Archive for category: News

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

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

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

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

The new Law on Auditing has been published in the Official Gazette of RS, no. 73/2019 from 11.10.2019 and shall enter into force on 1 January 2020. You can find an overview of the new law in our Tax alert.

Serbia was removed from the European gray list of tax jurisdictions, i.e. the list of jurisdictions that do not cooperate in tax matters. In July 2019, Serbia signed the Convention on Mutual Administrative Assistance in Tax Matters (MAC), which is 30.08.2019 endorsed by the Serbian Parliament and will be from effective 1.12.2019.

Specifically, in December 2017, the EU drafted a black and gray list of tax jurisdictions, after identifying ways companies and individuals seek to avoid tax obligations. A place on the gray or black list for countries means poorer reputation and tighter controls in transactions with the EU.

The EU Council of Ministers of Ministers also removed Albania, Switzerland, Costa Rica and Mauritius from the gray list. United Arab Emirates were removed from the black list, while the Marshall Islands switched from black to gray. Blacklisted countries are American Samoa, Belize, Fiji, Guam, Oman, Samoa, Trinidad and Tobago, Vanuatu and the US Virgin Islands.

The Convention on Mutual Administrative Assistance in Tax Matters was developed jointly by the OECD and the Council of Europe in 1988 and amended by Protocol in 2010. The Convention is the most comprehensive multilateral instrument available for all forms of tax co-operation to tackle tax evasion and avoidance.

The Convention facilitates international co-operation for a better operation of national tax laws, while respecting the fundamental rights of taxpayers. It provides for all possible forms of administrative co-operation between states in the assessment and collection of taxes. This co-operation ranges from exchange of information, including automatic exchanges, to the recovery of foreign tax claims.

New Law on Accounting was adopted by the Assembly. More details in our Tax alert.

The Draft Law on Amendments to the Law on Tax Procedure and Tax Administration was published, which among other things:

• regulates in more detail the connection with the Bankruptcy Law,
• Introduces an act that will regulate the procedure, manner, deadlines content and form of the statement by which the taxpayer will declare the business premises, which will be adopted by the Minister, on the proposal of the Director of the Tax Administration,
• that the PIB (tax number) cannot be awarded to an entrepreneur who has tax debt incurred in connection with the activities in other economic entities in which he is at the same time a founder with a share of more than 5%;
• banks becomes obliged to provide data on taxpayers’ accounts at the request of the Tax Administration,
• the delivery of the tax act is regulated in more detail
• it is regulated that the Tax Administration shall take over the tasks of maintaining a unified information system of local tax administrations, no later than 1.1.2021.

As announced by the Government of the Republic of Serbia, the amendments to the Law on Personal Income Tax, which would enter into force on January 1, 2020, in the next few weeks will be brought before the National Assembly. A proposal of a set of measures for youth employment would include amendments to the law, as and tax incentives for the companies that employ them. One of the most significant changes being proposed is the introduction of a independence test for entrepreneurs. The tax administration will be tasked with determining whether hiring an entrepreneur is a simulated job, or whether hiring an entrepreneur creates a employer/employee relationship.

The introduction of eleven criteria for the independence test has been announced, and if six out of eleven are fulfilled, the entrepreneur will be deemed not to meet the independence requirement:
1. The principal defines working hours.
2. There is a competition clause in the contract.
3. The entrepreneur is entitled to holidays and absences for a fee and is approved by the principal.
4. The principal advertises the positions for which he / she hires an entrepreneur or for that purpose he / she recruits employment agencies.
5. The entrepreneur performs work for the principal by working in a team with employees or other entrepreneurs.
6. The entrepreneur uses the premises provided or owned by the principal.
7. The principal trains entrepreneurs and manages the work process.
8. The entrepreneur uses tangible and intangible assets for the work provided by the principal.
9. The entrepreneur generates at least 70% of the income in 12 months from the principal.
10. The entrepreneur performs business activities of the principal and does not assume business risk towards clients of the principal.
11. The entrepreneur has been engaged by the principal for more than 130 days in 12 months.

