An overview of tax and taxation in Serbia
Tax environment in Serbia is one of the most favorable in Europe.
Some of the tax advantages for legal entities are:
- Linear corporate income tax rate 15%
- Special treatment of taxation in the field of research and development activities
- VAT and profit tax are among the lowest in Europe
- State subsidies for new employment and for newly settled persons
- The possibility of tax exemption from profit tax for 10 years for investments over 100 million dinars with the employment of at least 100 new employees
- The possibility of significant state subsidies for investments and employment of new workers with the fulfillment of the agreed investment and employment program.
Tax advantages for natural persons:
- Tax on dividends 15% linearly, without further taxation with synthetic tax
- Tax on capital gain 15% linearly, without further taxation with synthetic tax
- Tax on salaries 10%, in many cases there are tax benefits
- Tax residents of Serbia pay tax on their entire "world income" with the recognition of a tax credit for taxes paid abroad.
- Non-residents pay tax only for income earned on the territory of Serbia.
The tax system is schedular in combination with a synthetic annual tax. Every income of a natural person from various sources is taxed separately. The sum of these individually taxed incomes (earnings, income from the lease of movable and immovable property, etc.) is taxed at the end of the year with a synthetic annual tax at rates of 10% and 15% if they exceed three times the average salary in Serbia. The tax-free amount for people under 40 is six times the average salary. Synthetic annual tax is not payable on income from dividends and capital gains.
Types of taxes in Serbia
1. Indirect taxes
- VAT rates 20% and 10%
- Excise duties
2. Direct taxes
- corporate income tax
- Personal income tax
- Property tax
- Tax on the use of goods (cars, yachts, airplanes)
Double taxation in Germany and Serbia
Between Germany and Serbia, the Double Taxation Avoidance Agreement is in force, which brings additional security to companies and individuals doing business in both countries. The exemption method applies as a method of eliminating double taxation. This method foresees that, depending on the solution in the Agreement, exemption from taxation in one country is applied for certain incomes, if that income is taxed in another.
Also, the Agreement foresees some preferential rates, which the resident of the country pays in the country of the source of income:
Dividends: 15% in the country of source of income
Interest: exempt from taxation in the country of source of income
Royalties: 10% in the country of source of income
Profit from business: exempt from taxation in the country of source of income, unless the profit is realized through a permanent business unit.
State of editing: July 2023