Frequently asked questions on VAT

The reduced 8% rate applies only to a limited list of products, which includes among others milk and dairy products, wheat and wheat products, and books and school textbooks. Everything outside that list is taxed at 18% — TAK has clarified, for example, that grapes and protective masks carry the standard rate. So before setting your prices, verify where your product falls under Law no. 05/L-037.

Not necessarily, because there are two kinds of exemption. Exemptions with the right to credit (such as exports) let you charge no VAT on your sales while still deducting the VAT on your purchases. Exemptions without the right to credit (such as medical services or residential rent) bar you from deducting the VAT on purchases — it stays with you as a cost. This distinction feeds directly into your margins and prices.

A tax invoice must carry a serial number and date, the seller's name, address, fiscal number and VAT number, the buyer's details, the description and quantity of the goods or services, the price excluding VAT, the rate applied and the VAT amount shown separately. Where an exemption or the reverse charge applies, the invoice must include the relevant legal reference — for example 'Reverse charge under Article 52'. A deficient invoice can deny the buyer the right to deduct the VAT.

Yes, voluntary registration is open to any person carrying out economic activity, regardless of turnover. It usually makes sense when your main clients are VAT-registered businesses or when you have large investments with deductible VAT; it does not when you sell mostly to final consumers, because your end price goes up. Once registered, you file from the date of registration and your obligations are the same as any other filer's — a cost-benefit calculation Fryti Audit runs for clients before they apply.

No. At the moment of registration you are entitled to recognise deductible VAT on the goods you hold in stock, provided you have the purchase invoices and a stock list as at the registration date. This VAT is used as a credit against your future liabilities, but no refund can be claimed for it.

Yes, and without amending past returns: the law allows deductible VAT to be taken in any later period, but no later than the last tax period of the year following the year of the invoice. So an invoice from 2025 can be recorded at the latest in the December 2026 return. After that deadline the right to deduct is lost.

For cars used both for business and privately, the VAT deduction is capped at 50% — on the purchase as well as on fuel and maintenance. A full 100% deduction is accepted only if you convincingly document exclusively business use, for example with a travel log and mileage records — as TAK has accepted for the patrol vehicles of a security company.

The VAT liability arises at the earliest of three moments: delivery of the goods or completion of the service, issue of the invoice, or receipt of payment. So on an advance, VAT is charged and declared in the period the payment is received, not when the supply takes place. The same applies to gift cards: VAT is declared when the client pays for the card, not when they redeem it.

Exports are an exempt supply with the right to credit: the invoice is issued without VAT, provided the goods' exit is evidenced by the customs export document. That means you charge no VAT on the sale but keep the right to deduct the VAT on the related purchases. Without the customs evidence, TAK may treat the sale as a domestic supply taxable at 18%.

For most services supplied to foreign businesses, the place of supply is where the recipient is established, so the invoice is issued without VAT and the sale is reported as an exempt supply with the right to credit, in box 10 of the return. Mind the exceptions: services connected to immovable property are taxed where the property is located, while advertising actually carried out in Kosovo for a Kosovar audience is invoiced with VAT even when the customer is a foreign company.

The right to deduct import VAT arises when the single administrative document (the SAD, or customs declaration) is received, not from the date of the foreign supplier's invoice. The SAD is also the basis for calculating the deductible VAT; if customs revalues the goods later, the adjustments are made in the return for the month of the revaluation, without correcting past periods.

Services received from abroad fall under the reverse charge: as the recipient you calculate the 18% VAT yourself on the value of the foreign invoice, declare it as VAT charged and deduct it in the same return if the purchase serves taxable supplies (boxes 28 and 65). The net effect is usually zero, but failing to declare it is a violation — a treatment Fryti Audit prepares for clients every month as part of the VAT return.

The letting of business premises by a VAT-registered landlord is invoiced at 18%, while rent for permanent residential use is exempt from VAT. Note that letting counts as economic activity even for individuals not registered as a business — once the threshold is crossed, the obligation to register for VAT arises. On top of that, a business tenant withholds 9% tax at source on the rent, calculated on the amount excluding VAT.

The supply of houses and apartments intended for residential use is exempt from VAT without the right to deduct, regardless of whether the buyer is an individual or a business; these sales are reported in box 9 of the return. Commercial units, on the other hand, are invoiced with 18% VAT. This split means that developers of mixed-use buildings cannot deduct all the VAT on construction, only the proportional share.

Construction has a special scheme: when both parties are VAT filers and the supply is a construction service, the subcontractor invoices the contractor without VAT, citing the reverse charge, while the main contractor invoices the investor with VAT under the general rules. The reverse charge does not apply when only goods are supplied, when one party is not a VAT filer, or when the investor is invoiced directly.

For purchases that serve both kinds of sales, VAT is deducted only in part, using the deduction coefficient — the ratio of supplies with the right to credit to total turnover. The coefficient is applied during the year on a provisional basis and corrected in January of the following year with the final figures; even the shared areas of a mixed commercial-residential building are apportioned by their intended use. It is one of the most delicate VAT calculations, and one Fryti Audit builds and documents for clients with mixed activities.

A credit note (or a debit note, as the case may be) is issued with the consent of both parties, the return is recorded in the returned-sales book together with a written record, and the VAT is reduced in the period the return takes place — without amending past declarations. If you received a payment with VAT for a service that was never performed, the client is refunded the full amount including VAT, not just the net.

A refund can be requested once the VAT credit exceeds €3,000 and has been carried forward for three consecutive tax periods; exporters enjoy more favourable conditions. The request is accompanied by the tax invoices, contracts and proof of payment, where payments above €500 must have been made through the bank; an invoice does not have to be fully paid to be included in the request. Fryti Audit handles the preparation of the refund file as a project in its own right for clients.

The law allows a VAT adjustment for bad debt, but under strict conditions: the VAT must have been declared and paid earlier, the debt must have been written off the books as uncollectible, and you must show that all reasonable steps were taken to collect it, including enforcement or court proceedings for larger amounts. Without this documentation TAK will not recognise the adjustment. If the debt is collected later, the VAT becomes payable again.

Deregistration can be requested when turnover for the last 12 months falls below the registration threshold, while those who registered voluntarily must stay registered for a minimum period set by law before requesting deregistration. Beware: on deregistration, the VAT deducted on the stock and assets you still hold must be adjusted, which often creates an amount payable. So before deciding, a precise cost-benefit calculation is worth it — an analysis Fryti Audit carries out for clients together with the procedure itself at TAK.