Amendments to the tax laws and Regulation
on the procedure and manner of postponing the payment of due taxes and contributions

On December 17, 2020, the National Assembly of the Republic of Serbia adopted laws on amendments to several tax laws:
– Law on Personal Income Tax
– Law on Corporate Income Tax
– Law on Value Added Tax
– Law on Contributions for Compulsory Social Insurance and
– Law on Excise Duties

The laws shall be applied from January 1, 2021, except for the Law on Amendments to the Law on Corporate Income Tax, which will apply to the determination, calculation and payment of tax liability for the tax period beginning in 2021.

The most important changes are

1. Law on amendments to the Law on Personal Income Tax

– The obligation of a domestic legal entity to calculate and pay withholding tax has been introduced, in the case when that domestic legal entity makes a payment to an employer from another state on the basis of reimbursement of labour costs of a person delegated or sent to work with a domestic legal entity, if the delegated person has not settled the obligation by self-taxation. The basis for the calculation of payroll tax is the estimated amount of compensation paid to a foreign legal entity based on the use of the services of delegated workers.
– The non-taxable amount of salary has been increased to 18,300 dinars per month.
– The period of application of the existing employment benefits has been extended until December 31, 2021.
– The provisions in relation to benefits based on the employment of a qualified new employee are specified.
– Taxation of digital property transfers by capital profit taxation has been introduced.
– Tax incentives based on investments in investment funds have been introduced. Namely, a taxpayer who invests in an alternative investment fund, i.e. in the purchase of an investment unit of an alternative investment fund, is entitled to a tax credit on account of the annual personal income tax up to 50% of the investment made in the calendar year for which the annual personal income tax is determined.
– Taxation of income on the basis of ownership is regulated, as well as on the basis of transfer of ownership rights on investment units of an alternative investment fund.

2. Law on amendments to the Law on Corporate Income Tax

– It is specified that the taxpayer makes capital profit by selling or other transfer for a fee and investment units of the investment fund, but also the rights to digital assets, unless the taxpayer, as part of trading activities, acquired digital assets solely for resale .
– Capital profit realized from the sale of digital assets are not included in the tax base, if the proceeds from the sale are invested in that tax period in the share capital of a resident taxpayer, i.e. an investment fund established in accordance with regulations governing investment funds, and the center of business, i.e. investment activities is located in the territory of the Republic.
– The determination of the purchase value of real estate acquired before January 1, 2004 is specified.
– Income earned by a non-resident legal entity on the basis of membership in an alternative investment fund that does not have the status of a legal entity, is considered a dividend.
– It is stipulated that the residual net asset value of an open-end investment fund distributed to members is considered a capital profit.

3. Law on amendments to the Law on Value Added Tax

– The provisions governing the secondary supply of goods and services have been amended. It is specified that the turnover of movables in addition to real estate cannot be considered as ancillary turnover, and that the rental of real estate cannot be considered as an ancillary service.
– The notion of a value voucher is specified.
– It is defined that a taxpayer is also an open-end investment fund, i.e. an alternative investment fund, which does not have the status of a legal entity, and is entered in the appropriate register in accordance with the law.
– It is specified that the tax debtor is the recipient of goods and services in the field of construction, for turnover performed by VAT payers, if the value of that turnover is higher than 500,000 dinars.
– A special recording of the amounts that the taxpayer collects or pays in the name and on behalf of another, and which are not included in the tax base, is prescribed.
– Tax exemption with the right to deduct previous tax for the sale of goods in the process of active cultivation is added, as well as tax exemption without the right to deduct previous tax on the transfer of virtual currencies for funds in accordance with the law governing digital property.
– The rules on determining the proportional tax deduction have been amended in the meaning that the occasional turnover of shares, securities, postal securities at their imprinted value in the Republic, except for ownership shares from Article 4 of the Law on VAT, is not taken into account at determining the percentage of the proportional tax deduction.
– The rules governing the special procedure for taxing the sale of second-hand goods, including used motor vehicles, works of art, collectibles and antiques, have been completely changed. The taxpayer is given the right to choose whether to determine the tax base as the difference between the sale and purchase price of the good, with the deduction of VAT contained in that difference, or to calculate VAT on the sale price.
– The procedure of registration in the VAT system of a person who has not submitted a registration application within the legally prescribed period is regulated.
– The possibility of issuing invoices in electronic form has been regulated.
– The rule on cancellation of invoices in which VAT is incorrectly specified is specified.

4. Amendments to the Law on Contribution for Compulsory Social Insurance

By amendments to the Law harmonization has been performed with the amendments to the Law on Personal Income Tax.

5. Amendments to the Law on Excise Duties

– The amounts of excise duty on liquids for filling electronic cigarettes have been changed.
– It is specified that the obligation to inventory of excise products on December 31 of the current year and submission of inventory lists to the Tax Administration no later than January 31 of the following year has only the producer of excise products.
– It is prescribed that the right to excise refund has a buyer of seized, i.e. confiscated excise products in the control procedure, which he exported.
– New specific amounts of excise duty on cigarettes are prescribed for the period 2021-2025.

Regulation on the procedure and manner of postponing the payment of due taxes and contributions

On December 24, 2020, the Government of the Republic of Serbia adopted the Regulation on the procedure and manner of postponing the payment of due taxes and contributions in order to mitigate the economic consequences caused by COVID-19 disease (hereinafter: the Regulation).
The Regulation was published in the “Official Gazette of the Republic of Serbia”, No. 155 of December 25, 2020, and shall enter into force on the eighth day from the day of its publication, i.e. from January 2, 2021.

The Regulation regulates in more detail the procedure and manner of postponing the payment of due tax and contributions in 24 equal monthly installments, without calculating interest, the maturity of which has been postponed in accordance with the Regulation on Fiscal Benefits and Direct Payments and the Government Conclusion.
Postponement of payment is realized without the implementation of a special procedure, i.e. without the submission of a request by the taxpayer, as well as without collateral, so automatically.

Business entities may settle the obligation even before the expiration of the period for which the payment was postponed, but if they do not settle the installment within the prescribed deadlines, they lose the right to postponement, and the Tax Administration conducts regular and forced collection over the remaining unpaid amount ex officio.

Postponement of payments based on income and personal earnings

For business entities that decide to postpone the payment of taxes and contributions, salary compensation, personal earnings of entrepreneurs and advance payments of taxes and contributions of flat-rate entrepreneurs, the first installment is due for payment on February 10, 2021, and each subsequent installment is due on the same date in the following months. . The monthly amount of the installment cannot be less than 1,000 dinars.
Contributions which postponement is postponed in accordance with the Regulation are considered paid for the purpose of exercising rights based on pension and disability insurance, health insurance, exercising the right in case of unemployment and exercising the right to financial support for families with children, as well as exercising rights for other purposes.

Postponement of payments based on advance payment of income tax

Regarding postponed advance payments of income tax, the first installment is also due on the 10th of the month following the month in which the final corporate income tax return for 2020 was submitted, depending on whether there will be an obligation to pay income tax at all. It is prescribed that the monthly installment on this basis cannot be less than 2,000 dinars.
The same principle applies to postponed advance payments of income taxes from independent activities of entrepreneurs, with the restriction that the monthly installment cannot be less than 1,000 dinars.
We are at your disposal for additional advice.

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