The Basics of Taxation in Serbia for First Time Investors

Are you spinning the globe in search for another country to spread your business roots? Maybe you’re looking for a place where you can invest in something valuable and diversify your portfolio? Perhaps you’re thinking about establishing a company in Serbia? Business-wise, Serbia might be a little off the beaten track, but it’s still a country with one of the most favourable and corporate-friendly tax regimes, both in the neighbourhood and beyond.

In case you’re interested in investing, these are the basics of taxation in Serbia.

Corporate Taxation

Let’s start with corporate taxation. Assuming that you’re thinking about establishing a company in Serbia, this is the one that will interest you the most. Luckily for you, both company law Serbia and tax law Serbia have a lot to offer to foreign investors.

How you’ll be taxed in Serbia depends on your status as a resident – while non-residents of this country are charged tax only on the income that was generated here, Serbian residents are charged tax on their worldwide income. The same applies to legal entities, whereas the tax law Serbia considers a legal entity as a resident if it’s based, controlled or managed from Serbia, and income that’s subject to tax includes both capital gains and money earned by business under the company law Serbia.

The Serbia tax rate for corporate profit is 15%.

Need an additional incentive?

To taxable investors with fixed assets that surpass 9 million euros and provide a certain amount of new jobs, Serbia offers 10 year tax holiday plus 20% or 40% of investment translated to tax credit. Though the uniform rate for withholding tax is 20%, it can be decreased according to the country’s Double Taxation Agreement.

A typical tax year in Serbia lasts 12 months or shorter, and corporate tax is usually paid on a monthly basis. Tax filing is based on self-assessment, and tax return balance must be filled within 180 days after the end of the tax period. Capital gains are taxable 25% for non-residents and 15% for residents.

Individual Taxation

In Serbia, both the employment and business income tax are subject to 10%, while capital gains tax goes by the rate of 15% and royalties and rent tax go by the rate of 20%. The salary tax amount is 10%, and is subject to variation due to a large number of tax and financial incentives offered by the country.

The income threshold that taxation Serbia perceives as non-taxable is RSD 11,000. In case that the income you receive as a resident is 3 or more times higher than the country’s annual average, you’ll be taxed under the worldwide taxing system. In comparison to UN’s and Eastern European level, the total cost for employers in this country stand at nearly 50%.The employer is responsible for deducting salary tax at source, while tax filing for other types of income is based on residents’ self-assessment.

Self-employed residents are subject to unemployment insurance (1.5%), health insurance (12.3%) and pension and disability insurance (22%). Property tax ranges from 0.4% to 2%, transfer tax is 2.5%, while inheritance tax is charged at progressive rate between 1.5% and 2.5%.  

Whether it comes to corporate law Serbia or general taxes Serbia, rest assured that this country represents a fertile ground for all entrepreneurs and foreign investors. Of course, these are only the basics of taxation in this country, so make sure to contact a Serbia-based investment and tax specialist before you take the leap of faith. Good luck!