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Things To Know About the Tax Regime in Serbia

Things to Know About the Tax Regime in Serbia
Aleksandar Marinković Chief Executive Officer

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:

  1. Albania
  2. Greece
  3. Pakistan
  4. Armenia
  5. Hungary
  6. Poland
  7. Austria
  8. India
  9. Qatar
  10. Azerbaijan
  11. Iran
  12. Romania
  13. Belgium
  14. Ireland
  15. Russia
  16. Belorussia
  17. Italy
  18. Republic of Korea
  19. Bosnia and Herzegovina
  20. Kazakhstan
  21. Slovak Republic
  22. Bulgaria
  23. Kuwait
  24. Slovenia
  25. Canada
  26. Latvia
  27. Spain
  28. China
  29. Libya
  30. Sri Lanka
  31. Croatia
  32. Lithuania
  33. Sweden
  34. Cyprus
  35. Luxembourg
  36. Switzerland
  37. Czech Republic
  38. Macedonia
  39. Tunisia
  40. Denmark
  41. Malaysia
  42. Turkey
  43. Egypt
  44. Malta
  45. Ukraine
  46. Estonia
  47. Moldova
  48. United Arab Emirates
  49. Finland
  50. Montenegro
  51. United Kingdom
  52. France
  53. Netherlands
  54. Vietnam
  55. Georgia
  56. North Korea
  57. Germany
  58. Norway

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.

In general, Serbia is rated 48 among 190 economies in the ease of doing business, according to the latest World bank annual ratings.