Guide
Switching from flat-rate to bookkeeping
We handle the entire switch from flat-rate to keeping business books, from filing with the Tax Administration and, where needed, changes with APR, to setting up bookkeeping and new records, without interrupting your business.
Switching from flat-rate to bookkeeping means an entrepreneur stops paying the assessed monthly tax on a flat-rate determined income and starts being taxed on actual profit, with the obligation to keep business books. This happens when the flat-rate scheme is no longer possible, for example when annual turnover exceeds the prescribed threshold (six million dinars under the current rules) or when the activity is among those excluded from flat-rate taxation, but also when the flat-rate simply stops being worthwhile. The change affects how much tax you pay, which records you keep and which deadlines you must meet. That is why it matters to prepare the switch in time and carry it out properly, so you neither pay more than you should nor get fined for a missed deadline.
What you should know
- The flat-rate scheme is no longer possible when annual turnover exceeds the prescribed threshold (six million dinars under the current rules), when you perform an activity excluded from flat-rate taxation (for example advertising and market research, accounting and audit services, wholesale trade), or when you enter the VAT system, since a VAT payer cannot keep books on a flat-rate basis.
- If you cross the prescribed turnover threshold during the year, you switch to keeping business books from the day after the deadline expires for filing the tax return for the period in which the threshold was crossed, while for a voluntary switch you file a request with the Tax Administration by 31 December of the current year for it to apply from 1 January of the next.
- Instead of the assessed monthly tax set by a ruling, taxation is based on the actually realized profit at a 10 percent rate, and the entrepreneur may opt to pay themselves a personal salary on which tax and contributions are due.
- Instead of the KPO ledger, you begin keeping business books under the single or double-entry system, with records of income, expenses, fixed assets and, where applicable, goods and inventory.
- On switching, you take a stocktake of assets and liabilities as at the changeover date and draw up an opening (tax) balance sheet, which is the starting point for the new bookkeeping.
- On entering the VAT system you start issuing and receiving e-invoices via SEF (the e-Invoice System), filing VAT returns for the tax period and, where prescribed, using electronic dispatch notes (eOtpremnice) in line with the regulations.
How we handle it
- 01 Check and analysis We check why the switch is needed (crossing the turnover threshold, an excluded activity or VAT) or whether it pays off, and we calculate how tax on actual profit will look compared with your current flat-rate.
- 02 Preparing the switch We determine the exact changeover date and choose the bookkeeping system and personal salary setup, then prepare the filings for the Tax Administration and, where needed, changes with APR.
- 03 Stocktake and opening balance We take a stocktake of assets and liabilities as at the changeover date and draw up the opening tax balance sheet that becomes the basis of your new bookkeeping.
- 04 Setting up records We open the business books, chart of accounts and fixed-asset records, and on entering VAT we register you and connect you to SEF for e-invoices.
- 05 Ongoing accounting and deadlines We take over regular posting, the calculation of tax and contributions and the filing of tax and VAT returns, keeping track of all the new deadlines.
Company formation
We register your company with APR and handle all tax and banking obligations.
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