Serbia

Value-added tax (VAT)

The VAT was introduced on 1 January 2005 and generally follows the European Union's (EU’s) Sixth Directive.

The standard VAT rate is 20% for most taxable supplies. A reduced VAT rate of 10% applies for basic food, daily newspapers, medicines, publications, public transportation services, utilities, etc.

In addition to these tax rates, there is a 0% tax rate with the right of deduction of the input VAT that applies to the export of goods, transport and other services directly related to exports, international air transport, etc.

The tax exemption without the right of deduction of the input VAT applies to trading in shares and other securities, insurance and reinsurance, and the lease of apartments, business premises, etc.

A taxpayer for VAT purposes is a person who independently, and in the course of its business activities, undertakes the supply of goods and services or import of goods. Business activity is defined as the permanent activity of a manufacturer, salesperson, or service provider for the purpose of gaining income, including the activities of exploitation of natural resources, agriculture, forestry and self-employed activities. A branch or other operating unit can be a taxpayer.

Foreign entities that carry on taxable supply of goods and services in Serbia, as well as supply of goods and services for which a tax exemption is prescribed with the right to deduct input VAT, are obliged to register for VAT and to appoint fiscal representative irrespective of the amount of the turnover in the previous 12 months. Foreign entity that performs a taxable supply of goods and services exclusively to VAT payers or entities referred to as governmental institutions (which includes the Republic and its authorities, the territorial autonomy and local self-government authorities, as well as legal entities established under law or other act of the Republic, territorial autonomy, or local government authority for the purpose of execution of activities of the state administration or local government) or performs supply of goods that are in the procedure of customs warehouse in accordance with customs regulations, as well as passengers transportation service by buses (in special case envisaged by the Law), has no obligation to appoint a fiscal representative in Serbia and to register for VAT. A foreign taxpayer that fails to register for VAT in Serbia may be subject to penalties for non-compliance. If a foreign supplier does not appoint a fiscal representative, VAT is due by the Serbian recipient of the goods or services.

The usual taxable period is a calendar month; however, if a taxpayer’s total annual turnover is less than 50 million Serbian dinars (RSD), the taxable period is a calendar quarter. For newly established businesses, the VAT period is the calendar month for the current and next calendar year. Taxpayers are required to submit returns within 15 days of the end of each taxable period. Tax debtors who are not taxpayers are required to submit returns within ten days of the end of the taxable period in which the tax liability arose.

As of 1 July 2018, VAT payers are obligated to submit a VAT assessment overview to the tax authorities, along with the VAT return.

As of 1 January 2019, foreign taxpayers have the right to a VAT refund even if they perform taxable supply of goods and services in Serbia to a Serbian VAT payer.

Customs duties

Goods imported into Serbia are subject to customs duty rates provided in the Law on Customs Tariff. These rates are ad valorem (the only exception is related to the importation of other cigarettes containing tobacco, where a combined ad valorem and specific customs duty rate is prescribed).

Customs duty rates in Serbia range from 0% to 57.6%, with most being under 30%. At the moment, the 57.6% rate only applies to cigarettes containing tobacco.

Serbia has signed following Free Trade Agreements, that envisage application of preferential customs duty rates for importation of goods originating in countries with which Free Trade Agreement is signed:

1. Stabilization and Association Agreement with European Union;
2. Central European Free Trade Agreement (CEFTA) including Albania, Bosnia and Herzegovina, Macedonia, Moldova, Montenegro and Kosovo in accordance with UNSCR 1244.
3. European Free Trade Association (EFTA) including Norway, Iceland, Switzerland and Liechtenstein
4. Free Trade Agreement with Belarus, Russia, Kazakhstan,Turkey, Great Britain and Northern Ireland and China.

Excise duties

Excise duties are levied on the following goods:

• Fuel oil derivatives;
• Biofuels and bioliquids;
• Tobacco products, including tobacco products that are heated while used, but not burnt;
• Nicotine pouches;
• Alcoholic beverages;
• Coffee (raw, roasted, extract);
• Liquids for filling electronic cigarettes;
• Electricity for final consumption;
• Natural gas for final consumption.

