In the Official Gazette no. 118/2021 as of December 9, 2021, amendments to the following tax laws have been published:
- Law on Corporate Profit Tax,
- Law on Personal Income Tax,
- Law on Property Tax, and
- Law on Contributions for Mandatory Social Insurance.
An overview of key novelties is presented below.
Law on Corporate Profit Tax
The amendments introduced the possibility of taxpayers not to include capital profit collected by intake of certain property rights (copyright or related right on deposited author’s work, or the subject of related right, as well as rights relating to an invention, pursuant to the law on patents) in capital of a resident legal entity in tax base.
The condition is that such resident legal entity does not dispose of thus acquired rights within two years as of their acquisition, and not to allow the use of such right (in total or its part) for the same period and at a price below the price established according to the principle “at arm’s length”, if the right was assigned to a related person or person whose owner is its related person. Otherwise, the taxpayer shall lose the right to exclude capital profit from the tax base, in which case it shall be obliged to calculate in the tax application and pay the respective tax for the period when the acquired rights were disposed of or assigned.
The above stated amendments shall enter into force on the eighth day after publication in the Official Gazette, and they will apply to the establishment, calculation and payment of taxes starting from 2022, i.e., for the tax period starting in 2022.
Law on Personal Income Tax
An overview of key amendments to this law is given below:
- non-taxable amount of salary has been increased to RSD 19,300;
- validity of tax facilities in relation to the employment of new persons and persons with disabilities, in terms of the right to return a part of the paid income tax, has been extended by the end of 2022;
- as regards the tax facility referring to the payment of calculated and withholding salary tax for so-called qualified newly-employed persons, conditions have been prescribed for realisation of such rights by the end of 2025;
- new tax facilities have been prescribed for so-called newly-employed persons – an employer establishing the employment with such person shall be relieved of obligation to pay 70% of the calculated and withholding salary tax for salaries paid until December 31, 2024 (whereby the newly-employed person is considered persons who does not have the status of insured employee in the period from January 1, 2019 to February 28, 2022, or the status of insured entrepreneur, insured founder of independent business activity or insured member of company employed in the company that it founded, and which acquires the said status in the period from March 1, 2022 to December 31, 2022 by starting employment, and whose monthly salary exceeds RSD 76,500);
- additionally, new tax facilities have been provided for employers, i.e., legal entities whose business activity in the territory of Serbia includes research and development, which implies an exemption from payment of 70% of the calculated and withholding salary tax for persons directly engaged in research and development jobs (in proportion to the time spent at research and development tasks compared to full working time);
- it is also stipulated that tax facility from Article 21e of the current law, according to which an employer – company conducting the innovation activity (in terms of the law on corporate profit tax) shall be entitled to relief from payment of calculated and withholding tax for salaries of founders employed in such company, may also apply to the employer – newly-established company incorporated until December 31, 2022;
- the law also stipulates the relief from payment of tax on capital profit achieved by intake of copyright and related rights, and industrial property rights as non-cash investment in capital of a company that is Serbian resident; as well as
- decrease of income subject to taxation with annual personal income tax for payers under the age of 40, for three average annual salaries per employee paid in Serbia in the year that tax is calculated for (according to the data of the republic authority responsible for statistics); and
- exception from taxation of compensation collected (in accordance with the law on dual education, i.e., dual studying) as material and financial insurance by pupils and/or students in the process of work-based learning.
The stated amendments shall enter into force on the eighth day after their publication in the Official Gazette, and they will be applied starting from January 1, 2022, except for new facilities that will be applied starting from March 1, 2022.
Law on Property Taxes
Key amendments to this regulation, which will enter into force on January 1, 2022, include:
- extension of the subject of taxation with property taxes to include the lease of apartment or house for housing, constituted in accordance with laws regulating planning and construction, and science and research;
- specifying the date of onset of the obligation on basis of property taxes in a situation where a spouse acquires the right of joint ownership, i.e., co-ownership of real estate based on encumbered legal transaction it is not a party in, i.e., which was concluded by their spouse, and which varies depending on the existence of spouses’ statement regarding the joint ownership);
- changes to the tax base for inheritance and gift taxes, and transfer of absolute rights with regards to transfer of ownership right on used motor vehicles, which value is established by application of the prescribed formula, depending on the working volume and power of the engine, as well as vehicle age index;
- in relation to the above, it is prescribed that, in case of transfer of property right to used motor vehicle with compensation, buyer shall be obliged to pay taxes for transfer of absolute rights, whereas, if natural persons participating in the legal transaction concerned are not subject to VAT obligations, no tax application shall be filed for the establishment of taxes for transfer of absolute rights (except in cases stipulated by the law), but the tax shall be established and paid by self-taxation instead; and
- provisions pursuant to which the establishment, charging and control of taxes on inheritance and gift, and transfer of absolute rights, shall fall within the competence of local self-government units starting from January 1,
Law on Contributions for Mandatory Social Insurance
According to the amendments to the law regulating the contributions for mandatory social insurance, the rate of contributions for mandatory pension and disability insurance has been decreased to 25% (i.e., by 0.5%), and it is prescribed that all the above stated facilities from the Law on Personal Income Tax regarding salaries tax shall also apply to the respective contributions.
These amendments shall enter into force on the eighth day after their publication in the Official Gazette, and shall be applied starting from January 1, 2022, with the exception of the provisions on facilities relating to the employment of newly-employed persons, and performance of research and development activities, as the application whereof shall start on March 1, 2022.
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