On December 30, 2020 the Agreement between the Government of the Republic of Serbia and the Government of Hong Kong of the Special Administrative Region of the People’s Republic of China (hereinafter referred to as Hong Kong) on the elimination of double taxation income and property taxes and the prevention of tax evasion and avoidance (hereinafter referred to as the Agreement) entered into force.
We remind you that the Agreement was signed in Belgrade on August 14, 2020 and in Hong Kong, on August 27, 2020, in Serbian, Chinese and English.
In the Republic of Serbia, the Agreement will be applied starting from January 1, 2021., and in Hong Kong, the Agreement applies to each tax assessment year beginning on or after April 1, 2021.
In this regard, the maximum rates of withholding tax on dividends, interest and royalties provided for in the Agreement (which the source state such as the Republic of Serbia, may apply during the payment) are:
5 per cent of the gross amount of the dividends if the beneficial owner is a company which, during a period of 365 days including the dividend payment day, directly owns at least 25 per cent of the capital of the company paying the dividends (for the purpose of calculating that period, changes in ownership that would result directly from a corporate reorganization, such as a merger or demerger of a company that owns shares or pays a dividend, are not taken into account);
10 percent of the gross amount of dividends in all other cases.
10 percent of the gross amount of interest
As an exception to the above, interest arising in a Party (this is on the grounds that Hong Kong, in the formal legal sense, is not a State but a Special Administrative Region of the People’s Republic of China) paid by that Party (the Republic of Serbia) or its political unit or local authority or (in the case of the Hong Kong Special Administrative Region) by the Hong Kong Monetary Authority or the Stock Exchange Fund or (in the case of the Republic of Serbia) the National Bank of Serbia, to a resident of the other Party, shall be taxable only for that other Party if the ultimate beneficial owner is:
in the case of the Hong Kong Special Administrative Region:
Government of Hong Kong Special Administrative Region;
Hong Kong Monetary Authority;
Stock Exchange Fund;
in the case of the Republic of Serbia:
The Government of the Republic of Serbia, its political unit or local authority;
National Bank of Serbia.
5 per cent of the gross amount of royalties (for the use or for the right to use copyright in a literary, artistic or scientific work, including cinemas or movies or films for television or radio); and
10 per cent of the gross amount of royalties (for the use or for the right to use a patent, trademark, design or model, plan, secret formula or procedure or for the use or for the right to use industrial, commercial or scientific equipment or for notifications relating to industrial, commercial or scientific experience – professional expertise/know-how, DD note).
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