Corporate - Tax credits and incentivesLast reviewed - 21 April 2023
Foreign tax credit
A Serbian entity is entitled to a tax credit for the WHT paid on foreign-sourced dividends and underlying CIT paid abroad (by its non-resident subsidiary), provided that the taxpayer holds at least 10% of the shares in the subsidiary for at least one year before filing a return. If the taxpayer holds less than 10% of the shares in the subsidiary, the tax credit should not exceed the amount of tax that would be paid in Serbia on that income, where the tax basis represents 40% of the received gross income. Non-utilised tax credit can be carried forward by the parent company for five years.
A resident taxpayer also has the right to decrease its tax liability for WHT paid abroad on interest and authorship fees. The tax credit should not exceed the amount of tax that would be paid in Serbia on that income, where the tax basis represents 40% of the received gross income. Carryforward of unused tax credits is not allowed.
A ten-year tax holiday is available for companies with a minimum investment in property, plant, and equipment (PPE) of RSD 1 billion. To qualify for the credit, a taxpayer must employ at least 100 new workers for an indefinite period. The tax holiday is available for the ten-year period in proportion to the investment made. The number of employees employed in the tax period in which the taxpayer qualified for the tax holiday must be retained throughout the whole tax holiday period.
Research and development (R&D) double deduction
R&D costs related to R&D performed in the Republic may be double deducted for CIT purposes. The incentive does not apply on research costs incurred in extractive industries (finding of oil, gas, or mineral resources).
Royalty income relief
80% of qualified royalty income generated by the copyright or similar rights holders (inscribed in relevant register in Serbia) can be excluded from the tax base. Qualifying income should be excluded upon decreasing this income for the amount of tax deductible R&D costs incurred in relation to development of such copyright/similar right.
Investments into newly established companies performing innovative activities
Investments into newly established companies, performing innovative activities, entitles a taxpayer to a tax credit in the amount of 30% of the investments made. The maximum amount of tax credit cannot exceed RSD 100 million.