Serbian taxation system belongs to the group of jurisdictions with lowest tax rates in Europe and remained well below Europe average corporate and personal tax rate in 2019.
This is important news for everyone wishing to start new business, especially having in mind tax rates in other jurisdictions in Europe, like Czech Republic (19%), Hungary (19%) and similar competing solutions, not to mention Western European jurisdictions. Average corporate tax rate in Europe is 22,5%, that puts Serbia in the group of traditionally favorable countries, like Cyprus, where tax rate is only 2,5% lower.
Tax year is the calendar year but may be shorter than 12 months in case activities start or terminate during a calendar year or there is a change in the status of the entity.
The taxable base is calculated in the tax balance sheet, based on the profit and loss account adjusted for tax purposes. Taxable income includes both business income and capital gains. Taxable base is equal to difference between income and expenses.
Branch remittance to mother company is not a subject to dividend tax, given that the funds are moving inside the same legal entity, which unarguably makes this structure perfect for revitalization of old or inactive legal entities. Also, special legal arrangements between mother company and the branch give opportunity to receive funds and pay on behalf of the mother company, without generating revenue.
Serbian asset protection and pilot entities remain one of the world’s best, especially given that dividends paid by a Serbian resident company to another Serbian company are exempt from corporate income tax. Dividends received by a Serbian resident company holding at least 10% of the shares in a non-resident company for one year are eligible for a credit for foreign tax paid and the dividends.
Old tax havens can’t serve their purpose anymore, yet popular alternatives mean you’ll have to give up much of your profits? You want to pay less taxes? Welcome to Serbia!