New Tax Incentives in Serbia

The beginning of December 2018 in Serbia was marked with the adoption of a set of amendments to tax laws that will have a profound impact on all industries and digital economy in the following years, especially on the IT and retail sectors. The tax novelties will also be providing new opportunities for start-ups and creating a more investor-friendly environment. Most of the changes will be applicable from 1 January 2019.

The most significant changes are:

• expenses for marketing and promotion, previously recognised as expenditures only up to 10% of the total income, will now be recognised in full;
• expenses for research and development (except those concerning oil, gas, and mineral resources) will be recognised as expenditures in the double amount;
• 80% of income from royalties, licensing, as well as 80% of capital gains income from the sale of IP rights, will be exempt for corporate income tax purposes; the IP rights will have to be registered;
• introduction of a 30% corporate income tax credit (maximum EUR 850,000) for investments into innovative start-ups;
• team building activities and employee benefits will be exempt from personal income tax;
• unemployment insurance contributions will be reduced from 1.5% to 0.75%.

In addition to these incentives, the Multilateral Convention to Implement Tax Treaty Related Measures to BEPS will start to apply to double tax treaties with Austria, France, Lithuania, Poland, Slovenia, Slovakia, and the United Kingdom. The withholding taxes will be the first ones affected – from 1 January 2019, while other types of taxes will be affected from 1 January 2020.