Dttl Tax Serbiahighlights 2015

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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

Serbia Highlights 2015


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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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Dttl Tax Serbiahighlights 2015