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Serbia

General Information

Country Name: Serbia
Currency: Serbian Dinar (RSD)
Primary Tax Authority: Tax Administration of Serbia (Poreska Uprava)

Key Legislation:

  • Law on Corporate Income Tax (CIT) (Official Gazette of the Republic of Serbia)
  • Law on Personal Income Tax (PIT) (Official Gazette of the Republic of Serbia)
  • Law on Value-Added Tax (VAT) (Official Gazette of the Republic of Serbia)
  • Law on Tax Procedure and Tax Administration

Fiscal Authority Allocation

Centralized Fiscal System:
Taxation in Serbia is highly centralized. The national government, through the Tax Administration of Serbia, oversees all tax collection and administration. Local authorities have limited power to impose taxes, such as property taxes and some local fees.

Corporate Income Tax (CIT)

Standard Rate: 15%
Serbia imposes a 15% CIT rate on companies, which is among the lower rates in the region. Resident companies are taxed on their worldwide income, while non-residents are taxed only on Serbian-sourced income.

Exemptions and Incentives:

  • Tax Holidays: New investments may qualify for a 10-year tax holiday if certain conditions are met.
  • Tax Incentives for Employment: Incentives are available for companies employing new workers, particularly in underdeveloped regions.
  • R&D Deductions: Expenses for research and development are deductible at an enhanced rate.

Corporate Forms and Taxation

  • Društvo sa Ograničenom Odgovornošću (DOO) (Limited Liability Company): This is the most common corporate form in Serbia. DOOs are subject to a corporate income tax rate of 15%.
  • Akcionarsko Društvo (AD) (Joint-Stock Company): ADs, which can be public or private, are also taxed at the corporate income tax rate of 15%.
  • Ortačko Društvo (OD) (Partnership): Income from partnerships is subject to personal income tax rather than corporate tax.
  • Limited Partnership (KD): Profits are distributed and taxed at the personal income tax level.

Goods and Services Tax (GST) / Value-Added Tax (VAT)

Standard Rate: 20%
Serbia applies a VAT rate of 20%, with reduced rates of 10% for essential goods, including some foodstuffs, medicines, and books.

Exemptions:
Certain services, such as healthcare, education, and financial services, are exempt from VAT.

Personal Income Tax (PIT)

Flat Rate: 10%
Serbia uses a flat-rate system for personal income tax, where individuals pay a uniform 10% on their taxable income.

Exemptions:
There are specific deductions available for dependents and certain other categories, such as personal savings.

Additional Mandatory Contributions

Social Security Contributions:
Both employers and employees contribute to the social security system.

  • Employer Contribution: 16.15% of gross salary
  • Employee Contribution: 19.9% of gross salary

Withholding Taxes

  • Dividends: 20%
  • Interest: 20%
  • Royalties: 20%

These rates may be reduced under applicable double taxation agreements (DTAs).

Transfer Pricing Rules

Serbia follows the OECD guidelines for transfer pricing. Related-party transactions must be conducted on an arm’s-length basis, and detailed transfer pricing documentation is required for certain transactions exceeding specific thresholds.

Special Tax Regimes

  • Tax Holidays for Large Investments: Serbia offers extended tax holidays and incentives for large foreign investments, especially in industrial sectors.
  • Free Zones: Companies operating within designated free zones benefit from tax exemptions or reductions.

Other Taxes

  • Capital Gains Tax: 15% on gains from the sale of real estate and certain securities.
  • Property Tax: Progressive rates depending on property value, levied by local authorities.
  • Inheritance and Gift Tax: Progressive rates depending on the value and relationship between the donor and recipient.

Double Taxation Agreements (DTAs)

Serbia has a network of over 50 double taxation agreements that provide for reduced withholding tax rates on dividends, interest, and royalties and help prevent double taxation.

Local Taxes

Local governments primarily impose property taxes, based on the assessed value of real estate, with rates varying depending on the region and property use.

Compliance and Reporting

Annual Filing:
Corporate and individual tax returns must be filed annually. The tax year in Serbia follows the calendar year, and tax returns are generally due by March 31st for the previous year.

Penalties for Late Filing:
Late filing is subject to penalties, including interest charges. Penalties may vary depending on the amount of unpaid tax and the duration of the delay.

Recent Developments

Corporate Tax Reform:
Serbia is undergoing corporate tax reform, aligning its tax policies with EU and OECD standards. This includes stricter regulations on transfer pricing and improved incentives for foreign investments.

Digital Services Tax (DST):
The government is currently considering the introduction of a digital services tax to address revenue from online platforms and the digital economy. However, no firm decisions have been made.

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