Taxation of Foreign Companies in Serbia
Taxation of Foreign Companies in SerbiaUpdated on Friday 27th January 2023
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The tax regime of a country is extremely important when it comes to the type of structure and business you wish to implement and develop. This is also the case of Serbia, an extremely appealing country for numerous investors who can benefit from different incentives and tax exemptions. In matters of legal aspects, we invite you to address your inquiries to our team of lawyers in Serbia and find out more about the tax structure of this country and its implications. They can also help you register a company in Serbia.
What are the taxes imposed on foreign companies in Serbia?
Foreign companies need to align with the tax requirements in Serbia and must observe the following taxes imposed for business in this country:
- The corporate profit tax and the value added tax in Serbia.
- The withholding tax imposed on interests, royalties, dividends, capital gains, shares in profits.
- The annual income tax and the social insurance contributions in Serbia.
- The capital gains tax and other taxes imposed on personal income.
The registration for taxes in Serbia might seem complex for overseas investors who do not have an idea about the regulations imposed. This is why you should get in touch with our Serbian lawyers and find out how we can help in this direction.
What is the corporate profit tax in Serbia?
According to the Corporate Profit Tax Law, the corporate tax is set at a 15% rate, with the mention that Serbia aligns with other European states that impose a small corporate tax. This kind of tax is imposed to limited liability companies, limited and general partnerships and also joint stock companies, stating that the corporate tax is established and imposed once the balance sheet with the company profits is registered and submitted with the tax authorities in Serbia, respecting the international accounting laws (IFRS). Let us remind you that our Serbian lawyers can offer legal advice in the case of tax registration and submission with the entitled authorities in Serbia for all foreign investors looking for business in this country.
Are you interested in citizenship in Serbia? Our lawyers have experience in this matter of immigration and can offer you the necessary legal support. We will explain to you what the formalities and conditions are and we will help you with the necessary paperwork. You can invest around EUR 500,000 in a business in Serbia or purchase a property for EUR 250,000, as options for obtaining citizenship. We invite you to contact us to discover all the necessary information in this regard.
What is the VAT in Serbia?
The products and services offered on the market for sales purposes are subject to VAT which at the moment is set at 20%. Basic food, public transportation, newspapers and magazines, utilities, computers and medicines are subject to a VAT rate of 10%. Organizing lottery and gambling services, education, the exports of goods, medical services, culture and entertainment, and international air transport are exempt from VAT in Serbia. As for the real estate properties in Serbia, the VAT is set at 8% for the transfer of properties. In the case of yearly taxes for real estate properties of foreign companies in Serbia, a tax rate of 0.4% is imposed. Complete legal advice from our team of lawyers in Serbia can be offered for foreigners looking to set up a business in Serbia.
Double taxation treaties in Serbia
It is good to know that foreign companies in Serbia are protected by the double taxation agreements signed with 65 countries, meaning that entrepreneurs will pay the taxes only in the country where the profits are generated. Here are a few important provisions to pay attention to when opening a company in Serbia:
- If the taxes have been paid in a foreign country, proof of such payment is needed.
- A withholding tax of 10% rate is set for businesses from Belgium and Egypt.
- The profits of a company with establishments in Serbia are levied only in the country where they are registered.
- A withholding tax of 8% is set for companies from Finland, France, the Netherlands, Sweden, and Germany.
It is important to have legal support by your side, especially if you are a foreign entrepreneur looking for business registration in Serbia.
Tax incentives for companies in Serbia
It is important to know that the Corporate Income Tax Law has been recently reviewed and it refers to the copyrights and related rights which are levied with a tax of no more than 80% of the registered incomes. In the case of research and development, the costs can be deducted. The same set of laws mentions the right for tax credits of approximately 30% of the invested funds, not exceeding EUR 850,000. Businesses with activities in innovation can benefit from a series of tax incentives if they operate on the market for no more than three years. It is important to know that the Serbian government sustains the foreign investments in this country, including the ones directed to the research and development in Serbia.
Knowing the taxation structure in Serbia will help entrepreneurs from abroad decide on the business entity they want to form. We kindly invite you to contact our law firm in Serbia and solicit complete legal assistance in matters of taxation for foreign companies in Serbia.