Serbia started regulating crypto industry as the country’s Law on Digital Assets went into effect.
In parallel with the adoption of the Law on Digital Assets, the Serbian parliament amended a series of tax laws, specifically the Personal Income Tax Act, Corporate Income Tax Act, and the VAT Act.
The most important amendments relate to the following:
- Value Added Tax Law – Transfer or conversion of cryptocurrency to cash will be VAT exempt without the right to deduct input VAT.
- Corporate Income Tax Law – Sale or other transfer against consideration of digital assets by legal companies will be subject to capital gains tax at the rate of 15%. If a taxpayer invests the funds generated by the sale of digital assets in the share capital of a resident company in Serbia within 90 days of the sale, 50% of the capital gains tax will be exempt. A refund of 50% of paid capital gains tax will be made within 12 months from the date of sale of the digital assets.
Non-resident entities will be subject to a 20% tax on capital gains realized from the sale of digital assets unless there is an applicable double taxation treaty that exempts such gains from taxation in Serbia.
- Personal Income Tax Law – Similar to the CIT Law, sale or other transfer against consideration of digital assets by individual taxpayers will be subject to capital gains tax at the rate of 15% on the positive difference between a contracted price, i.e. market value and acquisition value of the digital asset. Generally, acquisition value is documented as the price actually paid. In the case of digital assets acquired through ‘mining’ or from the employer through a share plan, acquisition value would be determined under specific rules. PIT Law prescribes a tax exemption for 50% of realized capital gains if the gain is invested into the share capital of a Serbian legal entity or investment fund.
- Law on Property Taxes – Digital assets will be subject to inheritance and gift tax at the rate of 2.5%, whereby the tax base is the market value of digital assets at the moment they are inherited/gifted. Property tax and property transfer tax do not apply to digital assets.
These amendments will be applicable from 1 July 2021 when the Law on Digital Assets will start to apply.
For more information regarding the Law on Digital Assets and starting a crypto business in Serbia, please contact us.