If a company employs a person who she/he had previously hired as a entrepreneur and the person was not employed during 2019, a partial exemption is provided for payment of salary taxes and social contributions:
1. 70 During 2020, 70% of taxes and contributions
2. 65 During 2021, 65% of taxes and contributions
3. 60 During 2022, 60% of taxes and contributions

The Law on Amendments to the Law on Value Added Tax is currently in the parliamentary procedure. It is stipulated that this Law will enter into force eight days from the day of its publication in the Official Gazette of the Republic of Serbia, and its implementation will commence on 1.1.2020 except for the provisions relating to Article 24 (tax exemptions for the circulation of goods and services with the right to deduct prior tax) and Article 26 (tax exemptions for the importation of goods) of the present Law and provisions containing the powers to adopt by-laws to be applied from the day the entry into force of this Law.

These are some of the changes proposed in the Value Added Tax Act and also you can download our Tax alert:

Value Vouchers – It is proposed to divide the vouchers into one-purpose and multi-purpose ones and to determine the difference between the tax treatment of their transfer.
One-purpose vouchers are those for which the place of delivery of goods / services is known at the time of the value voucher. All other vouchers are multi-purpose vouchers. The obligation to calculate VAT will exist at the moment of issue with single-purpose vouchers, while the obligation to calculate VAT on multi-purpose vouchers will exist at the moment of their realization.

Turover of goods carried on board, in an aircraft or train – It is suggested that the place of turnover of goods carried on board, in an aircraft or train during the transport of passengers is considered the place of departure of the ship, aircraft or train and the place of departure, departure place is the first scheduled place for embarking passengers. It is suggested that the return journey is considered a separate transport.
Also, in determining the place of turnover in the services of sale of food and drinks for consumption, which are actually provided on board, that is, in an aircraft or train during the transportation of passengers, it is proposed to apply the above rule.

Residence / abode – It is also envisaged to add a paragraph defining that if the residence and abode of the provider or recipient of the service are not in the same place, the place of turnover of the service is determined according to the place of abode.

Turnover of telecommunication, radio and television broadcasting services and services provided electronically – in case of turnover of telecommunication, radio and television broadcasting services and services provided electronically, place of establishment, permanent establishment, residence or abode of the recipient of services shall be considered to be a place determined on the basis of criteria and assumptions for determining the place of establishment, permanent establishment, residence or abode of the recipient of those services.

Tax liability – It is stipulated that a tax liability will occur on the earliest date, inter alia, the invoicing of the services referred to in Article 5, paragraph 3, item 1) of the VAT Law is made, including services directly related to those services as well as technical services support for the use of software, hardware and other equipment for a specified period of time.

Tax exemptions for the circulation of goods and services with a right to deduct previous tax – The amount of the total value of the goods delivered (through which VAT can be refunded) that the passenger takes abroad in personal luggage, for non-commercial purposes, changes to RSD 6.000 from previous EUR 100.

Implementation of highway construction infrastructure projects – Provision is made for a tax exemption with the right to deduct previous VAT on goods and services performed within the

framework of the implementation of highway construction infrastructure projects for which a public interest has been established by a special law.

Pre-tax split and prorated tax deduction – Specifies which sales of goods and services are not considered in determining the prorated deduction percentage and specifies that a taxpayer is not required to split the pre-tax under this law if the prorated deduction percentage is at least 98 %.

A complete change to Article 44, which now reads – If the VAT payer in the invoice for goods and services supplied shows a higher amount of VAT than the one who owes in accordance with this law, i.e. the amount of VAT without having to pay the obligation in accordance with this law, the stated VAT is to be paid.
The VAT taxpayer referred to in paragraph 1 of this Article shall have the right to correct the VAT amount if he has issued a new invoice with a corrected VAT amount, that is, an invoice without VAT and if he has a document of the recipient of the invoice stating that the VAT stated in the original invoice was not used as previous tax.
The new invoice referred to in paragraph 2 of this Article must contain a note that the invoice replaces the previously issued invoice.
The person who declares VAT in the invoice, who is not liable for VAT, is obliged to pay the declared VAT.
The person referred to in paragraph 4 of this Article shall not have the right to correct the stated amount of VAT.

