As one of the last countries in Europe, Serbia introduced VAT on 1 January 2005. Although Serbia has not even applied yet for membership of the EU, just like Montenegro, its VAT legislation is largely modelled after the EU Sixth Directive. However, in some respects, the Serbian VAT legislation deviates from the EU template. In this article, the authors describe Serbia's new legislation and, in particular, its deviations from the Sixth Directive.