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Investment basics:
Currency Serbian Dinar (RSD)
Foreign exchange control Foreignexchange is regulated by the
ForeignExchange Law. Payments must bedocumented for funds to be
transferredabroad and foreign loans must be registeredwith the
central bank.
Accoun ting pr inciples/f inanc ialstatements IAS/IFRS.
Financial
statements must be prepared annually.Principal business entities
These are thejoint stock company, limited liability
company,general/limited partnership, socially andpublicly owned
company and branch of aforeign company.
Corporate taxation:
Residence A legal entity is consideredresident if it is
incorporated in Serbia ormanaged or controlled from Serbia.
Basis Resident entities are taxed on theirworldwide income;
nonresidents are taxedonly on income generated in Serbia.
Taxable incom e Taxable income includesboth business income and
capital gains. Thetaxable base is calculated in the tax
balancesheet, based on the profit and loss accountadjusted for tax
purposes.
Taxation of divi dends Dividends paid by aSerbian-resident
company to another Serbiancompany are exempt from corporate
incometax. Dividends received by a Serbian residentcompany holding
at least 10% of the sharesin a nonresident distributing company for
one
year are eligible for a credit for foreign taxpaid on the
dividends.
Capital gains Capital gains are subject toa 15% tax for
residents (included in theannual income tax return) and 20%
fornonresidents (based on the tax assessment).
Losses Net operating losses may becarried forward for five
years. Capital lossesmay be carried forward and offset
againstcapital gains for five years. The carryback oflosses is not
permitted.
Rate 15%
Surtax No
Al ternat ive minimum tax No
Foreign tax credit Credit is available forforeign tax paid, but
is limited to the amountof Serbian tax payable on the foreign
income.
Participation exemption See underTaxation of dividends.
Holding comp any regime No
Incentives A 10-year corporate income taxexemption is available
for large investors thatinvest over RSD 1 billion in fixed assets
andhire an additional 100 employees over theperiod of investment.
Nonprofit organizationsare exempt from income tax under
conditionsprescribed by law.
Withholding tax:
Dividends Dividends paid to a nonresidentare subject to a 20%
withholding tax, unlessthe rate is reduced under a tax
treaty.Payments made to a person resident in apreferential tax
jurisdiction are subject to a25% withholding tax.
Interest Interest paid to a nonresident issubject to a 20%
withholding tax, unless therate is reduced under a tax treaty.
Paymentsmade to a person resident in a preferentialtax jurisdiction
are subject to a 25%withholding tax.
Royalties Royalties paid to a nonresidentare subject to a 20%
withholding tax, unlessthe rate is reduced under a tax
treaty.Payments made to a person resident in apreferential tax
jurisdiction are subject to a25% withholding tax.
Technical service fees NoBranch remittance tax No
Other Payments made to a nonresident forthe lease of movable and
immovableproperty are subject to a 20% withholdingtax, unless the
rate is reduced under a taxtreaty.
Income from the lease of property andpayments made for services
provided bypersons resident in preferential taxjurisdictions are
subject to a 25% withholdingtax.
Other taxes on corporations:
Capital duty No
Payroll t ax No
Real pro perty tax For taxpayers that followIAS and IFRS fair
value accounting, propertytax is levied on immovable property
locatedin Serbia at a rate of up to 0.4% of the fairmarket value of
the property as of 31December of the previous year.
Social security The employer is requiredto make social security
contributions on anemployee's salary at rates of 12%, 5.15%and
0.75% for pension and disabilityinsurance, health insurance
andunemployment insurance, respectively.
Stamp du ty Stamp duty is payableaccording to a tariff based on
the value of thedocument. If there is no value, a flat
rateapplies.
Transfer tax A 2.5% tax applies ontransfers listed in the
Property Taxes Law,i.e. the transfer of real property,
intellectual
property, etc.Other No
Anti -avo idance ru les :
Transfer pricing Transactions betweenassociated entities (as
defined) must be onarm's length terms. There are
specificdocumentation requirements and transferpricing reports must
be submitted by 30June.
Companies are considered related if onecompany has the ability
to control orinfluence the business decisions of the other
company, if the company holds at least 25%of the shares, stock
or votes in the governingbody of the other company.
Thin capitalization Under the thincapitalization rules, interest
and relatedexpenses are deductible on loans that do notexceed four
times equity for companies (10times equity for banks and
leasingcompanies). In addition, under the transferpricing rules, a
taxpayer must demonstratethat interest that is deductible under the
thincapitalization rules is at an arms length level;
International tax
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otherwise, an adjustment of taxable incomemay be required.
Controlled foreign companies No
Other There is a statutory general anti-avoidance rule.