 

In accordance with the opinion of the Ministry of Finance No. 011-00-920 / 2018-04 of 10.7.2019. the tax exemption with the right to deduct the previous tax for the shipment of goods abroad, i.e. for the export of goods, can only be obtained by the taxpayer – the owner of the goods being exported, if he / she possesses evidence of the export of goods. Namely, it is a person who ships goods abroad and is listed in JCI for export of goods (box 2) as the sender / exporter – the person on whose behalf the declaration is submitted and who, at the time of accepting the declaration, owns the goods or has similar rights to dispose of goods.

From 8/13/2019 taxpayers may inquire about the status of property tax liability for the territory of the Republic of Serbia through the application for mobile phone “My LPA”, which is free and available in versions for Android and iOS operating system.I

In order to complete the inquiry, it is necessary to obtain a username and password, for which the taxpayers personally submit a request to the competent local tax administration (LPA). Individuals should contact the local tax administration by place of residence, while legal entities should contact the local tax administration by registered headquarters address.

On the website of the Finance ministry, a draft law on accounting is published, which should enter into force on 1 January 2020. The link contains the most important changes compared to the current applicable law of accounting.

The Ministry of Finance has issued a Notice regarding taxation of income from the provision of catering services in domestic crafts and rural tourism households by an individual.

The Rulebook on Terms, Criteria and Elements for Taxation of Revenues Based on the Provision of Hospitality Services was previously published. The Regulation is effective from 1.7.2019. and taxable income from the provision of hospitality services is calculated on the basis of the following:
– 5% of average monthly earnings in the year preceding the taxable year,
– number of single beds and camping pitches and
– coefficient by category of tourist destination.

At the session held on August 8, 2019, the Executive Board of the National Bank of Serbia decided to cut the reference by 0,25 percentage points to 2,5%. The next session of the Executive Board should be held on September 12, 2019.

The new Personal Data Protection Act, which was passed last year, will begin to apply on August 21, 2019. The law imposes a number of obligations on all legal entities, especially those who operate with a large number of users and perform data processing of any kind, and prescribes harsh penalties for non-compliance with the Law. The main reason for adopting the Act is to comply with EU regulations.

The law applies in cases where the data processor having his / her headquarters, domicile or residence in the territory of the Republic of Serbia processes personal data in the scope of activities performed in the territory of the Republic of Serbia, regardless of whether the processing operations are carried out in the territory of the Republic of Serbia. Also, irrespective of the seat, residence or domicile of the data processor, the Law also applies to data processing cases where the data subjects have their place of residence in the Republic of Serbia, in two cases – in the case of supply of goods and services, and in the case of monitoring the activities of persons if the activities are carried out in the Republic of Serbia.

On our website you can access the tax alert regarding the new “Rulebook on exercising the right to tax exemption based on the organization of recreation, sporting events and activities for employees”.

https://krestonmdm.com/wp-content/uploads/2019/08/Tax-Alert_rekreacija-2.pdf

 

 

The official middle exchange rate of the dinar will be applied in the future when dealing with pricing and billing of tourist packages abroad. This is prescribed by the new Law on Trade, which was adopted by the National Assembly of the Republic of Serbia. This solution was accepted during the drafting of the bill, and at the proposal of the National Bank of Serbia.

In this way, the long-standing issue of collecting tourist arrangements by using ask rate of commercial banks or effective foreign currency was resolved. The decision from the new Law on Trade in the Prices of Tourist Arrangements becomes completely comparable and predictable because it will not depend on the daily sales rates determined by the banks.

With this solution, users of tourist agency services will have the opportunity to plan with great certainty the amount of expenses in the family budget for payment of tourist arrangements that are being made abroad, since the price of such arrangement will be presented and collected using the official middle exchange rate of the dinar, which, thanks to the efforts and activities of the National Bank of Serbia, for several years is stable and without major oscillations.

