Corporate income tax
The standard tax rate is 15 percent. Tax incentive is offered in the way of tax exemption from a corporate income tax for a period of time up to 10 years (proportionally to the level of investments) in the event that the company applying for tax exemption cumulatively secures the investment of app. 8,5 – 9 million € in its fixed assets, and, throughout the investment period, employment of minimum 100 employees for an indefinite term.
Withholding tax on dividends distribution
The standard tax rate for shareholders – legal persons is 20 percent, and for shareholders – individuals are 15 percent. Please note that Serbia disposes of a wide range of Double Tax Treaties (DTTs) including more than 50 countries – thus allowing more favorable tax treatment of dividend distribution, as well as avoidance of double taxation relevant to the various type of income.
Serbia has signed DTTs with the following countries:
- Republic of Korea
- Bosnia and Herzegovina
- Slovak Republic
- Sri Lanka
- Czech Republic
- United Arab Emirates
- United Kingdom
- North Korea
Withholding tax on royalties, interest, lease of real estates and other assets in the Republic of Serbia
The standard tax rate is 20 percent. More favorable tax regime may be applied based on DTT, if applicable. This also refers to services rendered in Serbia by non-resident to a Serbian resident.
Value Added Tax (VAT)
The standard tax rate is 20 percent, and it is applicable to trade of goods and services on the Serbian territory, as well as for importation of goods into Serbian territory. VAT registration threshold amounts to 8 million RSD (app. 65.000,00€) in a period of 12 months.
Personal Income Tax
The Personal Income Tax rate in Serbia is 10 percent. Additional contributions are shared between employee and employer, where contributions paid by an employee are rated at 19.90 percent: 14 percent state pension fund, 5.15 percent state health fund, 0.75 percent unemployment fund.
Additional contributions by the employer are rated at 17.90 percent: 12 percent state pension fund, 5,15 percent state health fund, 0.75 percent unemployment. This sets the total Social Security Rate at 37.80 percent.
Also, the tax burden for employers can be reduced through a variety of financial and tax incentives. The tax loss stated in the tax return can be carried forward and offset against future profits over a period of up to 5 years.
If a taxpayer already paid tax on the profit generated abroad, he is entitled to a Corporate Profit Tax/Personal Income Tax credit in Serbia to the already paid amount, and vice versa (provided there is a Double Taxation Treaty with the country of residence of the taxpayer).
Serbia and Turkey have Double Taxation Treaty assuring 5 – 10 percent tax rate for dividends distribution and other interesting advantages.
Annual Income Tax
Annual income tax for higher salaries is rated at 10 percent and is set for annual income above the threefold of the average annual salary in Serbia, while the rate of 15 percent is set for the annual income above the amount of 6 times average annual salary in Serbia.