Taxes in Serbia – Everything you need to know!

2020-01-29T18:30:19+01:00 October 16th, 2019|

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!

 

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.

  • In Serbia corporate tax rate is 15% and there is no official profit to turnover ratio. Capital gains are separately taxed at the rate that is also 15%.

 

This is important news for everyone wishing to start new business, especialy 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.

 

  • Dividend tax is 15% and the taxable base is 85% of the profit (profit after corporate tax). Dividend tax may be lowered to 5% by activating double taxation avoidance agreements.

 

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.

Tax filling in Serbia is based on self-assessment.

A tax return and tax balance must be filled within 180 days after the end of the tax period for which the tax return is filled. Financial statements are submitted between February and July for the previous year.

 

  • VAT rate is 20% and is calculated and payed monthly or quarterly. VAT is paid on goods delivered and services executed in Serbia and for import of goods.

As for accounting, Serbia is up to date with international accounting standards, for example small and medium-sized entities are required to comply with IFRS rules, and medium-sized entities may elect to apply IFRS rules.

 

Serbia has more than 60 double-taxation avoidance agreements with different countries all over the world. 

 

There is no capital duty or payroll tax in Serbia!

Regarding individuals, the income tax is imposed on income, autonomous business income, authors’ rights, capital, real estate, capital gain and other types of income.

Non-residents are taxed only on income generated in Serbia. For income tax purposes, an individual is considered resident if he/she has a residence or center of business or stays in Serbia for at least 183 days in the total during the tax year. Apostilled tax residence certificate may be obtained 365 days after temporary residence is granted.

 

  • Income tax rate is maximum 15%., making Serbian income tax not only one of the lowest in Europe, but also in the world.
  • Inheritance tax is levied on inheritances and gifts at progressive rate between 1.5% (for taxpayers in the second order of succession) and 2.5% (for taxpayers in the third and subsequent orders of succession).
  • Transfer tax of 2.5% applies on transfer of immovable property (i.e. intellectual property, real property, etc.).
  • Property taxis levied on the occupation of real estate at progressive rates ranging from 0.4% to 2%, which is 2 to 15 times lower than Europe average.

There is no wealth tax in Serbia!

Using our experience and expert knowledge, our team will help you plan and optimize your business and save money using advantages of tax laws and regulations.

Grow your business freely. Welcome to Serbia.

 

 

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