In addition, travel agencies, who until now have calculated and charged travel arrangements for the users of their services using the selling rate of the bank with which they have opened an account, although in practice they bought foreign currency at more favorable rates, will no longer be able to earn additional earnings on the basis of exchange rates difference, and at the expense of clients.

We state that according to the current regulations, but also according to the new law, traders are obliged to show prices in the dinar as a rule, while only exceptionally they can display the price in foreign currency, as is the case in the trade in services in tourism that are in direct relation with foreign countries. However, in this case, according to the new law, the trader must indicate that in the calculation and charging of the price the official middle exchange rate of the dinar is used.

The new Law on Trade was published in the Official Gazette of the Republic of Serbia No. 52/2019 and shall enter into force on the eighth day from the day of its publication on 30 July 2019.

Source www.nbs.rs

In accordance with the opinion of the Ministry of Finance no. 413-00-277 / 2017-04 issued on 27.5.2019, if the electricity bill is in the name of one VAT payer and the electricity is used by another VAT payer, in that case VAT calculated and reported in the electricity bill cannot be reported as input VAT by the VAT payer in whose name the bill is due to the fact that it does not use electricity for performing its activities in the industry within which it is operating with the right to deduct input VAT; nor by the VAT payer – the user of electricity, because the bill of VAT payer – previous participant in the transport (electricity supplier) is not issued in the name of this VAT payer.

At the session held on July 11, 2019, the Executive Board of the National Bank of Serbia decided to cut the reference by 0,25 percentage points to 2,75%. The next session of the Executive Board should be held on August 8, 2019.

After being postponed for several times, the new VAT Rule Book came into force on 01/07/2018 introducing new records, as well as the obligation of taxpayers to submit a VAT calculation, together with the VAT return. The Tax Administration of the Republic of Serbia has published on its website the User Manual for presenting of Data in the VAT Calculation Overview, which also presents the legal framework, general guidelines, explanations and examples.

After the beginning of the implementation, a one-year period was left in which the tax authority did not take into account the erroneously presented data that do not affect the amount of the tax liability. That period ended on 30/06/2019.

It should be emphasized that regulations do not stipulate any penalty clauses which would apply in case the data which do not affect the VAT liability in VAT records and ’POPDV’ (VAT Calculation Overview) and ’PP PDV’ (VAT Tax Return) forms are not correct. Therefore, we assume that in case of the tax audit, the incorrectly presented data will be noted without imposing any penalties.

In accordance with The Law on Fees for the Use of Public Goods a Rulebook on the application form for the registration of the fee payer for improving energy efficiency has been published, the monthly and annual calculation form for the quantities of energy/energy generating products supplied to consumers or put into circulation on the territory of the Republic of Serbia or imported into the territory of the Republic of Serbia, the form of monthly and annual calculation of the obligation to pay the fee, the form of the payment report, and the manner of submitting these forms.

Monthly accounts should be submitted by the fee payer by the 20^th of the month for the previous month, while the annual accounts should be submitted by January 31, of the current year for the previous year to the Ministry of Mining and Energy in written form by post and in electronic form to the electronic address published on the website of the competent ministry.

The mentioned Rulebook shall apply as of July 1, 2019.

Regular annual financial statements of legal entities whose business year ended on Dec. 31, 2018. should be delivered no later than June 30, 2019.
In addition to the regular annual financial statements, legal entities are obliged to submit to the Business Registers Agency the following documents:
– Decision on adoption of regular annual financial statements
– Decision on the distribution of profit, that is, covering the losses according to the regular annual financial statement
– Annual business report if they are obliged to compile it
– An audit report, if the legal entity has an obligation to audit the financial statements
The legal deadline for compiling and submitting the Fiscal Balance Sheet is 180 days from the date of expiry of the period for which the tax is determined. Bearing in mind that on June 29th, the deadline for filing a tax return for determining corporate income tax and Fiscal Balance Sheet for 2018 is the first following business day, i.e. July 1, 2019.

