Amendments to the Law on brokerage and lease of real estate

The Government of the Republic of Serbia has adopted the Proposal of the Law on Amendments to the Law on Real Estate Brokerage and Leasing.

Among other things, the draft law provides for the amendment of Article 5, which defines the conditions for entry in the Register of Real Estate Brokers:

1) An entrepreneur or at least one natural person who establishes a company or another member of a company, or at least one full-time employee must have passed the professional examination referred to in Article 11 of this Law;

2) There must be a valid insurance contract concluded in accordance with Article 13 of this Law;

3) There must be adequate business premises in accordance with Article 14 of this Law;

4) The protective measure referred to in Article 32, paragraph 2 and Article 33, paragraph 4 of this Law, which is in force at the time of application, must not be imposed;

5) A member of a company, a real owner or entrepreneur, a representative of a company or manager, if the entrepreneur has entrusted the management of a business to a capable natural person, who have a registered predominant activity of a real estate agency, as well as natural persons with the professional examination referred to in Article 11 of this Law, legal persons may not be sentenced to a criminal offense for a fine or natural persons sentenced to imprisonment for a criminal offense in the Republic of Serbia or a foreign country.

The person referred to in item 1) of the Law, must be a full-time employed person and must have passed the professional exam, while under the applicable law it was possible to hire a person outside of employment.

The draft law stipulates a general condition of eligibility that candidates must fulfill when passing the professional examination for brokerage, which is that they cannot be sentenced to imprisonment for criminal offenses in the Republic of Serbia or a foreign country. The Law is scheduled to enter into force on January 1, 2020.

The new classification rules apply from 2020 onwards

(Opinion of the Ministry of Finance, No. 011-00-916/2019-16 as of 29 October 2019)

The provisions of Article 6, paragraph 1 of the Law on Accounting (“Official Gazette of the RS”, No. 73/2019 – hereinafter: the Law) stipulate that legal entities and entrepreneurs, within the meaning of this Law, shall be classified as micro, small, medium and large legal entities, depending on the average number of employees and business income in the business year and the value of total assets determined at the balance sheet date of the regular annual financial statements.

As the new classification rules take effect on 1.1.2020 and it is stipulated that from 1.1.2020 the provisions of the old Accounting Law relating to classification cease to apply, the new rules apply to classification beginning in 2020 (based on data from the 2019 Annual Financial Report).

With regard to other provisions of the Act relating to e.g. bankruptcy estate, the possibility of applying IAS / IFRS by micro-entities, the obligation to prepare and submit corporate governance reports, reports on payments to government authorities, the part related to non-financial reporting, etc. these provisions do not relate to the preparation of the financial statements for 2019, but will be applied starting with the financial statements, which are to be prepared as at 31.12.2020 (reports for 2020).

Extended period to 12/31/2020 for use of old tax incentives

The Law on Amendments to the Law on Personal Income Tax and the Law on Contributions for Compulsory Social Security stipulate the extension of the deadline for the use of old tax benefits for the employment of new persons until 31.12.2020.

However, it is stipulated that claims for tax and contributions refunds should be submitted on special forms which will be prescribed by the Minister of Finance.

Entrepreneur Independence Test

The Law on Amendments to the Law on Personal Income Tax introduces the Entrepreneurship Independence Test to be introduced on 1.3.2020. Five of the nine criteria finally proposed were corrected, following public hearings held in Belgrade, Niš, Novi Sad and Kragujevac.

After the changes, the criteria are:

1. the principal or related party with the principal determines the working hours of the entrepreneur, or the vacations and absences of the entrepreneur depend on the decision of the principal and the compensation to the entrepreneur is not reduced in proportion to the time spent on vacation;

2. the entrepreneur normally uses premises or conducts business in a place designated by the principal or a related person with the principal for the purposes of performing the tasks entrusted to him;

3. the principal or related person with the principal performs or organizes professional training or further training of the entrepreneur;

4. The principal has hired the entrepreneur after advertising in the media the need to engage individuals or by hiring a third party who is normally engaged in finding suitable people for employment and whose service has resulted in the engagement of that entrepreneur;

5. The principal or a related party with the principal provides its own basic tools, equipment or other basic tangible or intangible assets necessary for the regular work of the entrepreneur or finances their acquisition, except for specialized tools, equipment or other specialized tangible or intangible assets for the purpose of executing a specific job or order, either the principal or a related party with the principal normally manages the process of work of the entrepreneur, except for such management which entails giving a basic order in connection with the ordered job and reasonable control of the results of work or supervision of the principal, as a good businessman, over the performance of the work he has commissioned;

6. at least 70% of the total income of the entrepreneur or in the period of 12 months beginning or ending in the tax year concerned has been generated by one principal or a related party with the principal;

7. the entrepreneur performs activities which are officially defined as activities of the principal or related party with the principal, and for such performed activities his engagement contract does not contain a clause under which the entrepreneur bears the usual business risk for the job delivered to the client of the principal or related person with the principal, if such a client exists;

8. the contract for hiring an entrepreneur or a lump sum entrepreneur contains a partial or complete ban on the entrepreneur to provide services under a contract with other principal, except for a partial prohibition that includes the provision of services to a limited number of direct competitors to the principal;

9. the entrepreneur performs activities for a fee for the same principal or for a related party with the principal, continuously or intermittently for 130 or more business days for a period of 12 months beginning or ending in the respective tax year, whereby performing activities in one working day are considered to be any activity in any period during that working day between 00 and 24 hours.

Documenting expenses for coming to work – Law amendments

After the adoption of the amendments to the Law on personal income tax, employees will have to document to their employers all expenses for coming to work, except if the employer pays a monthly transport pass by direct payment through the invoice to the city carrier.

The most recent changes – through the addition of Article 18, paragraph 1, item 1) – add the word “documented”, which means that reimbursement of transportation costs will have to be documented, so each employee will need to present an invoice.

If he does not document the expense, he cannot use the prescribed non-taxable amount, and that amount will have to be calculated and tax paid.

The law is expected to enter the parliamentary procedure during November 2019, and implementation is expected as of January 1, 2020.