FYR Macedonia: FYR Macedonia introduces reverse charge mechanism for select categories of services

Elena Kostovska

A decision defining the categories of supply of goods and services for which the VAT responsible taxpayer is considered to be the entity to which the supply is being provided by another VAT-registered company was published in the Official Gazette 45/2014 and is applicable as of March 5 2014.

The decision lists goods and services on which a reverse charge VAT mechanism is applied as of the aforementioned date and onwards. It also defines the appropriate steps that the involved parties need to follow in such transactions. Namely, the provider of the affected goods/services must indicate that "the VAT liability is transferred to the recipient of the goods/services according to Article 32, point 1 of the VAT Law" on the invoices issued. The provider will neither calculate VAT on the outgoing invoice, nor consider such outgoing VAT in their VAT return. The recipient of the goods/service, on the other hand, will now be obliged to calculate and pay the VAT to the Tax Office while also using their right for deduction of such input VAT.

The published list of goods and services is comprehensive and detailed, and includes, among others, the provision of services related to:

• Construction, including maintenance, restoration and removal of buildings or parts thereof;
• Construction of residential and non-residential buildings;
• Construction of roads and highways;
• Construction of railways and underground railways;
• Construction of bridges and tunnels;
• Construction of utility facilities for liquid storage;
• Construction of power lines and telecommunications;
• Construction of hydro facilities;
• Demolition or wrecking of buildings and other facilities;
• Preparatory works on a construction site;
• Electrical installation work;
• Plumbing, sewage and gas installations and heating and installation of air-conditioning devices;
• Plastering, carpentry, flooring and paving;
• Painting and glazing;
• Used materials and repurposed materials, waste, industrial and non-industrial waste materials; and
• Property in the process of forced collection by public bidding (including agricultural land, forests and pastures, buildings – residential or commercial)

It is worth noting that the reverse charge mechanism is only applicable when both the service provider and the service recipient are VAT-registered taxpayers.

Elena Kostovska (elena.kostovska@eurofast.eu)
Eurofast Global, Skopje Office
Tel: +389 2 2400225

Share this article