User manual for electronic recording of VAT calculations in SEF

The User’s manual for electronic recording of VAT calculations in SEF has been finally published.
After the amendments to the Rulebook on VAT and the Rulebook on electronic invoicing, which have been in effect since January 1, 2024, on the website of the Ministry of Finance (www.efaktura.gov.rs) On January 4, 2024, the User’s Guide for the electronic recording of VAT calculations in SEF was published. You can download the User manual here.

Amounts of the highest and lowest bases for calculating contributions for mandatory social insurance that will be applied in 2024

The amounts of the highest and lowest bases for the calculation of contributions for mandatory social insurance, which will be applied in 2024, have been published. In the Official Gazette of the Republic of Serbia no. 115/2023 of December 22, 2023, the following were published:

  • The amount of the highest monthly contribution base for the year 2024;
  • The amount of the lowest monthly contribution base for 2024;
  • The amount of the highest annual contribution base for 2024;
  • The amount of the lowest monthly contribution base for insured persons from Art. 25, 26 and 27 ZDOSO for 2024.

The new bases for calculating contributions will be valid from January 1, 2024 to December 31, 2024.
The new base amounts for the calculation of contributions will be applied to all salary payments, salary differences or contracted compensation for temporary and occasional jobs that are performed from January 1, 2024, regardless of the month in which the payment is made.

  1. The amount of the maximum monthly contribution base for mandatory social insurance for the year 2024
    The highest monthly base on which contributions for mandatory social insurance are calculated and paid amounts to 573,470.00 dinars.
  2. The amount of the lowest monthly contribution base for mandatory social insurance for the year 2024
    The lowest monthly basis on which contributions for mandatory social insurance are calculated and paid is 40,143.00 dinars.
  3. The amount of the maximum annual contribution base for mandatory social insurance for the year 2024
    The highest annual contribution base for mandatory social insurance for 2024 is RSD 6,881,640.00.
  4. The amount of the lowest monthly contribution base for compulsory social insurance for insured persons from Articles 25, 26 and 27 of the Law on Contributions for Compulsory Social Insurance for the year 2024
    The lowest monthly base on which contributions are calculated and paid for mandatory social insurance for self-employed artists, priests, religious officials and farmers for the year 2024 is 40,143.00 dinars.

HAPPY HOLIDAYS

Dear all,

As the holiday season approaches, below you can see the public holidays in January and February 2024.

In January and February 2024, the following state holidays will be observed:

New Year: January 1st and 2nd (Monday and Tuesday) – New Year’s holiday, which falls on Monday and Tuesday in 2024, will be observed as non-working days. Statehood Day (Sretenje): February 15th and 16th (Thursday and Friday) – Statehood Day, being on Thursday and Friday in 2024, will be observed as a non-working day. In January and February 2024, the following religious holidays will be observed:

Christmas: January 7th (Sunday) – Christmas on Sunday in 2024, will be observed as a non-working day. However, since it is a religious holiday celebrated on the actual day, unfortunately, there is no adjustment to a non-working day on Monday, January 8th. Catholics and other Christians celebrating Christmas according to the Gregorian calendar will observe Christmas on December 25th, 2023 (Monday), and they are entitled to a day off.

Saint Sava (Spirituality Day): January 27th (Saturday) – Saint Sava’s Day, being on Saturday in 2024, will be observed as a working day if Saturday is a regular working day according to the work schedule. In January and February, Orthodox believers celebrating their patron saint on any day in January or February are entitled to a day off.

In accordance with Article 114, paragraph 1 of the Labor Law, employees are entitled to receive compensation in the amount of the average wage over the past 12 months for the time of absence from work on a public holiday that is a non-working day.

In accordance with Article 108, paragraph 1, point 1) of the Labor Law, employees are entitled to an increased wage determined by the general act and employment contract for working on a public holiday that is a non-working day – at least 110% of the base.

Happy upcoming holidays from Kreston MDM!

Kreston Futures Emerging Talent Conference

Last Thursday, our Kreston Global network held their first Kreston Futures Emerging talent conference, for all our Kreston people at Manager, Associate, and equivalent levels across the network.

Hosted by our own Jovana Vlajic and Vinoth Pushparaj from Kreston Sri Lanka, we heard from our keynote speaker Rob McGillen from CBIZ about how generative AI is an enabler for the accounting profession and how we can take advantage of it.

After breakout discussions, panel discussion, chaired by Emily Baldwin from Kreston Reeves and featuring tech recruitment expert Nevena Sofranic, founder of referral based hiring platform Recrooit and ACCA’s Clive Webb on where the profession is heading over the next few decades and what younger current and future recruits consider essential to them in their accounting careers.

Our delegates had lively debates in their group sessions and have given us valuable insight into how we can continue to support our younger talent across the network as part of our  Kreston Futures programme.

KRESTON MDM Signs Exclusive Partnership Agreement with Lentink De Jonge Accountants & Adviseurs

We are thrilled to announce the signing of an exclusive partnership agreement with Lentink De Jonge Accountants & Adviseurs. This collaboration will bring together our expertise within the Kreston Global network, focusing on audit and assurance-related services. The partnership entails KRESTON MDM’s support for national and international audit assignments of Dutch member firm.

A key aspect of this partnership involves the mutual exchange of knowledge and innovation. Lentink De Jonge Accountants & Adviseurs will be providing support to KRESTON MDM in the advancement of data analytical technologies.

By joining forces, we are not only expanding the capacity of the Dutch audit practice and the capacity of Serbian tech expertise but also breaking boundaries within the Kreston Global community. This partnership showcases the limitless potential of collaboration between members across borders.

THE FREELANCERS PORTAL HAS BEEN LAUNCHED

The Frilenseri portal, www.frilenseri.purs.gov.rs, has finally been launched, allowing freelancers to report their income, pay taxes and contributions, as well as learn about their rights and obligations.

At the beginning, it is possible to take a test to determine if you are a freelancer, and then you can use the tax calculator to calculate which tax model is better for you specifically.

Tax registration is done at the end, and there are two options for registration:

  1. You can register through the eid.gov.rs portal if you have a qualified electronic signature and a card reader, or through the mobile application (cloud signature).
  2. The second option is to download the Frilenseri application from this website and register your taxes through it.

Taxation of Freelancers And a New Tax Declaration PP OPO-K

The Minister of Finance issued the Rulebook on Amendments and Supplements to the Rulebook on Tax Returns on Calculated Tax through Self-Taxation and Associated Contributions to Earnings, i.e. other types of income from a natural person as a taxpayer (“Official Gazette of the RS”, No. 21/2023), which entered into force on March 25, 2023 (hereinafter: Rulebook).

The rulebook introduced a new tax return on the PP OPO-K form – Tax return on calculated tax through self-taxation and related contributions on income generated quarterly, by a natural person as a taxpayer, which will be submitted by natural persons, so-called freelancers, i.e. natural persons who earn income from the contracted fee from copyright and related rights and income from the contracted fee for the work performed, in a situation where the tax is determined according to the self-taxation system (when they earn income from persons who, when paying, do not have the obligation to calculate taxes and contributions in Serbia).
Namely, the new tax return of PP OPO-K was introduced considering that in the system of taxation of citizens’ income from January 1, 2023, in the application of two new models of quarterly taxation, two incomes are mentioned.
Natural persons as taxpayers, who declare and pay their tax liability quarterly (for income generated in a period of 3 months), according to the self-taxation system, submit an application on the PP OPO-K form for the income they have generated starting from the second quarter (from 1. April 2023 until June 30, 2023). The deadline for submitting the application is 30 days from the end of the quarter (for the second quarter, the PP OPO-K application must be submitted no later than July 31, because July 30 falls on a Sunday – a non-working day).
When it comes to the income they earn in the first quarter (from January 1, 2023 to March 31, 2023), taxpayers have 2 options at their disposal:

  • The application can be submitted on the PP OPO-K form, with the proviso that in that case the deadline for submitting the application is not 30 days from the day the first quarter has expired, but the deadline is 30 days from the next day in relation to the day when the technical conditions for submitting the application are met on the PP OPO-K form;
  • The application can be submitted on the PP OPO form, and in that case the deadline for submitting the application is 30 days from the end of the first quarter.

The reason for this situation is the fact that the technical support for submitting an application on the PP OPO-K form is still being prepared. It is expected that the technical support will be operational soon, and a notice will be posted on the website of the Ministry of Finance and the Tax Administration when the technical support becomes operational.
Technical support should make it easier for natural persons to submit an application on the PP OPO-K form, while the technical support service will not be available for submitting an application on the PP OPO form.

It is expected that the user manual will be published soon, as well as explanations regarding the submission and filling out of applications on the PP OPO and PP OPO-K forms.

Annual personal income tax on income earned in 2022

The annual personal income tax on income generated in 2022 is calculated and paid according to the self-taxation system, instead of according to the decision of the tax authority, as was the case until now.

In practice, this means that the Tax Administration, based on the available data from the official records of citizens’ incomes for the year 2022, will pre-fill the tax return for the determination of the annual income tax of the citizens for the year 2022 and post it as a working version of the return (status “in preparation” ”) to the ePorezi portal.

All natural persons who in 2022 earned an income higher than three times the average annual salary per employee paid in the Republic of Serbia, which for 2022 amounts to RSD 3,719,376.00, are obliged to no later than March 15, 2023. year on the ePorezi portal to check the data presented in the pre-filled tax return and to make any corrections independently if they do not agree with the data presented in their pre-filled tax return, and to submit the corrected return in the same place by accepting the “Sign and submit” option.

The most common example of supplementary data entry refers to the number of dependent members of the taxpayer’s household.

If the taxpayer does not submit a tax return by May 15, 2023, the Tax Administration will do it for him.

Amendments to the Law on Electronic Invoicing and the Law on Fiscalization

Here is the list of the key amendments to the Law on Electronic Invoicing and the Law on Fiscalization:

Electronic invoicing (changes take effect on 1.1.2023):

  • It has been introduced that an eInvoice that has been rejected can be subsequently accepted (for eInvoices recorded in the CRF, this provision will be applied from June 1, 2023)
  • The obligation to issue an eInvoice for the sale of goods and services free of charge has been abolished
  • It is specified that the provisions of this law do not apply to natural persons who are not liable for income tax from self-employment
  • The definition of the term “public sector subject” has been harmonized
  • If there is a temporary interruption in the work of the SEF, the eInvoice is considered delivered at the time of the re-establishment of the electronic invoice system.
  • It has been clarified which entities have the obligation to register VAT electronically in the SEF. Namely, persons who are considered tax debtors (in terms of the VAT Act), but who are not in the VAT system and have not registered as voluntary beneficiaries, are exempt.


