What is VAT representative?
VAT representative is a company, usually accounting, or a tax consultant, registered for this activity in Bosnia and Herzegovina, which calculates, applies for, and performs payment of VAT in Bosnia and Herzegovina on behalf of foreign entity performing its operating activities in Bosnia and Herzegovina without its establishment on the territory of BiH.
Who needs VAT representative?
If service provider, not based in Bosnia and Herzegovina, performs activities on territory of Bosnia and Herzegovina, which are by VAT law taxable in Bosnia and Herzegovina, service provider may nominate VAT representative. In the case VAT representative is not nominated, the local company – recipient of services will be obliged to perform calculation and payment of 17% VAT on such services rendered on territory of. Usual example of service taxable in B&H are activities of construction works, supervision and design services, related to the immovable property located in Bosnia and Herzegovina.
How this works in practice?
VAT representative nominated by foreign company is registered as VAT obliger in accordance with the article 60 of VAT Law. For the purpose of registration, agreement on VAT representation, a contract as proof that non resident carries out taxable transactions on territory of BiH, documents on identification of the foreign company, including identity documents of owners and legal representatives are submitted to the tax office. VAT representative will open a bank account solely for purpose of payment and VAT collection on behalf of foreign company. After the registration, all invoices, taxable on territory of BiH are charged with 17% VAT with the right of deduction of deductible input VAT charged from another tax obliger.
The taxpayer and nominated VAT representative are jointly and severally responsible for the tax calculated and paid in accordance with the VAT law of Bosnia and Herzegovina.