Just like in the case of other jurisdictions with an advantageous tax system, Serbia hasn’t signed many double tax treaties so far. When opening a company in Serbia as a foreigner, it is suggested to understand the taxation system regarding the double tax treaties signed by Serbia. In this matter and in any other legal related issues, our Serbian lawyers can offer support and information. We also remind that the Serbian fiscal system states that the profits are taxed at only 10% and the withholding taxes on dividends, interests, and royalties are 20%. All the above can be exempt, credited or minimized by the double tax treaties provisions.
The countries which signed double tax treaties with Serbia
Serbia signed double taxation agreements with 60 states: Albania, Austria, Armenia, Azerbaijan, Belgium, Belarus, Bosnia and Herzegovina, Bulgaria, China, Croatia, Canada, Cyprus, Czech Republic, South Korea, Denmark, Egypt, Estonia, Finland, France, Germany, Greece, Georgia, Hungary, Italy, Iran, India, Ireland, Kuwait, Kazakhstan, Latvia, Libya, Lithuania, Luxembourg, Macedonia, Malaysia, Malta, Moldova, Montenegro, Morocco, the Netherlands, Norway, North Korea, Pakistan, Poland, Qatar, Romania, Russia, Slovakia, Slovenia, Sri Lanka, Spain, Sweden, Switzerland, Turkey, Tunisia, Ukraine, the UAE, United Kingdom, Uganda, and Vietnam.
Provisions related to taxes
Entrepreneurs who want to know more details about how to avoid the double taxation on profits need to understand that there are two methods of taking advantage of the provisions linked to the revenues, such as:
- credit, when the profits are taxed in Serbia, but a credit on that amount is granted;
- through exemption
, when the profits are not taxed at all in Serbia
, but only in the country of origin.
Smaller withholding taxes on dividends, interests, and royalties or even an exemption from paying these taxes are available for the companies with foreign capital, depending on the degree of participation in the Serbian company or in the subsidiaries from the signatory states. The smaller withholding taxes apply if the foreign investor owns a part of the company’s capital for a long period of time. The investors must deliver to the Serbian tax authorities a proof that the taxes are paid in the country of origin or a proof that the company owns a majority of shares for a long period of time in the entity which requests the smaller taxes or exemption from these.
If the treaties are elaborated under the OECD model, the tax information exchange between the countries is a mandatory requirement. Due to it, the foreign authorities have the right to ask for information related to the entities which request the exemptions to the foreign partner countries.
The benefits of DTT in Serbia
The double tax conventions signed by Serbia
provide several advantages for foreign companies
established in this country. The one that needs to be mentioned refers to withholding taxes on dividends, royalties, and interests at low rates. For instance, a withholding tax on dividends of 5% is established for Serbian companies
where the foreign investor owns 25% of the capital, if he or she is from Spain, Malta, Greece, or Ireland. We mention that local companies are subject to a withholding tax on dividends, royalties, and interests of 20%. For countries like Germany, Sweden, Finland, France, Norway and the Netherlands, such tax is not imposed. Another benefit which needs to be taken in attention by foreign investors
is that the countries that signed double tax treaties with Serbia
are subject to taxes on royalties with rates between 0% and 10%.
If you need more information about the avoidance of double taxation, you may contact
our lawyers in Serbia