Fiscalization (changes entered into force on 20.12.2022):

  • The connection of SUF and SEF was introduced, so that the data contained in the Fiscalization Management System (SUF) related to fiscal invoices issued to legal entities, i.e. self-employed income tax payers, are transferred to the System of Electronic Invoices (SEF) – a secondary legal act will be adopted within 180 days from the date of entry into force of this law
  • Another exception to the rule has been introduced, which refers to the mandatory use of at least one electronic fiscal device that uses its own fiscal account processor in a retail establishment. This includes taxpayers who are subject to fiscalisation, who occasionally carry out retail sales of their own used movable tangible assets.
  • It is defined that the turnover of goods and services that the taxpayer is subject to fiscalization to legal entities, i.e. taxpayers of income tax from self-employment, outside their retail establishment is not considered retail turnover

AMENDMENTS TO THE REGULATIONS

In the “Official Gazette of RS”, number 138 of 12/12/2022 the following laws were published:

-Law on Amendments to the Law on Value Added Tax

-Law on Amendments to the Law on Electronic Invoicing

-Law on Amendments to the Law on Fiscalization

-Law on Amendments to the Law on Citizens’ Income Tax

-Law on Amendments to the Law on Contributions for Mandatory Social Insurance

-Law on Amendments and Supplements on Tax Procedure and Tax Administration

-Law on Amendments to the Law on Terms of Settlement of Financial Obligations in Commercial Transactions

-Law on Amendments to the Law on Property Taxes

Rulebook on interest rates deemed to be in line with the arm’s length principle

Based on Article 61, Paragraph 3 of the Law on Corporate Income Tax, the Minister of Finance adopted the Rulebook on interest rates that are considered to be in line with the “arm’s length” principle for the year 2022:
According to Article 2 of this rulebook:


1) for banks and providers of financial leasing:


(1) 0.50% on short-term loans in RSD;
(2) 2.86% on long-term loans in RSD;
(3) 2.75% on loans in EUR and dinar loans indexed in EUR;
(4) 3.91% on loans in USD and dinar loans indexed in USD;
(5) 2.61% on CHF loans and dinar loans indexed to CHF;
(6) 3.96% on loans in SEK and dinar loans indexed in SEK;
(7) 1.88% on loans in GBP and dinar loans indexed in GBP;
(8) 2.31% on loans in RUB and dinar loans indexed in RUB;


2) for other companies:


(1) 3.12% on short-term loans in RSD;
(2) 3.39% on long-term loans in RSD;
(3) 2.25% on short-term loans in EUR and dinar loans indexed in EUR;
(4) 2.73% on long-term loans in EUR and dinar loans indexed in EUR;
(5) 6.94% on short-term loans in CHF and dinar loans indexed in CHF;
(6) 1.85% on short-term loans in USD and dinar loans indexed in USD;
(7) 3.54% on long-term loans in USD and dinar loans indexed in USD.


Interest rates also apply to loans.

Amendments to the Law on Personal Income Tax and the Law on Contributions for Mandatory Social Insurance

Amendments to the Law on Personal Income Tax and the Law on Contributions for Mandatory Social Insurance resulted in the following changes, which apply from January 1, 2023:

-the non-taxable amount of salary was increased from 19,300 to 21,712 RSD on a monthly basis

-the rate of PDI contribution at the expense of the employer was reduced from 11% to 10%

The lowest contribution base for 2023 is 35,025 RSD
The highest contribution base for 2023 amounts to 500,360 RSD

A new edition of the OECD Guidelines

A new edition of the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations was published in 2022.

The new release contains the following changes:

  • In Chapter II, which refers to the application of profit split method, it is explained exactly where the profit sharing method is applicable
  • In Chapter VI, an annex was added that refers to hard to value intangibles
  • A new chapter X is added which is related to financial transactions

MINIMUM WAGE FOR 2023

Based on Article 112, paragraph 2 of the Labor Law, the Government of Serbia made a decision to increase the minimum wage from 201.22 to 230.00 RSD per hour.

The minimum wage, without taxes and contributions for mandatory social insurance, for the period January-December 2023 will be 230.00 dinars/hour net.

The decision was published in the “Official Gazette of the RS”, number 105 of September 14, 2022.

Notification of the PU on the calculation of depreciation of fixed assets

The Tax Administration is 27.6.2022. published a Notice on the calculation of depreciation of fixed assets, which contains an example of calculation and presentation of data in the OA Form.

The calculation of depreciation of fixed assets in the manner prescribed by Article 10 of the Law on Corporate Income Tax is applied in accordance with Article 14 of the Law on Amendments to the Law on Corporate Income Tax on Fixed Assets Acquired as of December 31, 2018. year, ie concluding with the last day of the tax period that begins in 2018, and for fixed assets classified in groups II-V at the latest on the calculation of depreciation of these assets as of 31.12.2028. year, ie the last day of the tax period that begins in 2028.

If, by applying the above rule, the final balance is determined in an amount less than the amount obtained by applying the rate:

of 10% for group II,

rates of 15% for group III,

rates of 20% for group IV, and

rates of 30% for group V,

on the balance determined on 31.12.2018. year, ie on the last day of the tax period starting in 2018, the entire balance of the group is recognized as a depreciation expense, due to which the amount in column 7 of the OA form is equal to the unwritten value from column 5, while in column 8 the value is zero. The opening balance at the beginning of the following year is equal to the carrying amount at the end of the previous year.

AVERAGE EARNINGS PER EMPLOYEE, MARCH 2022

The average salary (gross) calculated for March 2022 was

102,781 dinars, while the average salary without taxes and contributions (net) was 74,664 dinars.

Payment cards, checks and instant payment is considered cash only for bakeries and caterers (fiscalization)

At the end of April, the regulations were changed in such a way that cash, payment cards, check and instant payment are considered cash for the purposes of fiscalization.

However, on May 12, 2022, the Minister of Finance amended that part of the rulebook again, and published the Official Gazette on the same day, so that it came into force on May 13, 2022. According to the new change, the old change is valid only for those who hand over food and beverage services for consumption on the spot in terms of regulations governing value added tax and food and beverage sales in the bakery (caterers and bakers).

For all other taxpayers, cash is not considered instant payment, payment card and check, so there are the following methods of payment for them:

1) CASH – if payment is made in cash (banknotes and coins)

2) INSTANT PAYMENT by instant transfer of approval at the point of sale

3) PAYMENT CARD – if payment is made by payment card

4) CHECK – if payment is made by check

5) TRANSFER TO ACCOUNT – if payment is made by payment order or transfer order

6) VOUCHER – if payment is made by voucher, money vouchers, internal cards or similar means of payment

7) OTHER NON-CASH PAYMENT – if the payment is made non-cash by another means of payment that is considered allowed in the Republic of Serbia, in accordance with the law.

Notice for taxpayers of annual personal income tax

A new calculator of the Annual Personal Income Tax has been set up on our application in accordance with the new regulations.

The deadline for submitting the Tax Return for determining the annual personal income tax – form PPDG-2R, for 2021, expires on May 16, 2022. years.

More detailed information on the annual personal income tax and how to fill in the tax return PPDG-2R can be found in the Explanation of the Ministry of Finance regarding the annual personal income tax for 2021 and the Tax Informant – Annual personal income tax

You can download our application at the following links:

Google Play

App Store

The Rulebook on Fiscal Accounts Has Been Amended

Amendments to the Rulebook on Fiscal Accounts entered into force on the day of publication in the Official Gazette. glasnik RS, No. 50/22 of 28 April 2022.
According to the amended Article 6, paragraph 1, item 1) of the Ordinance, the taxpayer, via an electronic fiscal device, within the data on the method of payment on the fiscal account, depending on the means of payment by which the buyer pays for delivered goods or services, states CASH if payment performs:
• cash (banknotes and coins),
• instant transfer of approval at the point of sale,
• payment card and
• check.

Therefore, the taxpayer through the electronic fiscal device, within the data on the method of payment, on the fiscal invoice states one of the following data, depending on the means of payment:
• cash – if payment is made in cash, instant transfer of approval at the point of sale, payment card and check
• transfer to account – if payment is made by payment order or transfer order
• voucher – if payment is made by voucher, voucher, internal card or similar means of payment
• other non-cash payment – if the payment is made non-cash by another means of payment that is considered allowed in the Republic of Serbia.

In case the customer pays using more than one method of payment, the taxpayer, through the electronic fiscal device, within the data on the method of payment, may specify more data on the fiscal invoice, and is obliged to show the amounts paid divided by individual methods. payments.

Also, the Decree on determining the activities for which there is no obligation to record retail trade via electronic fiscal device was amended, which extended the transitional period for sellers on market stalls and similar facilities during which they have no obligation to record retail turnover via electronic fiscal device until the end of 2022.

Tax relief for salaries of persons engaged in research and development

The Rulebook on the conditions and manner of exercising the right to tax exemption based on the salary of employees in research and development, which entered into force on April 16, 2022, has been published. year, according to Article 21i of the Law on Personal Income Tax. According to that article, which has been in force since March 1, 2022. Employer – a legal entity, which within its activities in Serbia conducts research and development, is released from the obligation to pay 70% of calculated and suspended tax from the salary of persons directly engaged in research and development, in proportion to the time such persons prove in the work research. and full-time development.


The right to tax exemption is exercised exclusively on the basis of research and development projects carried out on the territory of Serbia (at least 90% of all employees on research and development, their activities on project implementation are performed on the territory of Serbia). Exceptionally, the project will be considered completed on the territory of Serbia, even if some of its parts are performed outside the territory of Serbia, provided that the relocation of activities is caused by special physical, geographical or natural factors that cannot be provided in Serbia.

THE ARCHIVE OF THE CITY OF BELGRADE DOES NOT RECEIVE NEW DOCUMENTATION UNTIL FURTHER

Due to the extremely large number of requests received so far for approval of the List of categories of archival material and documentary material with retention periods, as well as approaching the legal deadline for submitting transcripts of archival books, and due to lack of adequate technical and personnel capacity, the Historical Archive of Belgrade until further notice, it receives new documentation, in the only way applied so far – exclusively in writing.

In order to adequately solve this problem, at the moment, in cooperation with eGovernment, we are working on establishing an adequate e-service that will receive documentation in electronic form.

Until all creators and holders have the opportunity to submit the mentioned documentation related to the Law on Archival Material and Archival Activities, the Archives of Belgrade will not implement the punitive measures specified by the Law on this issue.

Requests received so far are continuously processed and delivered in accordance with the mentioned possibilities.

Explanation regarding the annual personal income tax for 2021.

An explanation regarding the annual personal income tax for 2021 has been published on the website of the Ministry of Finance.

The taxpayer of the annual personal income tax for 2021 shall submit the tax return on the PPDG-2R form to the competent tax authority by May 16, 2022.

You can view the text of the Explanation here.

NEW DEMO VERSION OF THE ELECTRONIC INVOICE SYSTEM AVAILABLE

A new demo version of the Electronic Invoice System is available at: demoefaktura.mfin.gov.rs
All private sector entities are invited to register for the new demo version of the Electronic Invoice System.
The production version of the Electronic Invoice System is available at: efaktura.mfin.gov.rs
From the moment of registration, they apply all rights and obligations prescribed by the Law on Electronic Invoicing (“Official Gazette of RS”, No. 44/21 and 129/21). Among other things, this means that all sent and received electronic invoices have the status of authentic documents.

Important notes:
The generated API key refers exclusively to the environment in which it was generated.

All additional information related to:

  1. Updated internal technical manual
  2. Updated specification of the adapted application of standard EN 16931-1
  3. Updated examples of XML files according to UBL1 standard
    They can be downloaded from the section Instructions / Instructions and Specifications of the portal www.efaktura.gov.rs

ANNUAL CITIZEN INCOME TAX FOR 2021

Individuals who earned more than 3,268,224 dinars in 2021 have the obligation to file a tax return for the annual personal income tax and pay the tax.

More details: Tax Alert 26.02.2022.

NOTICE OF THE AGENCY FOR BUSINESS REGISTERS OF JANUARY 31, 2022

A new Information System of the Agency for Receipt, Processing and Public Disclosure of Financial Statements was launched

All interested parties are informed that today, January 31, 2022, a new Special Information System of the Agency for Receipt, Processing and Public Disclosure of Financial Reports, ie Documentation (PIS FI Agency) was launched.