Disclosure requirements No
Compliance for corporations:
Tax year The tax year is the calendar year,but may be shorter
than 12 months whereactivities start or terminate during a
calendaryear or there is a change in the status of theentity. A
taxpayer can opt for a tax yeardifferent than the calendar
year.
Consolidated returns Residentcompanies may elect group status
and file aconsolidated return. Companies areconsidered a group
where one company(parent company) owns at least 75% of theshares or
stock of another company. The
parent company files a consolidated taxreturn in which gains and
losses of groupcompanies are offset and each companypays its share
of the tax. Once initiated, taxconsolidation must be applied for at
least fiveyears.
Filing requirements Serbia operates aself-assessment regime.
Advance corporatetax is payable in monthly installments. A
taxreturn must be filed and the balance of taxdue paid within 180
days after the end of thetax period for which the tax return is
filed. Incases of a change in status, liquidation or
bankruptcy, the deadline is 15 days from thedeadline for filing
financial statements.
Penalties Penalties may be imposed forfailure to comply with the
provisions in theTax Proceedings and Administration Law.Entities
also may be banned from carryingout their activities.
Rulings Binding rulings are issued uponrequests from
taxpayers.
Personal taxation:
Basis Serbian residents are taxed on theirworldwide income;
nonresidents are taxed
only on Serbia-source income.Residence An individual is
consideredresident for income tax purposes if he/shehas a residence
or center of business and/orvital interests in Serbia, or stays in
Serbia forat least 183 days in the aggregate during thetax
year.
Filing status Spouses are taxedseparately; joint filing is not
permitted.
Taxable inco me The principal taxableforms of income are
employment income,business income, royalties, rent, capital
gainsand other income.
Residents earning income of three or moretimes the annual
average wage in the taxyear are subject to complementary
annualincome tax under the worldwide system.
Nonresidents earnings also are subject tocomplementary annual
income tax, providedtheir Serbia-source income exceeds thesame
threshold.
Capital gains Capital gains are taxed at arate of 15%. Gains
from the sale of assetsthe taxpayer has owned for at least 10
yearsare exempt.
Deductions and allowances Personalallowances are available for
members of thetaxpayer's family that are financiallysupported by
the taxpayer.
Rates The personal income tax ratedepends on the type of income.
The rates are10% for employment income (salary); 10%for business
income; 20% for royalty andother income; and 15% for income
fromcapital, including rental income.
Complementary annual income tax is leviedat progressive rates of
10% or 15%, appliedto net worldwide income (or net Serbia-source
income, for nonresidents) in excess ofa prescribed threshold.
Other taxes on individuals:
Capital duty NoStamp dutyStamp duty is payableaccording to a
tariff based on the value of thedocument. If there is no value, a
flat rateapplies.
Capital acquisi tions tax No
Real prop erty tax Tax is levied on thecatalogue value of real
estate atprogressive rates ranging from 0.3% to 2%.
A 2.5% tax applies on transfers listed in theProperty Taxes Law,
i.e. the transfer of realproperty, intellectual property, etc.
Inheritance/estate tax Tax is levied oninheritances and gifts at
progressive ratesbetween 1.5% and 2.5%.
Net wealth/net worth tax No
Social security The employer withholdssocial security
contributions on behalf of itsemployees at rates of 14%, 5.15%
and0.75% of salary for pension and disability
insurance, health insurance andunemployment insurance,
respectively.
Compliance for individuals:
Tax year Calendar year
Filing and payment Tax on employmentincome is paid under the
PAYE system,under which tax is deducted at source by the
employer. Other income is self-assessed.Individuals must file a
tax return or paywithholding tax, depending on the type
ofincome.
Complementary annual income tax returnsmust be submitted by 15
May each year.
Penalties Penalties may be imposed forfailure to comply with the
provisions of theTax Administration Law.
Value added tax:
Taxable transactions VAT is imposed onthe provision of goods and
services.
Rates The standard VAT rate is 20%, witha reduced rate of 10%.
Certain items areexempt or zero-rated.
Registration The registration threshold forVAT purposes is an
annual turnover of RSD8 million.
Filing and payment VAT taxpayers withtaxable income above RSD 50
million mustfile a monthly VAT return within 15 days afterthe end
of the tax period and pay thedifference between the amount
specified inthe tax return and the input VAT incurred.
VAT taxpayers with taxable income belowRSD 50 million must file
a quarterly returnwithin 20 days after the end of the tax
period.
Source of tax law: Corporate IncomeTax Law, Personal Income Tax
Law,Property Taxes Law, VAT Law, TaxProceedings and Administration
Law
Tax treaties:Serbia has concluded 54 taxtreaties.
Tax author ities: Tax Administration,Customs Administration
International organizations:Central
European Free Trade Agreement, OECD(observer status)
Deloit te contactMarijana
VujosevicE-mail:[email protected]
mailto:[email protected]:[email protected]:[email protected]
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