The long-awaited definition of services that are subject to
withholding tax has finally been put in place. This has been an
area of great uncertainty among companies who were often unsure
about whether or not to pay withholding tax for services
received from abroad.
The new Article 40, paragraph 1, item 5 of the Law defines
that the subject of taxation as regards withholding tax is the
income of foreign legal entities received from domestic
(Serbian) legal entities for:
- Market research services;
- Accounting and auditing services; and
- Other services in the field of legal and
business consulting, regardless of the place where the
services are provided or used, or where they will be provided
or used.
It was proposed that the Minister of Finance define in even
greater detail the types of services in order to eliminate any
doubt as to the application of the regulations.
As a result of the amendment, starting from April 1 2018,
domestic legal entities will not have to calculate and pay
withholding tax for services, such as advertising services on
Facebook, Google and AdWords, and goods transportation services
through the territory of Serbia, etc. There will no longer be a
requirement to obtain a tax residence certificate for the
purpose of applying bilateral tax treaties on the avoidance of
double taxation. The obligation remains solely in respect of
tax-subject services: market research, accounting and auditing
services and other services in the field of legal and business
consulting.
This change applies to all payments made by domestic legal
entities to foreign legal entities starting from April 1 2018,
regardless of whether the service for which the fee is paid was
supplied before or after that date. With this in mind,
companies should not rush to pay for already performed
services, if and when possible, but should consider postponing
the payments until after April 1 2018 if the nature of the
supply is exempt from withholding tax under the new rule.
|
| Zvezdana Radulovic |
Zvezdana Radulovic (zvezdana.radulovic@eurofast.eu)
Eurofast Global
Tel: +381 11 324 14 84
Website: www.eurofast.eu