With the construction of that system, the Agency has adopted a new way of financial reporting which, in accordance with the new Law on Accounting, is applied starting from the financial reports prepared on 31.12.2021. years and later, as well as certain requests of users for the improvement of certain functionalities of the previous system, which would facilitate the procedure for submitting financial reports, ie documentation to taxpayers, as well as bookkeepers.

Link to approach the application for financial reports submission:

https://reid.apr.gov.rs/IDF/?wa=wsignin1.0&wtrealm=https%3a%2f%2ffin.apr.gov.rs%2fFiEksterna%2f&wctx=rm%3d0%26id%3dpassive%26ru%3d%252fFiEksterna%252f&wct=2022-01-31T19%3a18%3a46Z

AVERAGE SALARIES AND WAGES PER EMPLOYEE, NOVEMBER 2021

December 27, 2021/in News /by krestonmdm

Average gross salaries and wages calculated for November 2021 amounted to 95.312 RSD, while average net salaries and wages amounted to 69.136 RSD.

Increase of gross salaries and wages in the period January – November 2021, relative to the same period last year amounted to 9.1% in nominal terms, i.e. 5.2% in real terms. Simultaneously, net salaries and wages increased by 9.3% in nominal terms and by 5.4% in real terms. 

Compared with the same month last year, average gross salaries and wages for November 2021 increased by 13.2% in nominal terms and by 5.3% in real terms, while average net salaries and wages increased by 13.5% in nominal terms and by 5.6% in real terms.

Median net salaries and wages for November 2021 amounted to 51.782 RSD, meaning that 50% of employees realized wages and salaries up to the mentioned amount.

SOURCE: Statistical Office of the Republic of Serbia

NEW REGULATIONS ON REGISTRATION TO THE CENTRAL REGISTER OF COMPULSORY SOCIAL SECURITY

The Government of the Republic of Serbia has passed a new Decree on the content, form and manner of submitting an application for compulsory social insurance by methodological principles and a unifiedcoding system for entering data into a single database of the Central Register of Compulsory Social Insurance.
The decree was published in the “Official Gazette of RS”, number 132/2021 and has been valid since January 7, 2022.
An integral part of the Decree are the new unified coding system, new forms M and M-A and the List of evidence on the basis of which the status of the insured, ie the insured person, changes in insurance and termination of the status of the insured are determined.

Link: The Decree

LOWEST AND HIGHEST BASIS FOR CALCULATION AND PAYMENT OF CONTRIBUTIONS

The lowest and highest contribution bases are determined once a year on the basis of the average monthly salary paid in the period from October of the previous year to September of the current year.

The amounts of the lowest and highest contribution bases for 2022 are calculated on the basis of the published data on the average salary in Serbia paid for the period October 2020 to September 2021, which amounted to 88,228 RSD. (“Official Gazette of RS”, No. 112/2021 of 26 November 2020).

The amounts of the lowest and highest contribution bases for 2022 were published in the “Official Gazette of RS”, number 127/2021 from 24 October 2021.

The lowest monthly base for paying contributions for compulsory social insurance for 2022 is 30,880 RSD. The lowest monthly contribution base, in accordance with Article 37 of the Law on Contributions for Compulsory Social Insurance, is the amount of 35% of the average monthly salary in the Republic paid, ie realized in the previous 12 months starting from October of current year.

The highest monthly base for paying contributions for compulsory social insurance for 2022 is 441,140 RSD. The highest monthly contribution base, in accordance with Article 42 of the Law on Compulsory Social Insurance Contributions, is five times the amount of average monthly salary in the Republic paid, ie realized in the previous 12 months starting from October of current year.

The highest annual contribution base for compulsory social insurance for 2022 is 5,293,680 RSD. According to Article 43, paragraph 1 of the Law on Contributions for Compulsory Social Insurance, the highest annual contribution base is the sum of the 12 monthly highest bases.

The period of application of the new contribution bases is from 1.1.2022. until 31.12.2022.

AMENDMENTS TO THE RULEBOOK ON VAT CONCERNING INVOICING

The Rulebook on Amendments to the Rulebook on Value Added Tax was published in the “Official Gazette of RS”, number 127 of 24.12.2021.
Amendments to the Rulebook were made in order to comply with the regulations in the field of fiscalization and electronic invoicing concerning the issuance of invoices.
Amendments to the Ordinance enter into force on 25.12.2021.
The most important amendments concern the following:

  • The new obligatory element of the advance invoice is the date of receipt of the advance;
  • Fiscal invoice containing data on the personal income tax of the recipient of the fiscal invoice is considered an invoice issued in accordance with the VAT Act and can serve as a basis for exercising the right to deduct previous tax;
  • An electronic invoice issued through a system of electronic invoices is considered an invoice in the sense of ZPDV, although it does not contain information on the place of issuance;
  • An invoice issued to a foreign traveler for the purpose of VAT refund for the sale of goods sent abroad in personal luggage that he carries with him for non-commercial purposes, is also considered a fiscal invoice issued in accordance with the Law on Fiscalization;
  • For VAT refund, diplomatic and consular missions and international organizations are issued a fiscal invoice on which the PIB of the right holder is stated.

Detailed explanations of the amendments to the Ordinance on VAT:
Link: Tax Alert

EXPENSES ON THE BASIS OF SALARY BENEFITS ARE NOT RECOGNIZED IN DOUBLE-INCREASED AMOUNT AS EXPENSES OF SALARIES OF EMPLOYEES ENGAGED IN RESEARCH AND DEVELOPMENT

(Opinion of the Ministry of Finance, No. 011-00-1157 / 2021-04 of 1 December 2021)

In accordance with the provision of Article 22g paragraph 1 of the Law on Corporate Income Tax (“Official Gazette of RS”, No. 25/01, 80/02, 80/02 – other law, 43/03, 84/04, 18 / 10, 101/11, 119/12, 47/13, 108/13, 68/14 – other law, 142/14, 91/15 – authentic interpretation, 112/15, 113/17, 95/18, 86 (19, 153/20 and 118/21 – hereinafter: the Law), as an expense in the taxpayer’s balance sheet may be recognized, in double the amount, costs directly related to research and development performed by the taxpayer in the Republic of Serbia.

AVERAGE SALARIES AND WAGES PER EMPLOYEE, OCTOBER 2021

Average gross salaries and wages calculated for October 2021 amounted to 91 132 RSD, while average net salaries and wages amounted to 66 048 RSD.

Increase of gross salaries and wages in the period January – October 2021, relative to the same period last year amounted to 8.2% in nominal terms, i.e. 5.7% in real terms. Simultaneously, net salaries and wages increased by 8.9% in nominal terms and by 5.3% in real terms. 

Compared with the same month last year, average gross salaries and wages for October 2021 increased by 9.7% in nominal terms and by 2.9% in real terms, while average net salaries and wages increased by 9.9% in nominal terms and by 3.1% in real terms.

Median net salaries and wages for October 2021 amounted to 50 000 RSD, meaning that 50% of employees realized wages and salaries up to the mentioned amount.

SOURCE: Statistical Office of the Republic of Serbia

NEW YEAR AND CHRISTMAS NON-WORKING DAYS

In accordance with the Law on State and Other Holidays in the Republic of Serbia (“Official Gazette of the Republic of Serbia”, No. 43/01, 101/07 and 92/11), non-working days for the New Year and Christmas Eve are:

January 1, 2 and 3* (Saturday-Monday) – New Year

January 7 (Friday) – Christmas

If one of the dates when the public holidays of the Republic of Serbia are celebrated is a Sunday, the first following day is non-working (Article 3a of the Law on State and Other Holidays in the Republic of Serbia).

ANNUAL LISTING OF ASSETS AND LIABILITIES AS OF 31 DECEMBER 2021

The obligation and way of conducting the stocktaking are regulated by the Law on Accounting (“Official Gazette of RS”, No. 73/2019 and 44/2021 – other law) and the Rulebook on the manner and deadlines for conducting the stocktaking and synchronizing the bookkeeping situation with the actual situation (RS Gazette, No. 89/2020).

  • The deadline for submitting the Regular Census Report for 2021 for adoption is January 30, 2022.
  • The deadline for the adoption of the Decision on the adoption of the Report on the conducted regular stocktaking for 2021 is January 30, 2022.
  • The calculation of VAT on determined deficits is done in the calculation of VAT for the month of January 2022

EXTENSION FOR IMPLEMENTATION OF E-INVOICE SYSTEM ANNOUNCED – THE BEGINNING OF IMPLEMENTATION WILL BE POSTPONED TO MAY 1, 2022

At the meeting on application of electronic invoicing system, the Minister of Finance announced that the Law on Electronic Invoicing will be amended by the end of the year and that a transitional deadline will be given for adjusting the e-invoicing system by the end of April 2022.
This means that the beginning of the application of the Law on Electronic Invoicing for public sector entities and for private sector entities that issue invoices to public sector entities, instead of January 1, 2022, will be postponed to May 1, 2022.

Other deadlines from the Law on Electronic Invoicing will not change.
Therefore, the obligation of a public sector entity to receive and store electronic invoices and to issue electronic invoices to another public sector entity first applies, and this will apply from May 1, 2022, instead of January 1st, just as the obligation of a private entity sector to issue an electronic invoice to a public sector entity.

The obligation of the private sector entity to receive and keep the electronic invoice issued by the public sector entity, as well as the electronic invoices issued by the private sector entity, will apply from July 1, 2022, as planned. Also, the obligations of issuing and keeping electronic invoices in transactions between private sector entities take effect from January 1, 2023.

A demo version of the eInvoice system is available on the e-Invoice website

AVERAGE SALARIES AND WAGES PER EMPLOYEE, SEPTEMBER 2021

September 24, 2021/in News /by krestonmdm

Average gross salaries and wages calculated for September 2021 amounted to 89 980 RSD, while average net salaries and wages amounted to 65 218 RSD.

Increase of gross salaries and wages in the period January – September 2021, relative to the same period last year amounted to 8.6% in nominal terms, i.e. 5.4% in real terms. Simultaneously, net salaries and wages increased by 8.8% in nominal terms and by 5.6% in real terms. 

Compared with the same month last year, average gross salaries and wages for September 2021 increased by 9.0% in nominal terms and by 3.1% in real terms, while average net salaries and wages increased by 9.2% in nominal terms and by 3.3% in real terms.

Median net salaries and wages for September 2021 amounted to 50 000 RSD, meaning that 50% of employees realised wages and salaries up to the mentioned amount.

SOURCE: Statistical Office of the Republic of Serbia

PROPOSALS FOR AMENDMENTS TO TAX LAWS

At the session held on November 3, 2021, the Government of the Republic of Serbia adopted the drafts of several tax laws.

Proposals for amendments to tax laws are in the parliamentary procedure and are expected to be adopted by the end of November.

The most important proposed amendments to these laws are:

-Law on Amendments to the Law on Personal Income Tax: http://www.parlament.gov.rs/upload/archive/files/cir/pdf/predlozi_zakona/2021/1964-21.pdf

-Law on Amendments to the Law on Contributions for Compulsory Social Insurance: http://www.parlament.gov.rs/upload/archive/files/cir/pdf/predlozi_zakona/2021/1961-21.pdf

-Law on Amendments to the Law on Corporate Income Tax: http://www.parlament.gov.rs/upload/archive/files/cir/pdf/predlozi_zakona/2021/1965-21.pdf

-Law on Amendments to the Law on Property Taxes: http://www.parlament.gov.rs/upload/archive/files/cir/pdf/predlozi_zakona/2021/1962-21.pdf

THE PEP FORM HAS BEEN MODIFIED – ITEM 4.6. ADDED FOR AUTHORIZATION OF FISCALIZATION

The “Official Gazette of RS”, number 99 from 22.10.2021. has published The Rulebook on Amendments to the Rulebook on Filing Tax Reports Electronically, which amended the PEP form (added the item 4.6 for authorization of fiscalization).

