Business in times of corona

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The state of emergency in the Republic of Serbia was declared on March 15 due to the pandemic of the Corona virus 19. There have been many changes in the operations of the companies from day to day. In order to protect the health of employees, many companies organized work from home, the regime of work of state institutions was changed, and many business associations gave their recommendations that the state should introduce to facilitate private sector business.

In order to have all the information in one place that can greatly facilitate the day-to-day operations of your companies, the experts at Kreston MDM have prepared a Newsletter for you on the topic of “Business in times of corona”. You can read the newsletter HERE.

We want your companies to stay healthy and safe in these extraordinary circumstances!

Two new calculators within the Kreston MDM BusinessINFO application

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Our Kreston MDM BusinessINFO app now has two new calculators that can make your day-to-day business easier.

The annual personal income tax calculator fully assists not only in the calculation but also in completing the PPDG-2R tax form. The deadline for filing this tax return is May 15 of the current year for the previous calendar year.

Individuals who have earned income in 2019 over RSD 2,729,304 are required to file an annual income tax return and pay tax.

Pursuant to the provisions of Article 87, paragraph 1 of the ZPDG, taxpayers of the annual personal income tax are  persons:

– residents for income earned in the Republic of Serbia and in another country

– non-residents for income earned in the Republic of Serbia

The Exemption Calculator for Newly Employed Qualified Persons relates to tax benefits for the employment of so-called qualified persons, which began with effect from 1 January 2020.

In the calculator, in addition to the calculation of earnings is given the total cost of earnings for the years 2020, 2021 and 2022, the year of release, as well as the amount of release (savings).

Each calculator has a link to our tax alert that addresses the relevant topic.

The application can be downloaded on

Our Kreston MDM BusinessINFO app now has two new calculators that can make your day-to-day business easier.

The annual personal income tax calculator fully assists not only in the calculation but also in completing the PPDG-2R tax form. The deadline for filing this tax return is May 15 of the current year for the previous calendar year.

Individuals who have earned income in 2019 over RSD 2,729,304 are required to file an annual income tax return and pay tax.

Pursuant to the provisions of Article 87, paragraph 1 of the ZPDG, taxpayers of the annual personal income tax are natural persons:

– residents for income earned in the Republic of Serbia and in another country

– non-residents for income earned in the Republic of Serbia

The Exemption Calculator for Newly Employed Qualified Persons relates to tax benefits for the employment of so-called qualified persons, which began with effect from 1 January 2020.

In the calculator itself, in addition to the calculation of earnings is given the total cost of earnings for the years 2020, 2021 and 2022, the year of release, as well as the amount of release (savings).

Each calculator has a link to our tax alert that addresses the relevant topic.

The application can be downloaded on Google Play or the App store platform.

Instruction to business entities prescribing the exact manner of issuing a permit for movement of employees during curfew

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The Ministry of Economy has issued an Instruction to business entities prescribing the exact manner of issuing a permit for movement of employees during curfew.

It is necessary to create a list of employees on this form https://privreda.gov.rs/wp-content/uploads/2020/03/PolijskiCas.xls
And submit it to the Ministry of Economy at [email protected]

After that, the employer issues to the employees who are on the list for issuing a work permit a working order for each individual exit during the period from 8 pm to 5 am.

An individual work order is issued on a daily basis on a memorandum of a business entity, signed by the responsible person, and must contain the following information:

– name and surname,
– Personal identification number,
– the date and time (from to) when he was hired, or when movement was necessary,
– reasons justifying the need for movement.

Notice of work due to the COVID-19 virus pandemic

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We would like to inform you that in accordance with the recommendations of the Government of the Republic of Serbia, Kreston MDM has taken all necessary measures to prevent the spread of the COVID-19 virus.

In order to protect the health of our clients, as well as the health of our employees, all meetings and consultations with clients will be held through digital services, while most documentation is submitted electronically to minimize all contacts and the possibility of spreading the virus. All precautions will not affect the scope and quality of service, as we operate with unchanged capacity in accordance with the recommendations and the current situation.

We invite you to follow the general preventive measures for the protection of the coronary virus and to work according to the instructions of the Ministry of Health to prevent the transmission of infections and to protect your health and the health of people from your area.

DTT between Serbia and Israel

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The double taxation treaty between Serbia and Israel began to apply from 1.1.2020.

The taxes to which this Agreement applies are:

In Israel:

  • personal income tax and corporate income tax (including capital gains tax)
  • income tax on the alienation of property which is subject to taxation in accordance with the Law on Real Estate Taxation
  • tax that is prescribed in accordance with the Oil Profit Taxation Act.

In Serbia:

  • corporate income tax
  • personal income tax.

The maximum withholding tax rates stipulated by the Agreement are:

Dividends:

  • 5 percent of gross dividend if the beneficial owner is a company that, during the 365-day period, which includes the dividend payout date, directly owns at least 25 percent of the capital of the dividend-paying company
  • 15 percent of gross dividend in all other cases.

Interest:

  • 10 percent of gross interest
    Note: As an exception, interest accruing in Serbia to a resident of Israel shall be taxable only in Israel if the beneficial owner of the interest is the government of another Contracting State, its political subdivision, local government unit or the Central or National Bank. The reverse is also applicable.

Royalties:

  • 5 percent of the gross royalties (for the use or right of copyright in a literary, artistic or scientific work, including cinema films and films or films for television or radio) and
  • 10 percent of the gross amount of royalties (for use or for the right to use a patent, trademark, design or model, plan, secret formula or procedure, or for the use or right of use of industrial, commercial or scientific equipment or for notices relating to industrial , commercial or scientific experiences – expertise).

OECD issued a report which contains transfer pricing guidance on financial transactions

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OECD issued a report which contains transfer pricing guidance on financial transactions, developed as part of Actions 4, 8-10 of the BEPS Action Plan. This report is significant because it is the first time the OECD Transfer Pricing Guidelines includes guidance on the transfer pricing aspects of financial transactions, which will contribute to consistency in the interpretation of the arm’s length principle and help avoid transfer pricing disputes and double taxation. Sections A to E of this report are included in the Guidelines as Chapter X. Section F is added to Section D.1.2.1 in Chapter I of the Guidelines, immediately following paragraph 1.106. The guidance describes the transfer pricing aspects of financial transactions and includes a number of examples to illustrate the principles discussed in this report.

The report can be seen on this link.

Non-taxable income for individuals in 2019 – RSD 2,729,304

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The non-taxable amount of complementary annual income tax in 2019 is RSD 2.729.304, so all natural persons who have earned income above this amount are required to file a tax return for the complementary annual income tax. Individuals subject to annual tax are residents of Serbia for income earned in the country and abroad, as well as non-residents of Serbia for income earned in the country.
Personal deductions are amounts that are deducted from taxable income:
 for the taxpayer – 40% of the average annual salary (for 2019 the amount is 363.907 RSD)
 for a dependent family member – 15% of the average annual salary (for 2019 the amount is 136.465 RSD).
The amount of personal deductions may not exceed 50% of taxable income. Only one taxpayer can use a deduction for each dependent family member (e.g. if both parents are taxpayers).
Taxable income represents the difference between the income earned and the non-taxable amount. The basis for annual tax is taxable income, which is the difference between taxable income and personal deductions.
Annual income tax is payable on taxable income at the rate of:
 10% for taxable income up to RSD 5,458,608 (six times average annual earnings)
 15% for the amount above RSD 5,458,608
Dividend is not subject to complementary annual income tax.