Key tax factors for efficient cross-border business and investment involving Serbia.
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Civil association, Limited partnership, Limited liability company, Joint-stock company
RSD 100 (acc. EUR 0.83) minimum share capital for Limited Liability Company. RSD 3 million (app. EUR 24,200) minimum share capital for Joint-stock company.
A resident is a legal entity that is incorporated or has its place of effective management in the territory of Serbia.
Resident taxpayers are taxed on their worldwide income. Non-residents are taxed only on their Serbian source income.
CIT return is to be filed within 180 days. As of 2016, in case of bankruptcy or liquidation, CIT return is to be filed 60 days from the moment of
bankruptcy/liquidation procedure initiation and bankruptcy/liquidation procedure closure. In case of mergers and acquisition, when a company ceases to exist, the deadline is 60 days from the merger/acquisition.
The statutory corporate income tax rate is 15 percent.
20 percent / 25 percent. 25 percent rate is applicable on interest payments made to legal entities in jurisdictions with a preferential tax system.
20 percent / 25 percent. The 25 percent rate is applicable on royalty payments made to legal entities in jurisdictions with a preferential tax system.
25 percent on service fees paid to the legal entities in jurisdictions with a preferential tax system.
20/25 percent WHT applies to entertainment, musical, artistic and sports fees paid to non-residents that are not subject to personal income tax and 1 percent WHT on the purchase of secondary raw materials.
The 25 percent rate applies to certain payments made to legal entities in jurisdictions with a preferential tax system.
Dividends received from resident subsidiaries are exempt from taxation.
Tax credit is available for withholding tax on dividends and corporate income tax on profits out of which dividends have been distributed, paid by non-resident subsidiaries provided the parent company holds at least 10 percent of the subsidiary for at least one year. Unused tax credit can be carried forward for 5 years. If the above conditions are not met, reduced tax credit related to withholding tax on dividends is still available.
Capital gains earned in Serbia by non-resident companies are subject to 20 percent capital gains tax (CGT). CGT is assessed by the Tax Authorities based on the tax return filed by the non-resident taxpayer. Capital gains earned abroad by resident companies are subject to 15 percent corporate income tax.
Losses (excluding capital losses) incurred from business, financial, and nonbusiness transactions may be carried forward over the 5 subsequent tax periods from 2010 (10 years for losses suffered up to 2009) and can be offset against future taxable income. Losses that were carried forward are not forfeited due to mergers, acquisitions, spin-offs, and other reorganization changes.
Carry-back of tax losses is not allowed.
Yes, Serbian tax resident companies may elect for group consolidation. The parent company and its affiliates can constitute a group of associated companies, if at least 75 percent of the shares of the affiliates are held, either directly or indirectly, by the parent company.
Real estate (land and buildings) transfer tax rate amounts to 2.5 percent. The tax base is the contract price, unless the Tax Authorities conclude that the contract price is below the market value.
Real estate (land and buildings) property tax rate amounts up to 0.4 percent. The tax base is either 1) the fair market value of the property (if the
taxpayer carries land and buildings at fair market value in accordance with IAS and IFRS in its financial statements), 2) net book value of the property (for certain types of buildings) or 3) the product of average market price per square meter as published by the local tax administration and total area of the property.
Taxpayers are obliged to separately disclose in their tax balances the value of transactions with related parties. Transfers should be disclosed in transfer pricing documentation. The net positive difference between the price determined in applying arm’s length principle and taxpayer's transfer price is included in the tax base. There are six methods for determination of arm’s length price that are authorized by the Serbian legislator and which are based on OECD methodology: comparable uncontrolled price method, cost plus method, resale price method, transactional net margin method, profit split method and any other method, should it prove that any of the above methods cannot be applied.
Taxpayers are obliged to prepare and file transfer pricing documentation (a TP study) along with their tax returns.
Yes; 10:1 debt-to-equity ratio for banks and financial leasing companies and 4:1 debt-to-equity ratio for other companies
General anti-avoidance rule is represented by the 'substance over form' principle.
In addition to thin capitalization and transfer pricing rules, there are no other specific anti-avoidance rules applicable in a cross-border context.
A 10-year tax holiday in proportion to the value of qualifying non-current assets to total non-current assets. In order to qualify, entities must invest at least 1 billion RSD in non-current assets and additionally employ more than 100 employees for an indefinite period of time.
The standard rate is 20 percent, and the reduced rate is 10 percent.
KPMG in Serbia
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