This amendment enables economic entities to authorize the submission of applications related to fiscalization and take over the security element without authorizing other types of tax returns.

The amended PEP form is valid from October 30, 2021.

TAX ADMINISTRATION PUBLISHED USER INSTRUCTIONS FOR SUBMITTING DATA AND GENERATING A UNIQUE LABEL FOR BUSINESS PREMISES ELECTRONICALLY

The User Manual for submitting data and generating a unique label for business premises electronically has been published on the website of the Tax Administration (www.purs.gov.rs).

Starting October 1, through the eTaxes portal, taxpayers will be able to register business premises in which they perform activities with fiscal devices. The obligation of the taxpayer is to electronically submit data on business premises to the Tax Administration before generating the electronic fiscal device for issuing fiscal invoices in order to generate a unique label, so that they can start the eFiscalization process.
The taxpayer submits data on business premises to the Tax Administration by submitting an application via the eTaxes portal. After accessing the eTaxes portal, the taxpayer selects the application with data for generating a unique code of business premises and manually enters personal data such as telephone number and e-mail address, as well as data on business premises. The taxpayer is able to see an overview of all registered business premises by clicking on the list of business premises within the application with data for generating a unique designation of business premises.
After checking the submitted data, the Tax Administration decides on the application within three days from the day of submission. The applicant will get a notification in electronic form. The notice contains a unique designation of business premises which will be used in the electronic fiscal device.

You can download the User Manual here: www.purs.gov.rs

Source: Tax Administration

AVERAGE SALARIES AND WAGES PER EMPLOYEE, JULY 2021

Average gross salaries and wages calculated for July 2021 amounted to 89 330 RSD, while average net salaries and wages amounted to 64 731 RSD.

Increase of gross salaries and wages in the period January – July 2021, relative to the same period last year amounted to 8.2% in nominal terms, i.e. 5.7% in real terms. Simultaneously, net salaries and wages increased by 8.5% in nominal terms and by 6.0% in real terms. 

Compared with the same month last year, average gross salaries and wages for July 2021 increased by 7.6% in nominal terms and by 4.2% in real terms, while average net salaries and wages increased by 7.8% in nominal terms and by 4.4% in real terms.

Median net salaries and wages for July 2021 amounted to 49 999 RSD, meaning that 50% of employees realised wages and salaries up to the mentioned amount.

SOURCE: Statistical Office of the Republic of Serbia

NEW MODEL OF FISCALIZATION PRESENTED AT THE SERBIAN CHAMBER OF COMMERCE

An expert meeting dedicated to the introduction of a new fiscalization model was held at the Serbian Chamber of Commerce, attended by Finance Minister Siniša Mali, Director of the Tax Administration Dragana Marković, representatives of the Serbian Chamber of Commerce, Naled Management Board President Vladislav Cvetković and 150 local businessmen.

The Minister of Finance, Siniša Mali, stated that the deadline for the introduction of the new fiscalization model will be extended until April 30, 2022, and announced the beginning of the transition period for November 1 this year. He pointed out that the introduction and application of the new fiscalization model will not represent an additional cost for businessmen because the state will subsidize the purchase of the necessary equipment. Taxpayers will directly receive the funds needed to move to a new fiscalization model. The total amount of subsidies for the transition to the new fiscalization model is six billion dinars. The money will be paid directly to each taxpayer who will cover the costs of providing the necessary device, one hundred euros per point of sale and one hundred euros per fiscal device. Taxpayers who are not in the VAT system will receive a 20 percent higher subsidy for fiscal devices due to the impossibility to use the input VAT and to compensate that cost, said Minister Siniša Mali.

Director of the Tax Administration Dragana Marković called on businessmen to actively participate in the successful and timely introduction of a new model of fiscalization in the Republic of Serbia.

Director Dragana Marković said on that occasion that at the moment there are about 150 registered users (potential producers) who are developing some of the components of the new system, to whom technical support is provided by the team of the Tax Administration. The first applications for obtaining approval for the use of new electronic devices are expected in the coming days. The list of new models of fiscal devices that will be approved for use in the territory of the Republic of Serbia will be published on the website of the Tax Administration www.purs.gov.rs.

She announced that from October 1, through the eTaxes portal, taxpayers will be able to report the locations of their business units in which they perform activities for which it is necessary to have a fiscal device. Also, from November 1, taxpayers will receive an electronic invitation in the tax box on the ePorezi portal to apply for security elements that will be issued by the Tax Administration free of charge, if they have previously reported the locations of business units in which they perform activities.

MATERNITY COMPENSATIONS

In its decisions on May 7, 21 and 28, the Constitutional Court of the Republic of Serbia declared certain parts of the Law on Financial Support to Families with Children Unconstitutional, which was the reason for the Ministry of Family Care and Demography to prepare a proposal for amendments to the law. The Assembly of the Republic of Serbia, which has been in force since July 1, 2021. years.

Every employed woman during maternity leave, which starts 28 days before pregnancy due date, and exceptionally according to the doctor’s findings 45 days before the due date for childbirth up to three months of the child’s life, receives salary compensation during maternity leave, which cannot be less than the minimum wage on the day of the leave. The condition is to have at least one recorded base on which salary contributions are paid. Previously, in order to exercise this right, at least six bases on which salary contributions were paid were required.

The changes also apply to employed mothers who have a sick child, for whom the competent commission has approved the use of leave for special child care, who will be able to use the salary allowance with the allowance that belongs to them on the basis of the right to assistance and care of a child. The right to special child care can last until the child is five years old.

With the new provisions, women agricultural insurers are also in a more favorable position, as they can exercise the right to other benefits based on birth, care and special child care. The bases on which the contributions for pension and disability insurance were paid in the 18 months preceding the birth of the child will be taken for the calculation of the compensation. This provision will have retroactive effect from May 8, 2021.

In accordance with the amendments to the Law of 1.1.2022, employed women, women who are self-employed or engaged on the basis of flexible forms of work, and earn incomes that are higher than three average salaries in Serbia, will be able to receive salary compensation and other benefits in the amount of up to five average salaries on the day of leave (so far, the maximum has been three average salaries).

DEMO VERSION OF THE ELECTRONIC INVOICE SYSTEM AVAILABLE

On the e-invoice website, on September 17, 2021, it was announced that a demo version of the eFaktura (electronic invoice) system is available at https://demoefaktura.mfin.gov.rs/login.

The demo version of the E-invoice System defines the following: granting authorization to other users of the system, setting up data on the business entity, creating an output invoice by type, downloading and printing an electronic invoice, loading XML files and uploading through the E-invoice System.

In order for the user to use the services of the E-invoice System, it is necessary to pre-register on the Electronic Identification Portal (https://eid.gov.rs/) and to have a Qualified electronic certificate or parameters for two-factor authentication.

In order for a user to access an existing user account on the E-invoice System or register a new user account, it is necessary to select the “Log in” option on the home page. After that, they will be redirected to Electronic Identification Portal, where they can choose one of the two offered authentication methods.

Technical instructions can be downloaded at: https://www.efaktura.gov.rs/extfile/sr/171/Interno_tehnicko_uputstvo_verzija_od_17092021-1.pdf

The technical instruction mentioned applies from January 1, 2022.

For additional information on registration on the Electronic Identification Portal, you can contact the Office for Information Technology and Electronic Administration at the following email address: https://www.ite.gov.rs/

For information regarding registration and technical assistance for the use of the electronic invoice system, you can also contact the Ministry of Finance via the e-mail address below or via the portal.

Email address mail: [email protected]

Portal: https://www.efaktura.gov.rs/

Opening hours: Monday to Friday from 08-16h

LAW ON TAX PROCEDURE AND TAX ADMINISTRATION TO BE MODIFIED – MINISTRY OF FINANCE ANNOUNCES DRAFT LAW

The Ministry of Finance has published the Draft Law on Amendments to the Law on Tax Procedure and Tax Administration.

These changes, among other things, stipulate that the tax return on calculated contributions for compulsory social insurance for founders, ie members of a company (PP OD-O), will be submitted ex officio.

Following the Article 41a, a new Article 41b has been added to the LCPPA, which reads:
“Tax return on calculated contributions for compulsory social insurance for founders, i.e. members of a company, must be ex officio submitted by the Tax Administration instead of the taxpayer, in case the taxpayer fails to submit it within the period prescribed by the law which regulates the compulsory social security contributions.”

Suggestions and remarks can be submitted to the Sector for Fiscal System via e-mail to the address: [email protected] no later than September 14, 2021.

THE MINISTRY OF FINANCE HAS PUBLISHED TWO SPECIFICATIONS ABOUT THE IMPLEMENTATION AND DIRECT ACCESS TO ELECTRONIC INVOICES ON ITS WEBSITE

The Ministry of Finance has published two documents on their eFaktura website about the application of electronic invoices in the software of future users and its integration into the existing electronic invoice systems.

The specification of the adjusted application of the standard EN 16931-1 for electronic invoices in the local trade system of Republic of Serbia represents the specification of the use of the Core Invoice Usage Specification – CIUS in accordance with the standard SRPS EN 16931-1: 2019 / A2: 2020.

The framework of the application interface for direct access to the electronic invoice system provides a framework for access via the application interface.

The final technical specification of the application interface is an integral part of the implementation of the application interface and is maintained so that it is always in accordance with the appropriate version of the implemented system.

The website has also published an invitation for training in the use of the new electronic invoicing system for the public sector.

Start dates of application of these specifications in accordance with Article 24 of the Law on Electronic Invoicing (“Official Gazette of RS”, No. 44/2021) are:

ENTITYSTART DATErequirement
Public sector entities01.01.2022.to receive and keep an electronic invoice
01.01.2022.to issue electronic invoices to another public sector entity
01.01.2022.to electronically record the calculation of VAT

01.07.2022.
to issue electronic invoices to a private sector entity
Private sector entities01.01.2022.to issue electronic invoices to a public sector entity

01.07.2022.
to receive and keep an electronic invoice issued by a public sector entity, as well as electronic invoices issued by a private sector entity
01.01.2023.to issue and store electronic invoices in transactions between private sector entities
01.01.2023.to electronically record the calculation of VAT, except for transactions in which one of the parties is a public sector entity

If there are adequate technical conditions, the electronic invoicing system can be implemented before it becomes mandatory.

AVERAGE GROSS SALARIES AND WAGES CALCULATED FOR JUNE 2021

Average gross salaries and wages calculated for June 2021 amounted to 89.793 RSD, while average net salaries and wages amounted to 65.070 RSD.

Statistical Release, 25.08.2021.

NEW RULEBOOK ON VALUE ADDED TAX

The Minister of Finance has adopted the Rulebook on Value Added Tax, whose implementation will commence on July 1, 2021.

The Rulebook (in Serbian)

NEW RULEBOOK ON THE CHART OF ACCOUNTS

From the financial reports prepared for 2021, the Rulebook is applied by all legal entities and entrepreneurs who have the obligation to apply double-entry accounting, except for legal entities which, by definition from the Law, are classified as large (banks, etc.) and other legal entities. The Rulebook is also applied by other legal entities, which decide to evaluate positions in the financial statements in accordance with IAS / IFRS or IFRS for SMEs. Another legal entity, by its general act (in practice it is usually the Rulebook on Accounting and Accounting Policies) regulates the manner in which it will perform the recognition, valuation of presentation and disclosure of positions in the financial statements. Transferring from old accounts to new ones should be done no later than December 31, 2021. We recommend to do so as early as the beginning of 2021 – to provide data for compiling financial statements for 2021.

