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 stuffs, 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.
A 0% tax rate 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. A branch or other operating unit can be a taxpayer.
A non-resident that carries out taxable supply of goods and services in Serbia is obligated to appoint a fiscal representative and to register for VAT in Serbia, irrespective of the amount of the turnover realised in the previous 12 months. A 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 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.
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.
Supply of goods and services between the grantor of concession and concessionaire is not subject to VAT as of 1 January 2018, provided that the following conditions are cumulatively met:
- Supply is performed based on the public private partnership contract with elements of concession.
- The grantor of the concession and concessionaire are VAT payers.
If such supply would be subject to VAT, the customer would be entitled to input VAT recovery.
As of 1 July 2018, VAT payers will be obligated to submit a VAT assessment overview to the tax authorities, along with the VAT return.
As of 1 January 2019, foreign taxpayers will have the right to a VAT refund if one performs taxable supply of goods and services in Serbia to a Serbian VAT payer.
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) and apply to goods originating in countries that have a most favoured nation (MFN) status in trading with Serbia. Goods originating in other countries are subject to MFN duty rates increased by 70%.
At the moment, the only trading partner with Serbia that does not have MFN status is Taiwan.
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.
Excise duties are levied on producers and importers of the following goods:
- Oil derivatives.
- Tobacco products.
- Alcoholic beverages.
- Coffee (green, roasted, ground, and coffee extracts).
- Bio liquids and biofuels.
- Fuels for filling electronic cigarettes.
- Electricity for final consumption.
Excise duty in Serbia is specific (for oil derivatives, alcoholic beverages, cigars, cigarillos, and coffee), ad valorem (for pipe tobacco), and combined (specific + ad valorem on retail price for cigarettes).
Excise duties stated in Serbian currency are adjusted on a half-year basis according to variations of the consumer price index (CPI) declared by relevant government bodies in charge of statistics. For oil derivatives, the government can modify the specific excise duty amounts during the year according to changes in prices of crude oil on the market.
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 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.
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.