Excise duty in Serbia is specific (for oil derivatives, alcoholic beverages, cigars, cigarillos, coffee, electricity, nicotine bags, liquids for filling electric cigars and natural gas), ad valorem (for pipe tobacco), and combined (specific + ad valorem on retail price for cigarettes).

Electronic invocing

Serbian Law on electronic invoicing entered into force on May 7, 2021, according to which private and public sector entities are required to use an online portal called System of Electronic Invoices (SEF) for issuing, sending, receiving, processing and storing invoices, as well as for electronic recording of VAT.  

Public sector entity means the general state level, and a public enterprise that is not covered by the general state level. Private sector entity is a VAT payer, excluding public sector entities.

The obligation to issue electronic invoices applies to:

• domestic private sector entities for mutual transactions (i.e. local B2B transactions);
• a private sector entity for transaction with a public sector entity, including all requests for payment to the public sector entity ( B2G transactions);
• a public sector entity for transaction with a private sector entity; (G2B transactions)
• public sector entities for mutual transactions; (G2G transactions)
• fiscal representative of a foreign entity in Serbia, in accordance with VAT Law, for transactions with private and public sector entities.

Serbia's Ministry of Finance was adopting electronic invoicing in a three-phase implementation timeline:

1. As of January 1, 2022 - Public sector entity to receive and keep an electronic invoice and issue invoice to other public sector entity Private sector entity to issue an electronic invoice to a public sector entity
2. As of July 1, 2022 - Public sector entity to issue an electronic invoice to a private sector entity.  Private sector entity to receive and keep an electronic invoice issued by a public and private sector entity
3. As of January 1, 2023 - To issue and keep electronic invoices in transactions between private sector entities (B2B transactions).

Property tax

Property tax is payable annually on a quarterly basis in Serbia by all legal entities and individuals who own or have rights over real estate located in Serbia, such as:

• Ownership rights.
• Right of occupancy.
• Tenancy rights over an apartment or a building for a period longer than one year or for an indefinite period.
• Urban land usage right (municipal, public, and other state-owned land) larger than ten acres in area.

Where the taxpayer keeps books, the property tax on real estate is levied at a flat rate that cannot exceed 0.40%.

Transfer tax

Transfer tax is levied on the transfer for a consideration of rights over real estate when VAT is not payable on such a transfer; intellectual property rights; ownership over used vehicles, vessels, and aircraft (unless owned by the state); right to use urban and/or public building land; as well as rights relating to expropriated real estate.

The contract price is used as a tax base; however, the tax authorities have the right to adjust the tax base in case they estimate that the price agreed to in the contract is lower than under market conditions. The tax is payable at a 2.5% rate.

Stamp taxes

There are no stamp taxes in Serbia.

Capital gains tax of non-residents

Capital gains realised by non-residents from both residents or other non-residents are subject to 20% capital gain tax. Non-residents should appoint a fiscal representative in Serbia who should submit a tax return within 30 days from the realisation of capital gain. Based on the tax return, tax authorities will issue a decision assessing tax liability (if any).

In order to benefit from application of a relevant double tax treaty (DTT), the same rules are applicable as for withholding tax (WHT). Non-residents (i.e. the income recipient) must provide a tax residency certificate (on the form prescribed by the Serbian Ministry of Finance stamped by the relevant body from the non-resident's country of residence or official translation of certificate issued by foreign tax authorities), and the income recipient must be the beneficial owner of the income.

Payroll taxes and social security contributions

The employer is liable to withhold personal income tax (PIT) and social security contributions on payment of salaries to employees, at the following rates:

• 10% PIT.
• 19.9% social security contributions payable by the employee.
• 15.15% social security contributions payable by the employer.

The tax and contributions base is gross salary. The social security contributions base is limited to five average monthly salaries in Serbia.