New Rulebook on the chart of accounts

A DECREE WAS ADOPTED ON ACTIVITIES IN WHICH THERE IS NO OBLIGATION TO RECORD RETAIL TRADE THROUGH AN ELECTRONIC FISCAL DEVICE

Government session held on April 1, 2021, the Decree on determining the activities where there is no obligation to record retail trade through an electronic fiscal device was passed. Starting from the technical and functional characteristics of electronic fiscal devices and the specifics of performing these activities, certain activities have been determined that are exempted from the obligation to record through an electronic fiscal device. The new model of fiscalization has expanded the circle of taxpayers and envisages more comprehensive fiscalization. The decree was published in the Official Gazette of the RS, number 32/2021 from April 2, 2021, and it is applicable from January 1, 2022. On the day of the beginning of the application of the Decree, the (old) Decree on determining the activity in the performance of which there is no obligation to record the retail trade through the fiscal cash register ceases to be valid.

Uredba link

ANNUAL PERSONAL INCOME TAX FOR INCOME GENERATED IN 2020

Individuals whose total personal net income in 2020 exceeds RSD 2.987.424 (non-taxable amount) are required to file a personal income tax return. The total personal net income earned in 2020 and the non-taxable amount are reported in the tax return, where the difference represents taxable income.

A personal income tax return (PPDG-2R form) may be submitted either electronically or in hardcopy. The hardcopy tax return is filed with the branch office of the Tax Administration located in the municipality of the taxpayer’s registered address of residence.

The deadline for filing annual personal income tax return for income generated in 2020 is Monday, 17 May 2021.

More details in our Tax Alert

New Decree on the Establishment of the Program of Direct Benefits

The new Decree on establishing the Program of direct benefits from the budget of the Republic of Serbia to economic entities in the private sector in order to mitigate the economic consequences caused by the epidemic of Covid-19 disease caused by the SARS-COV-2 virus entered into force on February 13th 2021.

The Regulation does not stipulate fiscal benefits that were provided for in the previous Regulation (deferral of payment of obligations based on taxes and contributions).

DIRECT BENEFITS

A basic overview of the provisions of the decree is listed below:

  • Payment of direct benefits will be made in April, May and June based on PPP-PD applications for February, March and April 2021. The first payment is expected to take place on April 8.
  • the amount of direct benefits per employee is half of the basic minimum net salary for January 2021 (RSD 15,450.12), with the amount of direct benefits being the same for all economic entities of all sizes
  • Funds received on the basis of direct payments can be used no later than July 30, 2021
  • acceptance of direct benefits is done by giving a statement on the ePorezi portal, especially for each payment of direct benefits, until the last day of the month preceding the month in which the payment of direct benefits is made. Statements will be made in accordance with the explanation that will be published on the website of the Tax Administration
  • economic entity that has bank accounts with several banks no later than March 25, 2021 submits data via the ePorezi portal on the bank where a dedicated account will be opened
  • an economic entity that applies for direct benefits is not entitled to pay dividends in the period from the date of entry into force of the Regulation until the end of 2021
  • If the legal entity is temporarily deprived of PIB on the last day of the month preceding the month in which the direct benefits are paid, it is not entitled to direct benefits
  • Loss of the right to use direct benefits occurs in case of reduction of the number of employees by more than 10%

Several Laws adopted and published

At the session of the National Assembly held on 17.12.2020, a set of tax and financial laws was adopted, which were published in the “Official Gazette of RS”, No. 153/2020 on 21.12.2020, of which we single out:

1) Law on Amendments to the Law on Personal Income Tax

2) Law on Amendments to the Law on Contributions for Compulsory Social Insurance

3) Law on Amendments to the Law on Corporate Income Tax

The laws will be applied from 1.1.2021, except for the provisions related to digital property, which will be applied from the day of the beginning of the application of the law which regulates digital property.

MOST IMPORTANT AMENDMENTS TO THE LAW ON PERSONAL INCOME TAX AND THE LAW ON COMPULSORY SOCIAL SECURITY CONTRIBUTIONS

  • Increases non-taxable amount of salary from 16,300 to 18,300 dinars per month
  • Modifies period which is a condition for acquiring the status of a newly settled taxpayer – a qualified employer is any resident employer of the Republic, who establishes an employment relationship with a newly settled taxpayer who has met the conditions from Article 7, paragraph 2, item 1 for at least three years since 1990 of this law to be considered a resident of the Republic
  • Extends period of application of existing incentives for employment of new persons until 31.12.2021.
  • Clarifies provisions regarding benefits based on employment of a qualified new employee – Extended notion of employer for the purpose of exercising the right to relief for qualified new employees
  • The notification on the determination for the payment of personal salary will be submitted in electronic form
  • Taxation of capital gains on the transfer of digital assets is introduced
  • Introduces the obligation of a domestic legal entity to calculate and pay withholding tax when making payments to an employer from another country on the basis of reimbursement of labor costs of a person referred to a domestic legal entity
  • Extends exemption from taxation of winnings from games of chance

THE MOST IMPORTANT AMENDMENTS TO THE LAW ON CORPORATE INCOME TAX

All changes apply to the determination, calculation and payment of tax liability starting for 2021, ie for the tax period beginning in 2021, except for the provisions related to digital assets, which will apply from the date of application of the law governing digital assets:

  • The obligation to tax capital gains and sales of investment units of closed-end investment funds is introduced
  • Prescribes obligation to determine capital gains based on the sale of digital assets
  • The determination of the purchase value of real estate acquired before 1.1.2004 is specified
  • It is prescribed that the remaining net value of the assets of an open-end investment fund that is distributed to members is considered a capital gain
  • Specifies that the income that a non-resident legal entity realizes on the basis of membership in an alternative investment fund that does not have the status of a legal entity, is considered a dividend
  • Specifies manner of determining newly employed persons for exercising the right to tax incentive from Article 50a

Detailed explanations of the amendments to the above laws can be found in the Tax Alert

AMENDMENTS TO THE VAT LAW

At the session of the National Assembly, held on 17.12.2020, the Law on Amendments to the VAT Law was adopted. The Law was published in the “Official Gazette of RS”, No. 153/2020 on 21.12.2020 and will apply from 1.1.2021, except for the provision concerning the tax exemption relating to virtual currencies, which will apply from the day of the beginning of the application of the law which regulates digital property and the provisions containing the authorization for the adoption of the bylaw which will be applied from the day the amendments enter into force.

The most significant amendments to the Law on VAT relate to the following:

  • the transfer of the right of disposal of movable property which is performed with the transfer of the right of disposal of a construction object or economically divisible unit within a construction object which is considered immovable property in the sense of the law governing real estate transactions is considered ancillary supply of goods (in addition to the transfer of the right of disposal on a construction object or an economically divisible whole within a construction object that is considered real estate in terms of the law governing the transfer of real estate).
  • Ancillary provision of services is not considered to be the service of renting, ie giving for use of a construction object or economically divisible unit within a construction object which is considered real estate in the sense of the law which regulates real estate transactions.
  • Precise definition of a value voucher
  • Investment funds are considered taxpayers
  • For turnover in the field of construction, it is prescribed that the tax debtor is the recipient, provided that the value of that turnover is higher than 500,000 dinars, without VAT. In the case of turnover whose value is up to 500,000 dinars without VAT, the tax debtor will be the taxpayer performing the turnover – the contractor in accordance with the general rules.
  • Precise definition of amounts that are not included in the tax base
  • Tax exemption for sales of goods that are in the process of inward processing: VAT is not paid on sales of goods that are in the process of inward processing for which the taxpayer-acquirer would have the right to deduct previous tax if he purchased those goods with calculated VAT.
  • VAT is not paid in the turnover of capital, money in the transfer of virtual currencies and the exchange of virtual currencies for cash, in accordance with the law governing digital assets.
  • Occasional transactions of shares, securities, postal securities, taxes and other valid securities at their imprinted value in the Republic, except for ownership shares referred to in Article 4 of the Law on VAT, are not included in transactions for determining the percentage of proportional tax deduction
  • Complete amendment of the rules governing the special procedure for taxation of second-hand goods, including second-hand motor vehicles, works of art, collectibles and antiques
  • Prescribes the right to choose the taxpayer (engaged in the sale of second-hand goods) to choose whether to apply special or general taxation procedure.
  • Submission of a registration application after the prescribed deadline.
  • When deleted from the VAT system, VAT is not stated as due, but as a correction of the previous tax deduction (from 1 January 2021, it will not be shown in field 3.5, but in field 8e.4 of the VAT Return Form)
  • It is prescribed that the taxpayer may issue an invoice in electronic form if there is the consent of the recipient
  • The reversal and correction of the invoice in which the VAT was erroneously stated is regulated in more detail

Detailed explanations of the amendments to the Law on VAT: link Tax Alert.

AMENDMENTS TO THE LAW ON PROPERTY TAXES

At its session held on November 26, 2020, the National Assembly of the Republic of Serbia adopted the Law on Amendments to the Law on Property Taxes, published in the “Official Gazette of the Republic of Serbia” No. 144/2020. Amendments to the Law on Property Taxes in the area of ​​property taxes will be applicable from January 1, 2021.

Most significant changes:

  • It is prescribed that property tax payers are also open-end investment funds, ie alternative investment funds, which do not have the status of a legal entity, which are entered in the appropriate register in accordance with the law – when on real estate in the Republic of Serbia are rights holders, users or holders on which property tax is paid
  • Clarification was made when the subject of taxation is the right of ownership on land and the right to use construction land with an area of ​​over 10 acres by specifying that the property taxpayer is each holder of that right in proportion to its share in relation to the total land area, even when the proportional area of ​​the share of an individual taxpayer is less than ten acres
  • It is prescribed that the depreciation rate for which the value of real estate can be reduced, which is the basis of the taxpayer who does not keep business books, is equal for all real estate on the territory of the local self-government unit, ie depreciation rates on the territory of a local self-government unit cannot be different depending on the type of real estate, zone, etc.
  • From January 1, 2021, the average prices of 1m2 of appropriate real estate in zones will be determined on the basis of prices realized in the turnover of appropriate real estate by zones in the period from October 1 of the year preceding the current year to September 30 of the current year – instead of 9 month, 12 month period of time is introduced
  • For the purpose of determining the property tax base, ancillary facilities are classified in the same group with garages
  • The subject of taxation with inheritance and gift tax has been extended to inheritance and gift of digital property
  • From January 1, 2022, the competence for determining, controlling and collecting inheritance and gift taxes and taxes on the transfer of absolute rights is transferred from the Tax Administration to local self-government units.

AMENDMENTS TO THE LAW ON TAX PROCEDURE AND TAX ADMINISTRATION

The National Assembly adopted the Law on Amendments to the Law on Tax Procedure and Tax Administration, which was published in the Official Gazette of the RS, No. 144/20 of November 27, 2020.

The law enters into force on the eighth day from the day of its publication, on December 5, 2020, and certain provisions will be applicable later.

