Even if Serbia has only a few double taxation agreements signed with countries worldwide, this represents a major step in developing business relations on an international scale. It is mandatory to be aware of how double taxation can be avoided when opening a company in Serbia as a foreign entrepreneur. The company incorporation in Serbia is subject to less bureaucracy, and it can be guided by our Serbian team of specialists.
| Quick Facts | |
|---|---|
| Number of treaties signed by Serbia | Around 64 |
|
Types of incomes for which taxation applies |
– dividends, – royalties, – capital gains, – interests, – pensions, and other categories of remuneration |
|
How is the taxation made under a DTT signed by Serbia? |
On the income generated in Serbia |
| Tax credit | Offered in the case the income is levied in Serbia and also in the foreign country from which the company is. |
| Withholding tax (WHT) for royalties, dividends, and interests |
Ranging between 0% and 10% |
| Particular taxation |
No WHT for UAE tax residents, no WHT imposed in the case of DTT signed with Switzerland. |
| What is “Special WHT rules”? |
WTH of 25% or 20%, depending on the signed treaty |
| Provisions of DTT signed with Sweden |
0% taxation for certain incomes |
| Provisions of DTT signed with Germany |
No taxation imposed on loan interest |
| Are there any preferential tax systems agreed upon by Serbia? | Yes, with several countries worldwide |
| Available incentives implemented by Serbia |
For specific categories of employees |
| Some of the taxes in Serbia |
– 15% corporate income tax, – 20% VAT, – personal income tax ranging from 10% to 20% |
| Tax registration in Serbia |
Can be done with the help of our local experts in taxation. |
| Tax period in Serbia |
The calendar year |
| Why choose our Serbian agents | We offer assistance in terms of tax registration, compliance with the legislation, and many more. |
Table of Contents
Countries which signed DTT with Serbia
A number of 65 states have signed double tax treaties with Serbia, and here we mention the following: Armenia, Albania, Azerbaijan, Austria, Belarus, Bosnia and Herzegovina, Belgium, Bulgaria, Croatia, China, Czech Republic, Canada, Cyprus, Denmark, Estonia, Egypt, France, Finland, Greece, Germany, Guinea, Ghana, Georgia, Hungary, Iran, Italy, Ireland, India, Indonesia, Kazakhstan, Kuwait, Libya, Latvia, Luxembourg, Lithuania, Malaysia, Macedonia, Moldova, Morocco, Malta, Montenegro, Norway, the Netherlands, North Korea, Poland, Pakistan, Palestine, Qatar, Russia, Romania, Slovenia, Slovakia, South Korea, Sri Lanka, Sweden, Spain, Switzerland, Tunisia, Turkey, Ukraine, the UAE, UK, Uganda, Zimbabwe, and Vietnam.
Tax provisions mentioned in the double tax treaties of Serbia
When registering a company in Serbia, one should consider if a tax treaty has been signed and how double taxation can be avoided. In this matter, entrepreneurs must know that there are two important ways of enjoying the benefits of a DTT. The first one is the credit offered after the revenues are levied in Serbia. The second one is related to the exemption of taxation meaning that the profits of a company are only taxed in the home country and not in the country where the activities are performed, in this case, Serbia. Here is an infographic with essential information about the DTTs signed by Serbia:
Withholding taxes for DTT signatory states
Usually, the double tax treaties prevent the taxation of the incomes of a foreign company in the country of origin or in the country where it performs the business. The avoidance is made through exemption (when there is no tax paid in Serbia) or through credit (when the paid tax is deducted in the foreign country). The double tax agreements between Serbia and the above-mentioned participant countries mention smaller withholding taxes imposed on royalties, dividends, and interests, but there are situations in which such taxes are non-existent, being influenced by the amount of participation in the Serbian enterprises or subsidiaries.
Below is a video presentation with details about Serbia’s DTTs:
Making proof of the taxes paid in other countries
Yes, company owners in Serbia are obliged to demonstrate to the authorities that the taxes have been paid in the home country, especially if they own at least 25% of the shares in a business with origins from Malta, Austria, Libya, Ireland, Qatar, Estonia, or Spain. In such cases, the dividends are taxed at a 5% rate. As for countries like Egypt and Belgium, the withholding tax is set at 10%. Belarus is subject to a withholding tax of 8%, but there are also exemptions for states like Germany, Sweden, Finland, the Netherlands, and France. The countries which are part of the double taxation agreements with Serbia are subject to taxes on royalties not exceeding 10%.
Returns of double tax treaties signed with Serbia
Entrepreneurs from abroad who want to expand their portfolios by incorporating companies in Serbia should know that there are varied benefits stipulated by the double taxation agreements. For instance, the companies are subject to low rates of withholding taxes on royalties, interests, and dividends, with rates between 0% and 10%. Furthermore, the capital gains of a company with foreign capital established in Serbia shall not be levied in the home country, if certain conditions are respected.
