Taxation in Serbia
The taxation framework in Serbia is a complex system that is fundamental to the country’s economic strategy, providing a balance between generating revenue and encouraging growth and investment. This framework includes various taxes, each regulated by intricate rules and rates. For businesses, investors, and individuals, a thorough grasp of this environment is crucial for effective financial management and adherence to regulations.
Taxation system
Serbia’s taxation system is structured to harmonize with local fiscal policies and international responsibilities, providing a flexible yet organized approach to taxes. It may include a mix of flat rates, progressive scales, and specific exemptions, which mirror the nation’s economic goals and social aims. Grasping the complexities of these tax mechanisms is essential for maximizing financial results, maintaining compliance, and taking advantage of opportunities within the legal system.
Capital gains tax
Capital gains arise from the sale or transfer of real estate, intellectual property rights, shares, stocks, securities, certain bonds, investment units, and digital assets in exchange for compensation. These gains are taxed at a distinct rate of 15%. Tax losses can be carried forward for up to 5 years.
Corporate taxation
In Serbia, the corporate income tax is applied at a uniform flat rate of 15%. Companies that are residents are taxed on their global income, whereas non-resident companies are taxed solely on income sourced from Serbia. The tax year typically aligns with the calendar year, although alternate fiscal years can be implemented with approval. Businesses must make monthly advance payments according to their tax liability from the previous year.
Personal income taxation
In Serbia, personal income tax operates on a progressive scale, with rates starting at 10% for earnings from employment and going up to 15% for capital gains. Other income sources, including rental income and royalties, are subject to a 20% tax. Furthermore, individuals earning above certain annual income thresholds are required to pay an additional annual complementary income tax at progressive rates of 10% and 15%.
Dividend taxation
A Serbian resident company pays dividends to resident individuals, which are taxed at a rate of 15%. In contrast, dividends paid to non-residents are typically taxed at a higher rate of 20%, unless a lower rate is specified by relevant double tax treaties. The tax on dividends is usually deducted at the source by the entity disbursing the payments.
Property tax
In Serbia, a property tax is levied on immovable assets. Legal entities are subject to a property tax rate of as high as 0.4%, calculated on the property’s market value. In contrast, individuals have their tax assessed based on the catalog value of the real estate, using progressive rates that range from 0.3% to 2%. The taxable amount varies depending on the taxpayer category and the approach used for property valuation.
Inheritance taxation
In Serbia, inheritance tax applies to both inheritances and gifts. The tax rate varies based on the relationship between the heir and the deceased. Close relatives are subject to a rate of 1.5%, whereas more distant relatives or those who are not related face a 2.5% rate. The tax amount is determined by the value of the inherited assets.
International taxation
Serbia imposes a corporate income tax of 15% on resident entities, which is applied to their global income. Non-resident entities are taxed solely on the income they earn in Serbia, with particular rates and rules governing certain income types like capital gains and dividends. For non-residents, capital gains are taxed at a rate of 20%, unless a relevant tax treaty provides for a lower rate. Additionally, income from dividends, interest, and royalties paid to non-residents may incur withholding tax at different rates.
Cryptocurrency taxation
In Serbia, the earnings from selling or transferring cryptocurrencies are taxed at a capital gains rate of 15%. This tax is imposed on the profit made from the difference between the buying and selling prices of the cryptocurrency. Moreover, if trading cryptocurrencies is viewed as a regular business, the income may be liable for corporate or personal income tax, depending on the structure of the entity involved. Legal entities participating in crypto trading adhere to the standard corporate tax regulations.
VAT system
In Serbia, the general VAT rate is 20%, which is applicable to the majority of goods and services. There is a lower rate of 10% for certain items, including basic food products, medications, and hotel accommodations. VAT is levied on the sale of goods and services in the country, as well as on imports. It is determined by the transaction value, and businesses are responsible for collecting it on behalf of the government. VAT is relevant for all taxable supplies, both domestic and cross-border, and there are particular regulations regarding registration and compliance.
Our taxation solutions
In a tax environment that is always changing, expert guidance is essential. Our firm provides a range of specialized tax solutions customized to address the varied requirements of individuals, corporations, and investors in Serbia. Our services aim to navigate the intricacies of the tax code, reduce liabilities, and guarantee complete regulatory compliance.
- Personal tax advisory: Tailored advice to minimize tax exposure while ensuring legal compliance.
- Corporate tax strategy: Comprehensive planning to maximize tax efficiency and leverage incentives.
- Capital gains optimization: Expert guidance to manage and reduce taxes on capital gains.
- International tax planning: Advanced strategies for optimizing cross-border tax outcomes.
- Cryptocurrency advisory: Compliant tax strategies for both individual and corporate crypto activities.
- Inheritance and estate planning: Strategic planning for efficient wealth transfer and reduced inheritance taxes.
- VAT compliance: Full-service support for VAT registration, reporting, and optimization.
Book a consultation
Navigating the intricate realm of taxation can be greatly enhanced by seeking professional guidance. Reach out to us today to arrange a consultation with our tax specialists. We will collaborate closely with you to create a personalized tax strategy that meets your goals while ensuring complete adherence to the regulatory framework in Serbia.
Disclaimer
Tax laws and regulations are continuously evolving and can differ depending on individual situations. The information presented here serves as general guidance and might not represent the latest updates. Consulting a qualified tax professional for accurate and current advice tailored to your circumstances is strongly advised.