The new insurance policies provided for in Article 15 of the Law on Health Insurance apply to retirees who have entered into an employment agreement before April 11^th, 2019, and indisputably also to retirees who have entered into an employment agreement after April 11^th, 2019.

“Article 15 of the Law on Health Insurance (“Official Gazette of the Republic of Serbia”, No. 25/2019 – hereinafter: the Law) regulates the issue of the priority basis of insurance in case when the insured person from Article 11 of the Law meets the conditions for acquiring the status of insured person on several grounds, as well as the obligations of the listed categories of persons who fulfill the condition for acquiring the characteristics of the insured on several grounds, to choose one of the insurance bases under which they will be insured. Based on the aforementioned Article 15 of the Law, the insured retirees who have entered into an employment agreement no longer have the obligation to choose the basis of insurance according to which they will be insured, but, in the case of employment, they must be insured as employees.

The correct application of this provision implies its application to retirees who have entered into an employment agreement before April 11, 2019, and indisputably also to retirees who have entered into an employment agreement after April 11, 2019. Please note that, by the appropriate application of this provision, insured retirees who are employed, as well as members of their families who are insured through them, do not suffer any interruptions in the health insurance, but only change the insurance basis. To that end, the Republic Health Insurance Fund, in cooperation with the Republic Pension and Disability Insurance Fund, should take the necessary measures and activities so that all retirees who are employed and members of their families who have been insured through them, could continue to exercise the rights of the compulsory health insurance, without interruptions, in accordance with the law. ”

 (Opinion of the Ministry of Health, No.: 011-00-95 / 2019-05 (1) of 14th of May 2019)

THE LAW ON TOURISM

The new Law on Tourism (“Official Gazette of the Republic of Serbia”, No. 17/2019) and the Law on Hospitality (“Official Gazette of the Republic of Serbia” No. 17/2019) entered into force on March 22nd, 2019. The old Law on Tourism, which ceased to be valid on the day of entry into force of the new law, regulated both areas – tourism and hospitality:

• According to the new definition, the tourist agency is a commercial company, an entrepreneur, another legal entity that performs tourist agency activities under the conditions prescribed by the Law, while the branch of a foreign legal entity will no longer be able to perform the activity of travel agencies. The new Law introduces a central information system in the area of ​​catering and tourism (E-tourists), which enables electronic registration of guests, electronic payment of residence tax, submission of a request for categorization and other.
• In addition to the already existing possibilities for incentives, new financing for tourism promotion in the field of ecological standards, energy efficiency, use of renewable energy sources is foreseen; development of the national tourist brand; digitization and other innovative solutions; improving traffic connections with strategic markets; rural tourism and hospitality.
• The activity of a tourist agency may be performed occasionally at fairs and other public events, but not longer than 15 days.
• In relation to the travel agency license for travel organization, the deposit will be introduced as well as the license category. The amount of deposit will depend on the category of the license, and this area will be more closely regulated by the policy.
• In addition to the already prescribed obligations of the travel agency, new ones are prescribed, for example a tourist agency is obliged to sell a tourist trip at a selling price, which is expressed in a unique amount. Travel registration records are also introduced.
• A travel agency that sells a passenger service electronically is obliged to operate in accordance with the Law and regulations governing electronic trade.
• The identity card issued to tourist guides and tourist escorts is issued with a validity period of ten years.
• “Limo service” is no longer subject to regulation of the Law, and within the rent-a-car, the possibility of renting a motor vehicle A category is introduced. The service provider must have at least five registered motor vehicles of category B. The motor vehicle can not be older than five years, counting from the date of the first registration, and on motor vehicles and services provided, records are kept with prescribed content.
• Any change of data, which should be entered in the register of the Business Registers Agency, should be automatically taken into the Register of Tourism.

