Serbia Country Profile EU Tax Centre March 2012
Key factors for efficient cross-border tax planning involving Serbia EU Member State
No.
Double Tax Treaties
With: Albania
Finland
Libya
Slovakia
Austria
France
Lithuania
Slovenia
Azerbaijan
Germany
Macedonia
Spain
Belarus
Ghana(b)
Malaysia
Sri Lanka
Belgium
Greece
Malta
Sweden
Bosnia & Herzegovina
Guinea
Moldova
Switzerland
Bulgaria
Hungary
Montenegro
Turkey
China
India
Netherlands
UK
Croatia
Iran
Norway
Ukraine
Cyprus
Rep. of Ireland
Pakistan
Zimbabwe(c)
Czech Rep.
Italy
Poland
Denmark
People’s Rep. of Korea
Qatar
Egypt
Kuwait
Romania
Estonia
Latvia
Russia
Note:
Residence
(a)
(a)
Treaties signed but not yet in force (date signed); Guinea (October 22, 1996),.
(b)
In force since July 8, 2000, but not yet effective.
(c)
In force from October 19, 1996, but not yet effective.
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.
Tax rate
10 percent.
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Withholding tax rates
On dividends paid to non-resident companies 20 percent. On interest paid to non-resident companies 20 percent. On patent royalties and certain copyright royalties paid to non-resident companies 20 percent.
Holding rules
Dividend distribution by resident/non-resident subsidiaries Distribution of dividends by a resident to a non-resident is subject to WHT. Distribution of dividends by a non-resident to a resident is subject to tax but WHT paid abroad may be recognized: credit method applies subject to conditions (i.e. the parent company holding directly or indirectly 25 percent or more of the shares of the non-resident company for at least one year preceding the submission of tax balance). Non-utilized tax credit can be carried forward over five years. Capital gains Capital gains earned in Serbia by non-resident companies are subject to 20 percent WHT. Capital gains earned abroad by resident companies are subject to 10 percent corporate income tax. Deductibility of costs:
■ Interest costs: If the main business activity of the company is holding ■ ■ Tax losses
activity, then interest costs derived from a loan granted for the purpose of acquiring shares are tax deductible; Acquisition costs: Generally deductible; Costs on disposal: Generally deductible.
Losses (excluding capital losses) generated from business, financial, and nonbusiness transactions may be carried forward over the five subsequent tax periods from 2010 (10 periods for losses generated from 2003 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-backs are not allowed
Tax consolidation rules
Yes, but only if the parent company and all its affiliates are Serbian residents. The parent company and its affiliates can constitute a group of associated companies, if a least 75 percent of the shares of the affiliates are held, either directly or indirectly, by the parent company.
2 © 2012 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Registration duties
No.
Transfer duties
On the transfer of shares No. On the transfer of land and buildings Real estate transfer tax at the rate of 2.5 percent is due on transfer of land, as well as on the second and subsequent transfer of new buildings.
Controlled Foreign Company rules
No.
Transfer pricing rules
General transfer pricing rules Taxpayers are obliged to disclose separately in their tax balances transactions between related parties and the value of such transactions at arm's length prices. Difference between price determined in applying arms’ length principle and taxpayer's transfer price is included in the tax base. Only three methods for determination of arm's length price are authorized by the Serbian legislator: comparable uncontrolled price method, cost plus method and resale price method. Documentation requirement? Serbia has no guidelines regarding transfer pricing or the documentation required in case of transfer pricing audit by tax authorities.
Thin capitalization rules
Yes; 10:1 debt-to-equity ratio for banks and 4:1 debt-to-equity ratio for companies.
General AntiAvoidance rules (GAAR)
General anti-avoidance rule is represented by the “substance over form” principle provided by the Law on Tax Procedure and Tax Administration.
Specific AntiAvoidance/Anti Treaty Shopping Provisions
In addition to thin capitalization and transfer pricing rules, there are no other specific anti-avoidance rules applicable in a cross-border context.
Ruling system
No advance ruling, not binding.
3 © 2012 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
IP / R&D incentives
No.
VAT
Standard rate is 18 percent while reduced rate is 8 percent (certain goods and services, such as the first transfer of ownership of residential buildings, computers, utility services, and basic foodstuffs).
Hybrid Instruments
No.
Hybrid Entities
No.
4 © 2012 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Source:
Serbian tax law and local tax administration guidelines, updated 2012.
Contact us Igor Loncarevic KPMG in Serbia T +381 11 20 50 570 E
iloncarevic@kpmg.com
www.kpmg.com © 2012 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. Country Profile is published by KPMG International Cooperative in collaboration with the EU Tax Centre. Its content should be viewed only as a general guide and should not be relied on without consulting your local KPMG tax adviser for the specific application of a country’s tax rules to your own situation. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
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