SERBIA 2016

Web Site: www.shermannigretti.it

E-mail: info@shermannigretti.it
Tel. +39 (0)2 7722951
Mob. +39 335 6030346
Twitter: @ShermanNigretti
Linkedin: Gianmauro Sherman Nigretti

GEOGRAPHY AND POPULATION

CAPITAL:

BELGRADE

POPULATION:

7,20 MILLION

POLITICAL SYSTEM:

PARLAMENTARY REPUBLIC

CURRENCY:

SERBIAN DINAR (RSD)

FORMS OF BUSINESS ORGANIZATIONS

Foreign investors can conduct business as an entrepreneur or incorporate a company as a:

Joint stock company (a.d.)

Limited liability company (d.o.o.)
Limited partnership (k.d.)
General partnership (o.d.).

The most common company type is a limited liability company, which requires only RSD 100
for incorporation.
Businesses can be also registered as:

Entrepreneurs
Representative offices
Branches
Business associations.

ACCOUNTING
Accounting in Serbia is governed by the National Accounting Law. Regulation of accounting in
Serbia includes the following areas:

The way of keeping the sets of account

Recognition and valuation of assets and liabilities, income and expenses/costs
The compilation and displaying of submissions, and the disclosure and processing of annual
financial statements
Conditions for and mode of auditing financial statements and internal auditing.

Business entities in Serbia can independently perform accounting and bookkeeping tasks.

Accounting can be carried out by employees delegated to perform accounting tasks and must follow
rules which regulate the general degree, work experience and other requirements for these
employees.
Legal entities in Serbia are classified as micro, small, medium and large-sized companies, depending
on the average number of their employees, annual income and the value of assets as of the date of
compilation of financial statements in a financial year.

AUDITING
The purpose of auditing financial statements is to enable the auditor to express an opinion on
whether the financial statements have been prepared as required by the International
Accounting Standards in respect of all essential aspects.
Auditing of financial statements is compulsory for large and medium-sized legal entities, as well
as issuers selling their long-term securities by public offering.
Audits shall be conducted every year on the basis of information in respect of the classification
of legal entities for the previous year. Issuers of securities are required to obtain an auditing
report for the year preceding the year in which the securities are issued.
Supervision of legal entities in terms of the control of accounting records and keeping a general
ledger will be conducted by the Tax Authorities in accordance with the Law on Tax Procedure
and Administration.
A new requirement is that companies which did not have any business activities during the year,
and do not have any assets or liability within its financial statements, are obliged to submit a
statement of inactivity by the end of February of the following year.

Financial records, financial statements, annual reports, the decision for the adopting of financial
statements, the auditors report, the decision on profit distribution and other financial information
shall be prepared in the Serbian language.
Financial statements must include:

Balance sheet
Income statement
Cash flow statement
Statement on changes in equity
Notes to the financial statements.

CORPORATE TAXATION
Corporate income tax is payable by the following:

Resident is legal entity established or has its place of effective management and control in the
territory of the Republic of Serbia. Residents are taxed on their income generated in the
territory of the Republic, as well as on worldwide income.

Non-residents are taxed only on their income sourced through a permanent establishment in
Serbia. A permanent establishment is any permanent place of business through which a
nonresident conducts his business.

A taxable entity includes a company registered as a joint stock company, a limited liability company,
a general partnership, limited partnership, a socially owned company or a public enterprise, cooperative, branch office or any other legal entity generating income from the sale of goods or
rendering services to the market.
The tax year is the same as the calendar year, although a different tax year may be used if
approved by the tax authorities.

A tax period may not exceed 12 months in length and may only be changed once every five years.
Tax returns must be filed with the tax authorities within 180 days of the end of the tax year. A
monthly instalment payment system applies based on the profits arising in the previous period.
The tax rate on all profits and gains is 15%.

INDIVIDUAL TAXATION
Income tax is chargeable on all Serbian residents in respect of income generated in Serbia and other
countries.
A Resident of the Republic of Serbia (hereinafter referred as "resident') is each person who:
Has a personal residence or his centre of interests in Serbia;
Resides in Serbia for at least 183 days, whether or not consecutively, within a period of 12
months beg inning or ending in the respective taxation year.
Serbian residents are taxed on their worldwide income including:
Income from wages (tax rate -10%);
Income from agricultural activity and forestry (tax rate - 20%);
Income from independent personal activities (tax rate - 10%);
Income from royalties etc. (tax rate - 20%);
Income from capital (tax rate - 15%);
Income from property and property rights (tax rate - 15% and 20% on rental fees);
Capital gains (tax rate - 15%); and
Other income (tax rate - 20%).
Annual personal tax is paid under a withholding tax system. Tax credits are available for overseas
taxes up to the amount of tax suffered in Serbia on the income concerned.

DOUBLE TAX TREATIES

AVOIDING DOUBLE TAXATION

If a taxpayer has already paid tax on profits generated abroad, they are entitled to a
corporate profit tax credit in Serbia to the already paid amount. The same right is enjoyed by
a taxpayer who earns revenue and pays personal income tax in another country, provided
there is a double taxation treaty with that country.
Serbia has signed double taxation agreement with 49 countries.

VAT
According to Law on VAT, taxpayer is an entity that independently trades in goods and services as a
producer, trader or provider of services for the purpose of profit. The VAT rules also apply to the
following:

Agents assigned by foreign entities doing business in Serbia but without a permanent business
unit in Serbia;
Recipients of goods and services if foreign entity do not assign agent;
Entities that account for VAT in their invoices but are not obliged to pay the tax according to the
Law on VAT;
Entities that import goods.

Taxpayers whose total turnover did not exceed RSD 8,000,000 (circa Euro 65.000) in the preceding
calendar year are not obliged to register as VAT.
The taxable amount tor domestic goods and services is the sales price, including excise and duty
costs and all secondary expenses charged to the recipient of the goods and services.
The standard rate is 20%.
VALUE ADDED TAX EXEMPTION IN FREE ZONES - Income generated through commercial activities in
free zones in Serbia is exempted from value added tax. There are six free zones currently operating
in the country: Subotica, Novi Sad, Zrenjanin, Sabac, Kragujevac, Uzice and Pirot. Foreign companies
can establish a privately owned company in a free zone, subject to project approval by the
government.

DISCLAIMER
This publication must not be regarded as offering a complete explanation of the taxation and
corporate matters that are contained within this publication.
This publication has been prepared on the express terms and understanding that the publishers are
not responsible for the results of any actions which are undertaken on the basis of the information
which is contained within this publication.
The publishers and the authors expressly disclaim all and any liability and responsability to any person,
entity or corporation who acts or fails to act as a consequence of any reliance upon the whole or any
part of the contents of this publication.
Accordingly no person, entity or corporation should act or rely upon any matter or information as
contained or implied within this publication without first obtaining advice from an appropriately
qualified professional person, and ensuring that such edvice specifically relates to their particular
needs.