Info’s and rules:
- A foreign investor (foreign legal entity domiciled abroad, including a branch of a foreign legal entity registered in the Republic of Serbia; foreign citizen, regardless of permanent residence; citizen of the Republic of Serbia, domiciled) may establish a company.
- Unless otherwise provided by the Investment Act or other law, a foreign investor is in the same position and has the same rights and obligations as a domestic investor in relation to an investment.
- The members, partners, legal partners and depositors of the company, members of the limited liability company, shareholders apply the law governing certain legal forms of the company and in case of abuse are liable for the obligations of the company in accordance with the rules of limited liability.
- The registered office of the company is located in the territory of the Republic of Serbia, from which the company carries out its business activities and which is determined by the articles of association or the articles of association of the general meeting.
- The address of the registered office of the company is registered in accordance with the Registration Act
- The company operates under a company name registered under the Registration Act and engages in legal transactions.
- The company name must include the name, legal form and registered office of the company.
- The doo must have a legal representative, ie a director.
The directormust not have an employment contract with the company – it is sufficient if the monthly contributions for the minimum wage get paid.
Taxation in Serbia is governed by national laws and overseen by the Tax Administration of the Republic of Serbia. The tax system includes a variety of taxes on income, corporate profits, property, consumption, and other activities. Here’s an overview of the key aspects:
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1. Personal Income Tax
• Tax rates: A flat rate of 10% applies to most types of personal income, including salaries, self-employment income, and other forms of income.
• Annual income tax: Individuals whose annual income exceeds a specific threshold (three times the average annual salary in Serbia) are subject to an additional surtax of:
o 10% for income up to six times the average annual salary.
o 15% for income exceeding six times the average annual salary.
• Social security contributions: Paid on gross salaries, including:
o Pension and disability insurance (14%).
o Health insurance (5.15%).
o Unemployment insurance (0.75%).
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2. Corporate Income Tax
• Tax rate: The corporate income tax rate is 15% on profits earned by companies.
• Tax base: Based on accounting profit adjusted for non-deductible expenses, depreciation, and other adjustments.
• Incentives: Serbia offers various tax incentives, including tax holidays for investments in specific industries, deductions for employing new workers, and incentives for businesses investing in research and development.
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3. Value-Added Tax (VAT)
• Standard rate: 20% applies to most goods and services.
• Reduced rate: 10% applies to basic food items, medicines, books, and similar goods.
• Exemptions: Certain services, such as financial and insurance services, education, and healthcare, are VAT-exempt.
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4. Property Tax
• Levied on individuals and legal entities owning real estate in Serbia.
• Rates:
o Progressive rates for individuals, depending on the value of the property (ranging from 0.4% to 2%).
o Legal entities pay a flat rate of up to 0.4% of the market value of the property.
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5. Other Taxes
• Excise Taxes: Applied to products like tobacco, alcohol, petroleum products, and coffee.
• Capital Gains Tax: A flat rate of 15% applies to capital gains from the sale of property, shares, or other capital assets.
• Inheritance and Gift Tax: Ranges from 1.5% to 2.5%, depending on the relationship between the donor and the recipient.
• Environmental Taxes: Levied on entities impacting the environment.
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6. International Taxation
• Serbia has a network of double tax treaties with many countries to avoid double taxation and reduce withholding tax rates on dividends, interest, and royalties.
• Withholding taxes:
o Dividends: 20% (or reduced by treaty).
o Interest and royalties: 20% (or reduced by treaty).
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Recent Developments
• Serbia has been aligning its tax system with EU standards as part of its EU accession process.
• The government has been introducing incentives for foreign investments, especially in IT, manufacturing, and renewable energy sectors.