SERBIA 2016
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Web Site: www.shermannigretti.it E-mail: info@shermannigretti.it Tel. +39 (0)2 7722951 Mob. +39 335 6030346 Twitter: @ShermanNigretti Linkedin: Gianmauro Sherman Nigretti
GEOGRAPHY AND POPULATION CAPITAL:
BELGRADE
POPULATION:
7,20 MILLION
POLITICAL SYSTEM:
PARLAMENTARY REPUBLIC
CURRENCY:
SERBIAN DINAR (RSD)
FORMS OF BUSINESS ORGANIZATIONS Foreign investors can conduct business as an entrepreneur or incorporate a company as a: • • • •
Joint stock company (a.d.) Limited liability company (d.o.o.) Limited partnership (k.d.) General partnership (o.d.).
The most common company type is a limited liability company, which requires only RSD 100 for incorporation. Businesses can be also registered as:
• • • •
Entrepreneurs Representative offices Branches Business associations.
ACCOUNTING Accounting in Serbia is governed by the National Accounting Law. Regulation of accounting in Serbia includes the following areas: • • • •
The way of keeping the sets of account Recognition and valuation of assets and liabilities, income and expenses/costs The compilation and displaying of submissions, and the disclosure and processing of annual financial statements Conditions for and mode of auditing financial statements and internal auditing.
Business entities in Serbia can independently perform accounting and bookkeeping tasks.
Accounting can be carried out by employees delegated to perform accounting tasks and must follow rules which regulate the general degree, work experience and other requirements for these employees. Legal entities in Serbia are classified as micro, small, medium and large-sized companies, depending on the average number of their employees, annual income and the value of assets as of the date of compilation of financial statements in a financial year.
AUDITING The purpose of auditing financial statements is to enable the auditor to express an opinion on whether the financial statements have been prepared as required by the International Accounting Standards in respect of all essential aspects. Auditing of financial statements is compulsory for large and medium-sized legal entities, as well as issuers selling their long-term securities by public offering. Audits shall be conducted every year on the basis of information in respect of the classification of legal entities for the previous year. Issuers of securities are required to obtain an auditing report for the year preceding the year in which the securities are issued. Supervision of legal entities in terms of the control of accounting records and keeping a general ledger will be conducted by the Tax Authorities in accordance with the Law on Tax Procedure and Administration. A new requirement is that companies which did not have any business activities during the year, and do not have any assets or liability within its financial statements, are obliged to submit a statement of inactivity by the end of February of the following year.
Financial records, financial statements, annual reports, the decision for the adopting of financial statements, the auditor’s report, the decision on profit distribution and other financial information shall be prepared in the Serbian language. Financial statements must include: • • • • •
Balance sheet Income statement Cash flow statement Statement on changes in equity Notes to the financial statements.
CORPORATE TAXATION Corporate income tax is payable by the following: •
Resident is legal entity established or has its place of effective management and control in the territory of the Republic of Serbia. Residents are taxed on their income generated in the territory of the Republic, as well as on worldwide income.
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Non-residents are taxed only on their income sourced through a permanent establishment in Serbia. A permanent establishment is any permanent place of business through which a nonresident conducts his business.
A taxable entity includes a company registered as a joint stock company, a limited liability company, a general partnership, limited partnership, a socially owned company or a public enterprise, cooperative, branch office or any other legal entity generating income from the sale of goods or rendering services to the market. The tax year is the same as the calendar year, although a different tax year may be used if approved by the tax authorities.
A tax period may not exceed 12 months in length and may only be changed once every five years. Tax returns must be filed with the tax authorities within 180 days of the end of the tax year. A monthly instalment payment system applies based on the profits arising in the previous period. The tax rate on all profits and gains is 15%.
INDIVIDUAL TAXATION Income tax is chargeable on all Serbian residents in respect of income generated in Serbia and other countries. A Resident of the Republic of Serbia (hereinafter referred as "resident') is each person who: • Has a personal residence or his centre of interests in Serbia; • Resides in Serbia for at least 183 days, whether or not consecutively, within a period of 12 months beg inning or ending in the respective taxation year. Serbian residents are taxed on their worldwide income including: • Income from wages (tax rate -10%); • Income from agricultural activity and forestry (tax rate - 20%); • Income from independent personal activities (tax rate - 10%); • Income from royalties etc. (tax rate - 20%); • Income from capital (tax rate - 15%); • Income from property and property rights (tax rate - 15% and 20% on rental fees); • Capital gains (tax rate - 15%); and • Other income (tax rate - 20%). Annual personal tax is paid under a withholding tax system. Tax credits are available for overseas taxes up to the amount of tax suffered in Serbia on the income concerned.
DOUBLE TAX TREATIES AVOIDING DOUBLE TAXATION
If a taxpayer has already paid tax on profits generated abroad, they are entitled to a corporate profit tax credit in Serbia to the already paid amount. The same right is enjoyed by a taxpayer who earns revenue and pays personal income tax in another country, provided there is a double taxation treaty with that country. Serbia has signed double taxation agreement with 49 countries.
VAT According to Law on VAT, taxpayer is an entity that independently trades in goods and services as a producer, trader or provider of services for the purpose of profit. The VAT rules also apply to the following: • • • •
Agents assigned by foreign entities doing business in Serbia but without a permanent business unit in Serbia; Recipients of goods and services if foreign entity do not assign agent; Entities that account for VAT in their invoices but are not obliged to pay the tax according to the Law on VAT; Entities that import goods.
Taxpayers whose total turnover did not exceed RSD 8,000,000 (circa Euro 65.000) in the preceding calendar year are not obliged to register as VAT. The taxable amount tor domestic goods and services is the sales price, including excise and duty costs and all secondary expenses charged to the recipient of the goods and services. The standard rate is 20%. VALUE ADDED TAX EXEMPTION IN FREE ZONES - Income generated through commercial activities in free zones in Serbia is exempted from value added tax. There are six free zones currently operating in the country: Subotica, Novi Sad, Zrenjanin, Sabac, Kragujevac, Uzice and Pirot. Foreign companies can establish a privately owned company in a free zone, subject to project approval by the government.
DISCLAIMER This publication must not be regarded as offering a complete explanation of the taxation and corporate matters that are contained within this publication. This publication has been prepared on the express terms and understanding that the publishers are not responsible for the results of any actions which are undertaken on the basis of the information which is contained within this publication. The publishers and the authors expressly disclaim all and any liability and responsability to any person, entity or corporation who acts or fails to act as a consequence of any reliance upon the whole or any part of the contents of this publication. Accordingly no person, entity or corporation should act or rely upon any matter or information as contained or implied within this publication without first obtaining advice from an appropriately qualified professional person, and ensuring that such edvice specifically relates to their particular needs.