The most important changes relate to the following:

  • Open-end investment funds, ie alternative funds, which do not have the status of a legal entity, are considered a taxpayer who has all the rights and obligations in accordance with the provisions of the Law
  • The taxpayer may submit in electronic form through the portal of the Tax Administration a request for refund or transfer of higher or incorrectly paid tax – applicable from January 1, 2021
  • Amendments related to the allocation of PIB refer to another exception when the Tax Administration may grant PIB, and the transitional provision stipulates that the taxpayer, if he meets the conditions from the new exception, may submit a request for refund of PIB
  • The Business Registers Agency may not register the acquisition of shares or stocks in economic entities, ie the establishment of new economic entities, where a legal entity or entrepreneur is registered as the founder over whom the measure referred to in Article 29, paragraph 9 of the Law has been established. The provision stipulates a fine for the misdemeanor.
  • It is specified that the tax act can be submitted in electronic form to a natural person who submits tax returns in electronic form, through the portal of the Tax Administration, in which case no additional consent of the natural person is required.
  • The delivery of tax documents is specified by sending a registered item
  • The possibility of fulfilling the tax obligation by giving instead of paying, ie replacing the fulfillment when the tax obligation is higher than 50.000.000 dinars, in the manner and under the conditions determined by the RS Government by decision, and only in cases where there is interest of the Republic to acquire the property.
  • Deferment of payment of due tax, ie overdue tax liabilities is approved in the manner and under the conditions determined by the Government, in order to mitigate the economic consequences caused by pandemic, force majeure, or other extraordinary event occurring during the calendar year, and is applied retroactively – from January 1, 2020
  • Introduced a new tax offense – tax fraud related to value added tax
  • The Tax Administration will take over the management of the unified information system of local tax administrations by January 1, 2022 at the latest.

More details in our Tax Alert.

New official translation of IFRS has been published

New official translation of IFRS – International Financial Reporting Standards was published in the “Official Gazette of RS”, number 123/2020.

Application of these translated IFRS is mandatory for regular annual financial statements prepared as of December 31, 2021. Earlier application of the above IFRS is also permitted, with the disclosure of relevant information in the Notes to the financial statements.

The Tax Administration issued a warning notice for not declaring income from abroad

The Tax Administration of the Republic of Serbia, based on available data on payments from abroad and comparing these data with submitted tax returns on calculated and paid tax by self-taxation and related contributions to earnings / other income by a natural person as a taxpayer, found a high rate of non-compliance and identified those individuals.

These revenues are generated through the provision of various types of services, and most often these are software development services, translation, foreign language classes, promotion, graphic design and other types of services. Non-compliance with tax regulations has also been established for natural persons who earn income on social networks (“YouTubers”, “influencers”), online betting and similar, as well as for persons who have rented out their real estate for up to 30 days (“apartment per day”).

The Tax Administration of the Republic of Serbia calls on all natural persons who failed to file tax returns to do so voluntarily before taking any action by the tax authority regarding the committed act or omission, or before starting tax control or submitting a request to initiate misdemeanor proceedings, i.e. to pay taxes and contributions with accrued interest and settles its legal obligations, in order to avoid misdemeanor liability.

The Tax Administration of the Republic of Serbia will continue the continuous implementation of tax controls of natural persons.

This notice applies only to natural persons who have received payments from abroad including payments through PayPal, Western Union, Payoneer and similar platforms.

The taxpayer/natural person is obliged to file a tax return and pay the tax 30 days after earning income from abroad. In case of not submitting the return in timely manner, the taxpayer is obliged to calculate and pay interest as well. By self-reporting, the taxpayer avoids the misdemeanor penalty.

Issuing a license to provide accounting services

The Rulebook on the form and content of the request for the issuance of a license for the provision of accounting services, as well as the fee for the issuance of a license, has been published on the website of the Chamber of Certified Auditors.

Along with the request for the issuance of a license for the provision of accounting services, the accompanying documentation should be submitted, as well as proof of paid fee (RSD 24,000.00 for legal entities and RSD 17,000.00 for entrepreneurs).

The register of accounting service providers should start operating on 1.1.2021, and the deadline for entry in the Register expires 1.1.2023.
Along with the application for a license to provide accounting services, the applicant shall submit the following:

  1. proof (decision, excerpt, etc. of the Business Registers Agency) that it has a registered predominant activity for the provision of accounting services;
  2. proof that the founder, ie the beneficial owner, as well as a member of the management body of the legal entity that has a registered predominant activity for providing accounting services, has not been convicted of a criminal offense in terms of the law governing the liability of legal entities for criminal offenses. the founder, ie the owner, as well as a member of the governing body of the legal entity, a natural person, has not been convicted of criminal offenses under Article 18, paragraph 6, item 2) of the Law on Accounting “Official Gazette of RS”, No. 73/19, hereinafter: Law):
    1. for a legal entity – Excerpt from the criminal records of the competent court;
    2. for a natural person – Excerpt from the criminal records of the Ministry of the Interior;
  3. Proof that he has at least one full-time employee with a professional title in the field of accounting or auditing, acquired by a professional organization that is a member of the International Federation of Accountants (IFAC):
    1. confirmation of the applicant for the issuance of a license for the provision of accounting services, which contains information on the name and surname of that person and the date of conclusion of the employment contract for an indefinite period;
    2. a copy of the act (certificate, diploma, certificate, certificate, license, etc.) proving that the employee has acquired a professional title in the field of accounting or auditing, which was acquired by a professional organization member of the International Federation of Accountants (IFAC) .
  4. data on beneficial owners listed in Form 1;
  5. data on associates in the sense of Article 18 of the Law, which are listed in Form 1.

 

Exceptionally, an audit company that has a license to conduct an audit issued in accordance with the law governing the audit, submits an application for a license to provide accounting services on Form 1, without providing the above evidence.

The minimum wage for 2021 is 183,93 RSD per working hour

The Government of the Republic of Serbia passed the Decision, which stipulates the net amount of the minimum wage in the amount of 183,93 RSD per working hour.

The net amount of the minimum wage in 2021 will be:

  • RSD 29,428.80 in a month with 160 working hours
  • RSD 30,900.24 in a month with 168 working hours
  • RSD 32,371.68 in a month with 176 working hours
  • RSD 33,843.12 in a month with 184 working hours

“My First Salary” Program

The program “My first salary” envisages the employment of 10,000 unemployed people who are less than 30 years old, have no work experience and are on the National unemployment registry. For nine months, the state will finance a part of their salaries through a monthly cash benefit of 20,000 RSD for those with secondary education, and 24,000 RSD for the unemployed with higher education.

Employers should apply through the website www.mojaprvaplata.gov.rs in the period from August 17 to September 25, where they should enter a description of job positions and conditions that the candidate must meet. On the other hand, the unemployed who want to apply for a job through this program, will be able to do so from 1-15 October

From 16-31 October, employers will select candidates, and from 1-7 November the final lists will be published.

The trilateral contract can be signed from November 8 to December 7. The first cash benefits are therefore expected in December at the earliest.

Conclusion of the Government on new measures to support economic entities

At the Government session held on July 30, 2020, a Conclusion was passed by which the Government gives its consent for additional direct benefits to be paid to economic entities and to approve additional delays in the payment of public revenues.

DIRECT GRANTS TO BUSINESS ENTITIES

The first payment of direct benefits will be made in August, and the second in September 2020.

  • Business entities that used direct benefits in accordance with the Decree passed in April 2020 (except for large legal entities)

These economic entities are paid direct benefits in August and September 2020 in the amount of 60% of direct benefits paid to them in July 2020. Therefore, payments will be made automatically regardless of the submission of any tax return.

  • Large legal entities

These entities have the right to additional direct benefits if no later than August 15, 2020 submitt SL Forms for June and July 2020. The number of employees specified in the SL Forms is multiplied by the amount of 50% of the minimum net salary for March 2020.

  • Business entities that were entitled to measures in accordance with the Decree, but did not use them, as well as newly established business entities that have employees

These entities are entitled to direct benefits in the amount of 120% of the minimum net salary for March 2020 per employee, provided that they submit the PPP-PD Form no later than September 15,2020 for the accounting period August, where in field date of payment would be specified January 5,2021. So, only one application is submitted, and one payment in the amount of 120% (2×60%) of the minimum net salary for March will be made.

  • Newly established business entities that do not have employees

Business entities that do not submit the PPP-PD Form are entitled to direct benefits automatically, in the amount of 120% of the minimum net salary.

For economic entities that have special purpose accounts, payments of direct benefits are made to those accounts, and for those entities that do not have special purpose accounts, the accounts will be opened automatically. If the business entity has accounts with several banks, the Tax Administration will decide with which bank a dedicated account will be opened.

According to item 10 of the Conclusion, economic entities can use the received funds no later than October 31, 2020. years. Upon the expiration of the stated deadline, special purpose accounts are closed and unused funds from those accounts are transferred to a special budget account.

FISCAL BENEFITS – DELAYING THE MATURITY OF CERTAIN PUBLIC REVENUES

The conclusion does not envisage additional postponement of the advance payment of corporate income tax.

The conclusion determines the postponement of the due date for the payment of public revenues, only for one month, as follows:

  • taxes and contributions on salaries
  • taxes and contributions on personal earnings of entrepreneurs
  • taxes on income from self-employment

Fiscal benefit is achieved by submitting the form PPP-PD for the accounting period August 2020 by the end of September with the specified payment date is January 5, 2021.

LOSS OF RIGHT TO USE MEASURES

The business entity loses the right to use the measures from the Conclusion if it reduces the number of employees by more than 10%, in the period from March 15, 2020 until the expiration of three months from the last payment of new direct benefits.

Fees for protection and improvement of the environment

The Law on Fees for the Use of Public Goods stipulates that the entity liable for fees for protection and improvement of the environment referred to in Article 134, paragraph 1, item 1) of the Law must submit an application with data relevant for determining the fee to the local public administration unit by July 31 each year, for which a fee is determined.

Criteria for determining the negative impact of activities that affect the environment of legal entities and entrepreneurs are determined within the predominant activity performed by the taxpayer. According to the degree of negative impact on the environment, the activities of legal entities and entrepreneurs are divided according to the activity into those that have a large, medium and small impact on the environment. If the taxpayer performs the activity on the territory of several local self-government units, he submits the application to the competent authority on the territory of all local public administration units on which he performs the activity.

From July 18, 2020, it is possible to submit an electronic application on the LPA portal.

Rulebooks for the implementation of the new Law on Accounting have been published

The Minister of Finance adopted seven rulebooks related to the implementation of the new Law on Accounting:

  • Rulebook on Chart of Accounts and contents of accounts in the Chart of Accounts for companies, cooperatives and entrepreneurs
  • Rulebook on the content and form of financial reports and the content and form of statistical report for companies, cooperatives and entrepreneurs
  • Rulebook on Chart of Accounts and contents of accounts in the Chart of Accounts for other legal entities
  • Rulebook on the content and form of financial report and content and form of statistical report for other legal entities
  • Rulebook on the manner and deadlines for conducting the inventory and reconciliating the bookkeeping balance with the actual balance
  • Rulebook on the manner of recognition, valuation, presentation and disclosure of positions in individual financial statements of micro and other legal entities
  • Rulebook on the manner of keeping and content of the Register of Accounting Service Providers.

The Ordinances are applicable for the financial statements prepared on 31.12.2021, except for the Rulebook on the manner of keeping and content of the Register of Accounting Service Providers which is to be applied from 1.1.2021.

