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The Obligation of Issuing an Electronic Invoice – Another Step towards Digitization


In the past few years, Serbia has been moving towards digitization more and more, so we are witness to a number of regulations and procedures being adopted in order to make the functioning of the economy more digitized. The novelties which stand out in particular are the Law on Fiscalization and the Electronic Invoicing Law. The adoption of both laws was announced simultaneously, and putting an end to the gray economy was listed as the main goal of these laws.

The Law on Fiscalization introduces significant novelties in the procedure of issuing invoices and recording the turnover of retail goods (more on this topic in this post). On the other hand, the Electronic Invoicing Law regulates the new manner of issuing, sending, receiving, processing, and storing invoices, as well as the new content of invoices, which will allow the Tax Administration to access data contained in the invoices. The aim of these regulations is to, among other things, allow the state to track cash flow more efficiently.

The Electronic Invoicing Law entered into force on May 7, 2021, while the obligation of companies to act in accordance with the law was postponed till January 1, 2022, July 1, 2022, and January 1, 2023, depending on whether the invoice is being issued to entities of the public or private sector, and whether an entity from the public or private sector is issuing the invoice. Additionally, a set of bylaws that regulate the procedure of issuing invoices in more detail were adopted as well. The implementation of these bylaws was postponed until January 1, 2022.

Start of the Implementation of the Law

The Electronic Invoicing Law foresees that electronic invoicing systems can be used when technical-technological conditions are established. According to the data from the website of the Ministry of Finance, the start of optional application of the e-invoicing system is announced for October 2021, so public and private entities will be able to issue and receive electronic invoices (if they want to) as of then.

On the other hand, the obligation of companies to start to act in accordance with the law and use the electronic invoicing system is prescribed differently for entities from the public and private sector:

electronic invoicing law e invoicing law

What is an Electronic Invoice and to Whom Does the Obligation of Issuing Electronic Invoices Apply?

Pursuant to the Electronic Invoicing Law, the electronic invoice represents a request for payment on the grounds of transactions with compensation, same as any other document which influences the payment and the amount of payment, invoice which is issued for turnover without compensation, as well as received advances, which is issued via the system of electronic invoices. To put it simply, electronic invoices are those invoices that are issued, received, and processed only and explicitly electronically.

The obligation of issuing electronic invoices exists only for private and public sector entities, on the grounds of mutual transactions, as well as for the VAT of attorneys of foreign entities who are registered for VAT in the Republic of Serbia, on the grounds of transactions with entities from the private and public sector.

The Law also foresees certain exceptions from the obligation of issuing an electronic invoice. So, the obligation of issuing electronic invoices does not exist for:

1. retail turnover and received advance for retail turnover pursuant to the Law on Fiscalization;

2. a contractual obligation directed towards service users from international framework agreements

3. procurement, modernization, and repair of weapons and military equipment, procurement of security-sensitive equipment, as well as related procurements of goods and services.

What Does the Electronic Invoice Include?

Pursuant to the Law, as well as the Rulebook of the Ministry of Finance (available in Serbian), the content of the electronic invoice is described in detail, however, it hasn’t changed much. Besides the elements which have to be included according to the currently valid regulations (name, address, TIN, CIN, business account of the issuer, etc.), it is foreseen that, if the electronic invoice is issued to the public sector entities who use public resources, i.e., if it is issued to those public sector entities, such invoice has to include the personal identification number of the user of public resources.

How are Electronic Invoices Issued?

Electronic invoices are issued, sent, received, and stored via the electronic invoices system. The electronic invoices system is an information-technical solution that is governed by the competent unit of the Ministry of Finance, which shall be responsible for its functioning. The manner of invoicing won’t be changed much, but instead of sending invoices directly to clients, the invoices will be sent through the electronic invoices system.

In order to access the electronic invoices system, the users will have to register through the web portal, in accordance with the directions which will be published on the website of the Ministry of Finance.

Starting an Enforcement Proceeding Based on an Electronic Invoice

During the announcement of introducing the obligation of issuing electronic invoices, the possibility of starting an enforcement proceeding based on an electronic invoice in case the debtor doesn’t pay their creditor what they owe was posed as one of the questions.

The answer to this dilemma is given in the Electronic Invoicing Law. Namely, the Law explicitly prescribes that an electronic invoice shall be considered a valid document if it is issued through the electronic invoicing system. Simply put, in case the debtor does not pay the creditor the claim, the creditor will be able to start an enforcement procedure, same as before the introduction of the new Law, without any additional expenses.

The new Law on electronic invoicing introduces a lot of novelties, and both public and private entities will have to comply with these novelties. However, it is expected that the electronic invoicing system will greatly speed up the procedure of issuing invoices and that there will be much less room for human errors. The benefits of the new system of issuing invoices are greater transparency and legal security, avoiding non-payment of invoices under the expected benefits of the new system of issuing invoices, as well as protecting the environment, and above all, greater control of cash flow by foreign authorities. It remains to be seen whether the expectations on the implementation of the new Electronic Invoicing Law are justified or not. In the meantime, companies will have to introduce a new manner of issuing invoices to their business practice.

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