Corporate taxation in Belgrade
Teleport city rankings for corporate income tax
Resident entities are taxed on their worldwide income; nonresidents are taxed only on income generated in Serbia.
Taxation of dividends
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 nonresident distributing company for one year are eligible for a credit for foreign tax paid on the dividends.
A legal entity is considered resident if it is incorporated in Serbia or managed or controlled from Serbia.
Net operating losses may be carried forward for five years. Capital losses may be carried forward and offset against capital gains for five years. The carryback of losses is not permitted.
Foreign tax credit
Credit is available for foreign tax paid, but is limited to the amount of Serbian tax payable on the foreign income.
Taxable income includes both business income and capital gains. The taxable base is calculated in the tax balance sheet, based on the profit and loss account adjusted for tax purposes.
Capital gains are subject to a 15% tax for residents (included in the annual income tax return) and 20% for nonresidents (based on the tax assessment).
Other taxes on corporations
Real property tax
For taxpayers that follow IAS and IFRS fair value accounting, property tax is levied on immovable property located in Serbia at a rate of up to 0.4% of the fair market value of the property as of 31 December of the previous year.
The employer is required to make social security contributions on an employee's salary at rates of 12%, 5.15% and 0.75% for pension and disability insurance, health insurance and unemployment insurance, respectively.
A 2.5% tax applies on transfers listed in the Property Taxes Law, i.e. the transfer of real property, intellectual property, etc.
Stamp duty is payable according to a tariff based on the value of the document. If there is no value, a flat rate applies.
Compliance for corporations
Penalties may be imposed for failure to comply with the provisions in the Tax Proceedings and Administration Law. Entities also may be banned from carrying out their activities.
Serbian residents are taxed on their worldwide income; nonresidents are taxed only on Serbia-source income.
An individual is considered resident for income tax purposes if he/she has a residence or center of business and/or vital interests in Serbia or stays in Serbia for at least 183 days in a 12- month period commencing or ending in the tax year concerned.
Spouses are taxed separately; joint filing is not permitted.
Binding rulings are issued upon requests from taxpayers. Personal taxation:
Serbia operates a self-assessment regime. Advance corporate tax is payable in monthly installments. A tax return must be filed and the balance of tax due paid within 180 days after the end of the tax period for which the tax return is filed. In cases of a change in status, liquidation or bankruptcy, the deadline is 15 days from the deadline for filing financial statements.
Resident companies may elect group status and file a consolidated return. Companies are considered a group where one company (parent company) owns at least 75% of the shares of another company. The parent company files a consolidated tax return in which gains and losses of group companies are offset and each company pays its share of the tax. Once initiated, tax consolidation must be applied for at least five years.
The personal income tax rate depends on the type of income. The rates are 10% for employment income (salary); 10% for business income; 20% for income arising from copyrights, rights related to copyrights and industrial property rights and other income; and 15% for income from capital, not including rental income, which is taxed at a 20% tax rate.
The tax year is the calendar year, but may be shorter than 12 months where activities start or terminate during a calendar year or there is a change in the status of the entity. A taxpayer can opt for a tax year different than the calendar year.
The principal taxable forms of personal income are employment income, business income, income from capital (dividends, interest, rent and income from investment in an open investment fund), capital gains (e.g. from the sale of shares in a legal entity, from the sale of real estate) and other income.
Capital gains are one of the categories of taxable income.
Deductions and allowances
Personal allowances are available for members of the taxpayer's family that are financially supported by the taxpayer.
Other taxation in Belgrade
Value added tax
The standard VAT rate is 20%, with a reduced rate of 10%. Certain items are exempt or zero-rated.
VAT is imposed on the provision of goods and services.
The registration threshold for VAT purposes is an annual turnover of RSD 8 million.
Under the thin capitalization rules, interest and related expenses are deductible on loans that do not exceed four times equity for companies (10 times equity for banks and leasing companies). In addition, under the transfer pricing rules, a taxpayer must demonstrate that interest that is deductible under the thin capitalization rules is at an arm’s length level; otherwise, an adjustment of taxable income may be required.
Transactions between associated entities (as defined) must be on arm's length terms. There are specific documentation requirements and transfer pricing reports must be submitted by 30 June.
There is a statutory general anti-avoidance rule.
Dividends paid to a nonresident are subject to a 20% withholding tax, unless the rate is reduced under a tax treaty. Payments made to a person resident in a preferential tax jurisdiction are subject to a 25% withholding tax.
Payments made to a nonresident for the lease of movable and immovable property are subject to a 20% withholding tax, unless the rate is reduced under a tax treaty.
Interest paid to a nonresident is subject to a 20% withholding tax, unless the rate is reduced under a tax treaty. Payments made to a person resident in a preferential tax jurisdiction are subject to a 25% withholding tax.
Royalties paid to a nonresident are subject to a 20% withholding tax, unless the rate is reduced under a tax treaty. Payments made to a person resident in a preferential tax jurisdiction are subject to a 25% withholding tax.
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