartment under non-profit terms from Article 56a, para. 3 of the Law); and
• certified statement of the buyer that he/she purchases the first apartment.

Having performed the control of fulfilment of requirements for exercising the right to VAT refund, the responsible tax authority shall pass a decision on the request within 30 days after the submission of the request and VAT refund shall be done within 15 days after the date of delivery of the decision.

The Law also prescribes that the following persons shall not be entitled to VAT refund:

• buyer of the apartment who exercised the VAT refund based on the first apartment purchase;
• a household member of buyer of the first apartment for which the latter exercised VAT refund, in case when such household member is purchasing the apartment;
• buyer of the apartment who acquired the first apartment without seller’s obligation to pay for such apartment the tax on transfer of absolute rights on basis of first apartment purchase, according to the law on property taxes; and
• a household member who acquired the first apartment without seller’s obligation to pay for such apartment the tax on transfer of absolute rights on basis of the first apartment purchase, according to the law on property taxes, and which exercised such tax relief.

Address passivation

According to the Law on Residence and Whereabouts of Citizens (Official Gazette of RS no. 87/2011), residence is a place where a citizen settles with an intention of permanent living, i.e., a place where the centre of his/her living activities, professional, economic, social and other connections that prove his/her permanent connection with the place of settlement is; while address passivation is indication in records of competent authorities that the citizen does not live on the address of his/her registered residence or whereabouts.

Impact of address passivation on right to VAT refund

The Law stipulates that the competent tax authority shall pass a decision on VAT refund to the buyer of first apartment upon implemented procedure for control of fulfilment of requirements for exercising the right to VAT refund that need to be met on the day of notarization of the purchase agreement, except for:

• requirements referring to payment of the agreed price, namely
• requirements with regard to apartment purchase under non-profit terms from a local self-government unit or non-profit residential organisation established by a local self-government unit for realising the activities regulated by acts in the field of social housing, the VAT refund may be exercised providing that the amount not less than the VAT amount calculated for the first transfer of right to the apartment disposal was paid on basis of the agreed apartment price, including VAT, to the current account of the seller, and which shall be fulfilled on the day of submission of VAT refund request.

According to the position of the Ministry, a natural person – adult citizen of the Republic of Serbia, with residence in the territory of Serbia, who purchases the first apartment, shall have the right to VAT refund upon purchase of the first apartment, given that the prescribed terms have been fulfilled and according to the procedure regulated by the Rulebook; therefore, the fact that the address passivation of such person was indicated in the records of the responsible authority shall not affect his/her right to VAT refund on this basis.

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.