Supplementary details about the taxes in Serbia
Foreign citizens who work in Serbia are also protected by the double tax treaties signed with states mentioned earlier, meaning that the revenues gained in Serbia will only be taxed in this country. In general, the gains derived from the sale of real estate are taxed, but also the gains derived from the sale of shares with a majority of value derived from the real estate located in the country of origin. The following withholding tax rates apply as mentioned:
- a 10% rate applies for the right to use the trademarks, for the use of scientific or commercial equipment of companies with origins from the contracting states;
- a 10% rate applies on dividends of Malaysian residents;
- there is no withholding tax applicable on dividends for UAE tax residents;
- if Switzerland imposes no withholding taxes on royalties, dividends, and interests, then Serbia won’t apply such tax, in accordance with the signed treaty.
We also mention that for taking advantage from the provisions of the double taxation conventions signed by Serbia, and particularly from the withholding tax rates, the resident taxpayer needs to provide to the authorities the residence certificate translated into the Serbian language.
Types of revenues protected by the DTT signed by Serbia
The third chapter of a double tax treaty signed by Serbia comprises complete information about the types of incomes, the taxation, and the protection against fiscal evasion. The incomes from immovable properties, revenue related to international traffic, remuneration of athletes, professors, and artists, capital gains, royalties, interests, dividends, pensions, and independent personal activities are protected by the double taxation treaties signed by Serbia.
Particularities of DTTs signed by Serbia
Each double taxation arrangement signed by Serbia is unique and reflects the collaboration, the terms, and the provisions agreed with a specific country. For example, the double taxation treaty signed with Sweden mentions a series of incomes with zero taxation. The DTT signed with Germany (one of the main investors in Serbia) is also extremely favorable, considering that there is no tax for loan interest. Preferential tax systems are offered to countries like Cyprus, Malta, the Netherlands, Estonia, Luxembourg, and Ireland. It is important to note that Serbia continues to expand its business and economic relations with Asian and American countries.
In Serbia, “Special WHT rules” also apply to non-resident companies from tax havens. In this case, the withholding tax is 25% on interest, royalties, income from immovable property rental and other assets, and service fees compensated to non-resident establishments from tax havens. Also, the 20% withholding tax applies to the dividend payments to non-residents from tax havens in Serbia.
Modifications of the Tax Law in Serbia
The changes brought by the Tax Law in Serbia refer to the so-called “hiring incentives“. In fact, the Serbian government has also implemented additional deductions. Here is some information about these changes regarding taxes in Serbia:
- Company owners in Serbia can benefit from tax incentives for salaries of newly hired experts in the firm, with an indefinite contract. Thus, hiring incentives refer to a 70% reduction from personal income tax (PIT) for this type of employee, specifying that they must occupy positions that otherwise cannot be taken by workers on the local market. These hiring incentives are granted for 5 years.
- Hiring incentives are also granted to business owners in the innovative sector who work in their company. These refer to PIT and social contribution exemptions for the salaries of these employees for 36 months.
- Partial PIT and social contribution (pension and disability insurance) exemptions are also offered for newly qualified employees in the company. This benefit is offered until December 31, 2024.
- An additional deduction of 3 times the average annual salary is offered to taxpayers up to 40 years old, under certain conditions.
The new changes brought to the taxation legislation in Serbia can be explained to you by our tax experts. You can therefore opt for the services of our company and learn more about the taxation system, the profits that are the subject of double taxation agreements, and many more.
What is supplementary annual taxation in Serbia?
In Serbia, the supplementary annual PIT is paid by an individual if his/her income in a calendar year is higher than 3 times the average annual salary in Serbia in the year for which the taxation is made. On the other hand, the supplementary annual tax return in Serbia is registered with the tax authority system by 1 April of the present year for the preceding tax year period.
Making investments in Serbia
Serbia is a flourishing business hub that provides permissive legislation related to foreign investments, allowing international entrepreneurs to generate profits in a wide range of important business sectors. The manufacturing field is quite consistent and thriving, and it sustains a large percentage of the country’s GDP. Besides the business possibilities of Serbia, foreign entrepreneurs also benefit from a relaxed taxation system that allows further investment possibilities. The double taxation treaties also play a great role for entrepreneurs from abroad who want to protect their incomes against fiscal evasion and extra taxation.
An experienced investor knows the business potential offered by a country like Serbia. Once the field of activity is chosen, opening the company is easy, and here we also recommend the services offered by our accountants in Serbia. Please feel free to contact our team of agents in company formation in Serbia and solicit information about the avoidance of double taxation in Serbia.