 

THE LAW ON HOSPITALITY

The new Law on Tourism (“Official Gazette of the Republic of Serbia”, No. 17/2019) and the Law on Hospitality (“Official Gazette of the Republic of Serbia” No. 17/2019) entered into force on March 22nd, 2019. The old Law on Tourism, which ceased to be valid on the day of entry into force of the new law, regulated both areas – tourism and hospitality:

• The new Law introduces a central information system in the field of hospitality and tourism (E-tourists), which enables electronic registration of guests, electronic payment of residence tax, application for categorization and other.
• Hospitality activity can be performed by a company, another legal entity and an entrepreneur, if registered in the appropriate register. Some hospitality services can also be provided by a physical person.
• Some new concepts have been introduced by the law and the definition of existing concepts has been carried out.
• The hospitality worker who provides accommodation services in an unclassified hospitality establishment is obliged to submit a registration to the local self-government unit on whose territory the facility is located, before the commencement of its activity.
• Establishment of the Central Information System in the field of hospitality and tourism (hereinafter: CIS) is envisaged. It is planned to adopt a rulebook on how to enter, operate, manage and use CIS, as well as prescribe its content and type of data.
• The Ministry is obliged to enter in the CIS the data on the facilities and the caterer, which it records, as well as the data on the health institutions that perform the hospitaity related activity, and the local self-government unit is obliged to enter data on the objects it registers in the CIS. Hospitality workers will have to have access to CIS in order to enter data on the accommodation user. Also, each request for categorization of catering facilities is submitted via CIS.
• For the purpose of checking the quality of service provision in categorized hospitality facilities, a business association of hospitality workers may designate a secret guest who makes a report with an expert opinion which he can submit to the Ministry.
• A physical person can provide hospitality services in a domestic hospitality facility and a village tourist household of up to 30 individual beds, for up to 30 users of services, and only accommodation services (so far it could provide food services).
• A physical person as a hospitality worker is obliged to clearly state his name and surname at the entrance of the building, as well as the contact telephone and must be the owner or co-owner of that accommodation facility. Exceptionally, hospitality services may also be provided by a member of the family household of the owner or co-owner, with their written consent, which must be certified by the notary public. The physical person for the provided hospitality services issues a special account, with prescribed content and it is obliged to keep a record of the issued invoices at the daily level.
• The taxpayer pays the physical person in the determined annual amount, while the Government shall prescribe more precisely the conditions and manner of determining the amount of the annual amount of the residence tax for the natural person providing hospitality accommodation services, as well as the manner and deadlines for payment.
• A completely new chapter on “personal data protection” has been introduced, as well as the possibility for the inspector to act as an anonymous user of the service.

Pursuant to Article 61, paragraph 3 of the Legal Entity Profit Tax Law (“Official Gazette of the Republic of Serbia”, 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 and 95/18), Minister of Finance adopted the Rule-book on interest rates for 2019 that are considered to be in accordance with the “arm’s length” principle. The Rule-book is published in the “Official Gazette of the Republic of Serbia”, no. 13/2019 and enters into force on March 8^th 2019.

Pursuant to Article 2 of this Rule-book:

For 2019, the interest rates are:

1) for banks and financial leasing companies:

(1) 2.72% on short-term loans in RSD;

(2) 3.64% on loans in EUR and RSD loans indexed in EUR;

(3) 5.05% on loans in USD and RSD loans indexed in USD;

(4) 2.98% on loans in CHF and RSD loans indexed in CHF;

(5) 3.91% of loans in SEK and RSD loans indexed in SEK;

(6) 4.25% on loans in NOK and RSD loans indexed in NOK;

(7) 1.92% on GBP loans and RSD loans indexed in GBP;

(8) 1.41% on loans in RUB and RSD loans indexed in RUB;

2) for other companies:

(1) 4.98% on short-term loans in RSD;

(2) 5,69% on long-term loans in RSD;

(3) 2.71% on short-term loans in EUR and RSD loans indexed in EUR;

(4) 2.90% on long-term loans in EUR and RSD loans indexed in EUR;

(5) 7.61% on long-term loans in CHF and RSD loans indexed in CHF;

(6) 3.08% on short-term loans in USD and RSD loans indexed in USD;

(7) 4.12% on long-term loans in USD and RSD loans indexed in USD.

Interest rates apply to borrowings as well.