Which entities are required to have a statutory audit

We would like to emphasize that the Ministry of Finance published the opinion number 011-00-1089 / 2019-16 on December 17, 2019, which indicates and reminds that it is prescribed that the statutory audit is mandatory for regular annual financial statements of large and medium-sized legal entities classified in accordance with the law governing accounting, public companies in accordance with the law governing the capital market, regardless of their size, as well as all legal entities or entrepreneurs whose total income generated in the previous business year exceeds 4.400.000 EUR.
However, as the current Rulebook on the content and form of financial reports for companies, cooperatives and entrepreneurs (“Official Gazette of RS”, No. 95/14 and 144/14), or the Rulebook on the content and form of financial reports for other legal persons (“Official Gazette of RS”, No. 95/14), in the Income Statement, do not contain the appropriate AOP which shows the total income, and for the purpose of determining the auditor based on the criteria – total income, we believe that in this case , in order to determine the total revenue in terms of Article 26, paragraph 1 of the Law, the following revenues (AOP positions) from the mentioned regulations should be taken into account:

-Operating income;

-Financial income;

-Income from adjusting the value of other assets at fair value through profit or loss (for companies, cooperatives and entrepreneurs), ie income from adjusting the value of short-term and long-term financial placements and receivables (for other legal entities);

-Other income.

The final decision on tax treatment of transportation costs to employees

Ministry of Finance has published on 1.2.2019 an opinion on documenting the costs of arrival and departure from work for employees. Each company has an obligation to properly document the costs, ie it is necessary to keep a record every month whether travel expenses for employees are covered and that there are documents justifying the costs of transportation.

Furthermore, the Ministry of Finance has issued opinion no. 430-00-648 / 2019-04 dated 17.1.2020 on tax treatment of compensation for costs of arrival and departure from work that have not been documented. Compensation for expenses for arrival and departure from work, to which an employee is entitled in accordance with the general act and the employment contract in accordance with the provisions of Article 118, paragraph 1, item 1) of the Labor Law (not considered as earnings under Article 105, paragraph 3) Of the Labor Law), no compulsory social security contributions are paid regardless of the tax treatment of such benefits under Article 18, paragraph 1, item 1) of the Law.

Finally, 3.6.2020, the Ministry of Finance issued another opinion number 011-00-00040 / 2019-04 which stipulates that the cost of transportation that is not documented by an appropriate credible accounting document is recognized as an expense in the tax balance pursuant to Article 9, paragraph 2 of the Corporate Tax Law.

So, the conclusion is:

  • reimbursement of these expenses that are not documented does not have the treatment of earnings, so that the reimbursement of expenses for arrival and departure from work is taxed at the rate of 10%,
  • At the same time, contributions for compulsory social insurance are not calculated and paid and
  • Transportation costs that are not documented by an appropriate credible accounting document are recognized as an expense in the tax balance.

„Small Business Continuity Checklist“ by IFAC

The unprecedented circumstances of COVID-19 have seen many businesses faced with challenges the likes of which they have never faced before. For many small businesses, having a trusted advisor that they can turn to for help and guidance through this crisis is incredibly important.

Small- and medium-sized practices (SMPs) have a deep knowledge of their clients’ business and many of the specialist skills necessary to help them navigate through these most challenging of times.

A professional accountant can help effectively manage and reduce risk, explain how to take appropriate actions and fortify the business for the medium to long-term.

The Small Business Continuity Checklist is a diagnostic tool to navigate times of disruption, covering two key areas of Financial Management Tasks and Strategic Management Tasks. It is not intended to be an exhaustive checklist of requirements, but rather a tool to help identify priority actions for immediate attention.

Kreston MDM has done an official translation of this document, and the translation has been published on the Kreston MDM website as well as on the IFAC website.

New rules for the classification of legal entities

In accordance with the new Law on Accounting, the new rules for the classification of legal entities apply for 2020, based on data from the annual financial report for 2019.

The criteria are as follows to meet two of the three criteria:

  micro legal entities small legal entities medium legal entities large legal entities
Average number of employees <10 10- 50 51 – 250 >250
Operating income <700.000 EUR 700.001 EUR – 8.000.000 EUR 8.000.001 EUR  – 40.000.000 EUR >40.000.000 EUR
Value of total assets at the BS date <350.000 EUR 350.001 EUR – 4.000.000 EUR 4.000.001 EUR – 20.000.000 EUR >20.000.000 EUR

For the conversion of EUR amounts into RSD, the official middle exchange rate determined by the National Bank of Serbia is applied, on the balance sheet date of the regular annual financial report.

Newly established legal entities and entrepreneurs are classified on the basis of data from the financial statements for the business year in which they were established and the number of months of business. If the newly established entity has been operating for less than 12 months:

  • operating income is taken from the Income Statement form, and the threshold value is determined in proportion to the number of active months the current year
  • average number of employees (calculated as the sum of employees at the end of each month in the accounting period, divided by the number of active months),
  • to determine the value of total assets on the balance sheet date, the value on 31.12.2019 is being considered.

Extended deadline for acquiring the status of a qualified new employee

Deadline for acquiring the status of a qualified new employee from Article 21ž paragraph 3 of the Personal Income Tax Law and Article 45đ paragraph 3 of the Law on Social Contributions, for a person who in the period from January 1, 2019 to December 31, 2019 did not have the status of insured employee, ie status of entrepreneur who is the founder, ie a member of the company, and is employed in that company, is moved for a period of 60 days from the day of termination of the state of emergency.

 

New deadlines for financial reports and more

Government Decree of 16th April 2020 prescribes the postponement of deadlines for the submission of financial reports, tax returns for income tax and income tax from self-employment and annual general meetings.

Below are the new deadlines:

JUNE
5th June 2020 Deadline for submission of extraordinary financial reports
5th June 2020 Validity of licenses for audit of financial statements

JULY
5th July 2020 Validity of licenses for real estate appraisers
5th July Deadline for submission of annual reports of taxpayers whose reporting is regulated by the Law on Capital Market, the Law on Investment Funds or the Law on Open-End Investment Funds with Public Offering

AUGUST
4th August 2020 Deadline for submission of regular annual financial reports
4th August 2020 Deadline for holding annual general meeting
4th August 2020 Deadline for filing corporate income tax returns and self-employed income tax returns

SEPTEMBER
3rd September 2020 Deadline for submission of consolidated annual financial statements

 

Amendment of the Decree on Fiscal Benefits and Direct Payments

Amendments to the Decree on Fiscal Benefits and Direct Benefits to Private Companies and Financial Assistance to Citizens to Mitigate the Economic Consequences of COVID-19 Disease were published in the Official Gazette of the RS, no. 60 of April 24, 2020.

The changes are as follows:

  • Article 9

June tranche of direct payments – the number of employees is also reduced by the number of employees who ceased working with the company from April 10, 2020 to April 30, 2020.

July tranche of direct payments – the number of employees is also reduced by the number of employees who ceased employment with the business entity from May 1, 2020 to May 31, 2020.

The economic entity referred to in this Article shall be obliged to use the received funds from direct benefits by 15 August 2020 at the latest, thus permitting the payment of wages in full from its own funds before the receipt of direct payments.

  • Article 10

Number of employees for whom large legal entities have direct benefits in June – in the amount of the product 50% of the basic minimum net salary for March 2020 and the number of employees referred to in paragraph 1 of this Article increased in accordance with paragraph 2 of this Article, for whose remuneration the employer – a large legal entity submitted the PPP-PD Form for April 2020, for which the decision on termination of work applies for at least 15 working days in the month of April 2020.

Number of employees for whom large legal entities have direct benefits in July – in the amount of the product 50% of the basic minimum net wage for March 2020 and the number of employees referred to in paragraph 1 of this Article increased in accordance with paragraph 2 of this Article, for whose remuneration is the employer – large legal entity has submitted the PPP-PD Form for May 2020, for which the decision on termination of work relates to at least 15 working days in the month of May 2020.

The large legal entity referred to in this Article shall be obliged to use the funds received from direct benefits by 15 August 2020 at the latest.

  • Article 12

Repayment of direct payments with accrued interest is made to a special purpose account opened for this purpose with the Ministry of Finance – Treasury Department.

  • Article 16

Dividends, for the purposes of this Article, shall mean all payments made to their owners by a company on the basis of their ownership of the stocks or shares of that company.

  • Article 19a

Business entities in the private sector which, in the period from the date of entry into force of the Rulebook on the list of users of public funds 26.12.2019. (Official Gazette of RS, No. 93/19), as of the date of entry into force of this Decree, deleted from the List of users of public funds from the Register of users of public funds, maintained as an electronic database with the Treasury Directorate, are entitled to opening a special purpose account referred to in Article 13, para. 2 and 3 of this Decree, as well as fiscal benefits and direct payments under the conditions laid down in this Decree.

New deadlines for submission of financial statements and tax return

Government of Republic of Serbia has adopted Decree regulating delay of deadlines for submission of annual and consolidated financial statements of companies, cooperatives, other legal entities and entrepreneurs, as well as deadlines for filing company and self-employment income tax returns.

The deadline for submission of annual financial statements with the auditor’s report for all taxpayers whose reporting is regulated by the Capital Markets Law, the Law on Investment Funds or the Law on Alternative Investment Funds with a Public Offering, is extended to 60 days from the date of termination of the state of emergency.

For reporting that is governed by the Accounting Law, the period for the regular annual financial statements is postponed for 90 days from the date of termination of the state of emergency. The deadline for the consolidated financial statements is moved to 120 days from the date of termination of the state of emergency.

The deadlines for filing corporate income tax and self-employment income tax returns are postponed for  90 days from the end of the state of emergency, for legal entities whose tax period is equal to the calendar year, that is, for 120 days for taxpayers of corporate income tax whose tax period is different from the calendar year.

Persons liable to tax on self-employed income keeping business books in accordance with Article 43, para. 2 and 3 of the Law on Personal Income Tax, file a tax return within 90 days from the date of termination of the state of emergency.

Prescribed Form for presenting information on persons for whom a large legal entity is entitled to the payment of direct benefits

The Government of the Republic of Serbia adopted the Rulebook on the Contents of the Form for presenting information on persons for whom a large legal entity is entitled to the payment of direct benefits, which entered into force on 15.04.2020.

The Rulebook prescribes a Form for presenting information on persons for whom a large legal entity is entitled to the payment of direct non-refundable payments referred to in Article 10 of the Decree on fiscal benefits and direct payments to companies in private sector and financial aid to citizens in order to mitigate the economic consequences caused by disease covid-19.

Decree governing the financial support program was adopted

On 10.04.2020. a Decree was adopted to mitigate the economic consequences of pandemic. The program defined in this Decree relates to the granting of credit facilities to business entities for liquidity management and working capital.

Board of Directors of Development Fund (Fond za razvoj), in accordance with this program, will determine the more detailed criteria and conditions under which loans for maintaining current liquidity will be approved. The criteria and conditions will come into force when the Government gives the consent.

Deviation from the established criteria and conditions defined by this program is possible in justified cases in which there is a special interest of the Republic of Serbia, which shoul be determined by the Government’s conclusion.

You can read more about it here.

Decree on fiscal benefits

Government has adopted the decree on fiscal benefits and direct payments to companies in private sector and financial aid to citizens in order to mitigate the economic consequences caused by disease covid-19 in order to mitigate the economic consequences of pandemia.

You can read more in our Tax Alert on this subject which you can find on this LINK.

Conclusion of the Government of Serbia regarding holiday leave

The Government of Serbia has issued a Conclusion recommending employers in the territory of the Republic of Serbia to enable those who are obliged to perform regular work duties in state of emergency, to use the holiday leave for 2019 by the end of 2020.

During state of emergency, for those employees who are allowed to perform activities outside the premises of the employer (working remotely and working from home), the employer is obliged to enable the use the holiday leave for 2019 in accordance with the law, ie as of 30.06.2020.

It is recommended for employers who, in state of emergency, are unable to organize the work process, to give advantage to use of holiday leave.

Qualified newly employed status and continued self-employment

According to the opinion of the Ministry of Finance RS No. 430-00-44 / 2020-04 dated 12.02.2020 when, after having been employed and having acquired the status of a qualified new employee in accordance with the conditions laid down in Article 21ž of the Law, that person continues to pursue an self-employment activity as an additional activity, that circumstance does not affect his status as a qualified new employee acquired by establishing an employment relationship within the statutory period, and by changing the basis of social insurance.

Employee movement during curfew

Business entities are obliged to issue to each employee who performs his / her tasks from 5pm  to 5 am, and for which an agreement has been obtained, that it is exempted from the implementation of the Order on the Prohibition and Restriction of Movement of Persons in the Territory of the Republic of Serbia. The form of this confirmation can be downloaded from this link.

An employer who has up to 100 employees in a shift that lasts during the period of prohibition of movement issues a certificate on a daily basis, while an employer that has more than 100 employees in a shift that lasts during the period of prohibition of movement issues a certificate on a weekly basis for each employee for whom obtained consent of the Ministry of the Interior to be exempt from the application of the said order.

Starting from March 28, 2020, at 5 pm, when checking the observance of the Order on the Prohibition and Restriction of Movement of Persons in the Territory of the Republic of Serbia, the Ministry of Interior’s representatives ask for a Certificate issued by the employer, which will be valid only if the person is located in the database of the Ministry of the Interior and for which it was obtained that they were exempted from the implementation of the Order on Prohibition and Restriction of Movement of Persons in the Territory of the Republic of Serbia.

The Ministry of Interior will also accept certificates in electronic form (scanned receipt on phone, tablet, etc.).
Requests related to the issuance of movement permits between 5 pm and 5 am are submitted by economic entities through the Ministry of Economy to the email address [email protected]

Announced set of measures by the Government of Serbia to help the economy

The Serbian government has announced a set of measures to help the economy. An official legislation and a full implementation guide are expected in the next 10 days. Furthermore, the announced measures will help companies that have laid off less than 10% of employees The following measures are announced:

  1. Postponing of payment of due tax liabilities, with subsequent repayment in installments for at least three months, for following taxes:
    – payment of taxes and contributions for at least three months (employers who choose to use this measure may use deferral of payment of taxes and contributions to earnings until January 2021, and thereafter there is a possibility of further deferral of payment of these taxes and contributions up to 24 months without obligation to pay interest, at the request of the taxpayer)
    – postponing of payment of the income tax advance (in the meantime, companies may file a periodic tax balance and tax return to reduce the monthly advance if significant changes in the taxpayer’s business have occurred in the current year)
  2. Exemption from VAT for donations (exemption for donors from the obligation to pay VAT means that donors who donate their products and goods to institutions directly involved in activities aimed at preventing the spread and treatment of citizens from Covid-19 will be exempt from VAT for that turnover)
  3. Payment of three minimum wages for entrepreneurs, micro, small and medium enterprises for each employee. The state will pay minimum wage support for entrepreneurs, micro, small and medium-sized enterprises in the private sector for each employee. The minimum wage is about 31,000 RSD, so a total of about 93,000 RSD per employee will be paid. Companies can expect the state to pay them the first third of the funds mid-May, the second half in June, and the third half in July. Companies will be required to pay this money to employees. Large companies whose employees are sent on forced leave will receive subsidies of 50% of minimum wage due to reduced business volume or complete shutdown.
  4. Corporate bonds. It is one of the ways in which large enterprises can count on the state support. Given the complicated legislation, changes to legislation are to be made
  5. Preferential loans and guarantee schemes in order to maintain liquidity during and after the state of emergency:
    – Program for granting favorable loans with 1% interest through the Development Fund of the Republic of Serbia, for maintaining liquidity and working capital for entrepreneurs, companies classified into micro, small and medium-sized legal entities, agricultural households and cooperatives
    – Guarantee schemes for business support for loans for maintaining liquidity and working capital for entrepreneurs, companies classified into micro, small and medium-sized legal entities, agricultural holdings and cooperatives. Guarantee schemes will refer to loans granted by commercial banks, and practically the state will guarantee these loans.
  6. Payment of direct assistance in the amount of 100 EUR in RSD equivalent to all adult citizens of Serbia, upon termination of the state of emergency

Business in times of corona

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

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

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

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

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

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

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.

For compensation of the costs of arrival and departure from work tax rate of 10% is applicable, but no contributions are paid

Ministry of Finance has published on 1.2.2019 an opinion on documenting the costs of arrival and departure from work for employees. Each company has an obligation to properly document the costs, ie it is necessary to keep a record every month whether travel expenses for employees are covered and that there are documents justifying the costs of transportation.

Furthermore, the Ministry of Finance has issued opinion no. 430-00-648 / 2019-04 dated 17.1.2020 on tax treatment of compensation for costs of arrival and departure from work that have not been documented. Compensation for expenses for arrival and departure from work, to which an employee is entitled in accordance with the general act and the employment contract in accordance with the provisions of Article 118, paragraph 1, item 1) of the Labor Law (not considered as earnings under Article 105, paragraph 3) Of the Labor Law), no compulsory social security contributions are paid regardless of the tax treatment of such benefits under Article 18, paragraph 1, item 1) of the Law.

Therefore, the reimbursement of these expenses, which have not been documented, is not treated as earnings, so that the tax at the rate of 10% is paid for the reimbursement of the costs of arrival and departure from work, while at the same time no compulsory social security contributions are calculated and paid.

 

APR: application for submission of reports is active

The Agency for Business Registers (APR) has issued a notice that as of 20.01.2020 access to the application for submission of reports through the Agency’s Special Information System is enabled, which provides a unique procedure for entering, controlling, signing and submitting statistical reports and financial reports with the prescribed documentation for 2019.

This year, the last day for submission of the report for statistical purposes will expire on Saturday, 29.02.2020, so that the submission of reports will be possible by 02.03.2020.

CENTRAL REGISTRY OF ULTIMATE OWNERS

Ministry of Economy has announced that misdemeanor reports will be filed against legal entities that do not register the ultimate owners in the Central Registry, and requests for instituting misdemeanor proceedings will be filed by the Agency for Business Registers (APR) after the prescribed deadline. The fine for this type of offense ranges from 500,000 to 2,000,000 dinars for legal entities, while the responsible person (legal representative) is provided with a fine of 50,000 to 150,000 dinars.

Otherwise, at the beginning of 2019, amendments to the Law on the Central Registry of Real Owners, which, among other things, prescribe misdemeanor liability for registered entities that do not register by January 31, will enter into force.

The Rulebook on the tax balance and tax return has been amended, as well as the Rulebook on transfer pricing

A new form PB 1 of tax balance sheet has been prescribed, which is replacing the old one. The new form has 69 items. Item 25 of the old PB 1 – Advertising and Propaganda Expenses was deleted and 5 new items were added:

  • Item 36 – R&D expenditure recognized in double amount in accordance with Article 22g of Corporate Tax Law
  • Item 40 – Capital gains tax paid in another country
  • Item 43 – the amount that is included in the tax base due to a decrease in the percentage of utilization of old R&D funds
  • Item 44 – the amount to be included in the taxable amount in the tax period in which the application was rejected by the competent authority
  • Item 50 – the amount of qualifying income that is not included in the tax base in accordance with Article 25b of the Corporate Tax Law

 

A new PDP form has also been prescribed, and amendments to the Rulebook on Transfer Pricing prescribes a different way of including in the tax base the established difference between the transfer purchase price of a fixed asset and its price determined by applying the “arm’s length” principle when a fixed asset subject to tax depreciation is procured from a related party.

Rulebook on depreciation of fixed assets that is recognized for tax purposes

The Minister of Finance passed the Rulebook on depreciation of fixed assets that is recognized for tax purposes. The Rulebook will be published in the Official Gazette of RS No. 92/19, and will come into force on 1.1.2020. It is applied in determining income tax for 2019.

The Rulebook prescribes a new POA Form.

 

New Tax alert

On 06.12.2019 The National Assembly adopted the following amendments to the Law:

  1. Law on Compulsory Social Security Contributions
  2. Law on personal income tax
  3. Property Tax Law
  4. Corporate Income Tax Law
  5. Law on Tax Procedure and Tax Administration

The laws were published in the “Official Gazette of the RS” No. 86 dated 06.12.2019.

Most amendments are effective from 1.1.2020 (some provisions will apply later). An overview of amendments to the law set is shown in our Tax alert.

Reduced pension contribution rate from 12% to 11.5%

By adopting the Law on Amendments to the Law on Compulsory Social Security Contributions (Official Gazette of RS, No. 86/2019) the rate of pension contribution at the expense of the employer is reduced from 12% to 11.5%. The new rate will be applicable from 1.1.2020.

Old employment benefits

The deadline for using the old employment benefits has been extended to 31.12.2020. From next year, claims for tax refunds and contributions will be submitted on special forms, which will be prescribed by the Minister of Finance by a by-law. The deadline for passing the by-law is April 2020.

New Laws

The National Assembly is 6.12.2019. adopted the Proposal of Decision on approval of the Decision on amendments to the Financial plan of the Social Security Fund for Military Insureds for 2019, submitted by the Government, as well as the Bill on Amendments to the Law on Contributions for Compulsory Social Security, the Law on Amendments and amendments to the Law on Tax Procedure and Tax Administration, Law amending the Law on Personal Income Tax, Law amending the Law on Republic Administrative Fees, Law amending the Law on Property Taxes, Law amending and amendments to the Law on Pension and Disability Insurance, Proposal of the Law on Termination of the Law on the Temporary Regulation of the Basis for Calculation and Payment of Salaries, or Wages and Other Permanent Remuneration of Public Funds Beneficiaries, Proposal of the Law on Amendments to the Corporate Income Tax Act, Proposal for a Law on Amendments to the Law on Corporate Taxes, Law on holding and carrying goods and the Law amending the Law on the Temporary Regulation of the Method of Charging Public Media Service Fees, submitted by the Government.


We will be releasing a Tax Alert soon regarding financial and tax laws.

Rulebook on the determination of telecommunications services and services provided electronically

In Official Gazette no. 75/2019 of 23.10.2019. Rulebook on the determination of telecommunications services and services provided electronically, within the meaning of the Law on VAT, and on establishing criteria and assumptions for determining the headquarters, permanent establishment, residence or residence of the recipients of telecommunications, radio and television broadcasting services and services provided electronically, has been published.

You can read our Tax Alert here (link).

New Year and Christmas gifts

Employee benefits in respect of gifts for children for the New Year and Christmas are not considered earnings up to the amount of the prescribed non-taxable amount, which is now 9,784 dinars per year per child.

Gifts of greater value than non-taxable amount, gifts to children of employees over 15 years of age, as well as gifts to employees are treated as employee earnings.

The non-taxable amount of gifts refers to gifts in cash and gifts in goods.

If both spouses work with the same employer, each of them as an employee is entitled to a gift for children on New Year’s or Christmas.

If the employer organizes a New Year’s program for the children of employees on the occasion of New Year or Christmas, by engaging theater groups or independent artists, the payment is made on the basis of the copyright contract.

Extension of the deadline for the new codebook of occupations

It is proposed to extend the deadline for updating the data in the Central Registry for the applicants for the single application for compulsory social security by another year, ie until December 31, 2020.

Namely, after 28 years, Serbia has adopted a new Codebook of occupations, which includes jobs that have emerged in the labor market in the last three decades. The Unique Nomenclature of Occupations from 1990 has been in use so far.

By the end of 2019, employers are under an obligation to update their employee data according to the new Codebook of occupations. As of January 1, 2020, only a new codebook covering 3,641 occupations will be used, and the list is aligned with the needs of the economy and labor market in Serbia, as well as with the international standard.

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.