All material subject to strictly enforced copyright laws. © 2022 ITR is part of the Euromoney Institutional Investor PLC group.

Serbia narrows down list of services subject to withholding tax

intl-updates-small.jpg

Important changes affecting a wide range of companies in Serbia have been introduced via amendments to the provision related to the application of withholding tax. Article 40, paragraph 1, item 5 of the Law on Corporate Profit Tax regulates the taxation of services provided by foreign entities by subjecting them to withholding tax. It will apply as of April 1 2018.

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.

radulovic.jpg

Zvezdana Radulovic

Zvezdana Radulovic (zvezdana.radulovic@eurofast.eu)

Eurofast Global

Tel: +381 11 324 14 84

Website: www.eurofast.eu

more across site & bottom lb ros

More from across our site

This week Brazil’s former President Luiz Inacio Lula da Silva came out in support of uniting Brazil’s consumption taxes into one VAT regime, while the US Senate approved a corporate minimum tax rate.
The Dutch TP decree marks a turn in the Netherlands as the country aligns its tax policies with OECD standards over claims it is a tax haven.
Gorka Echevarria talks to reporter Siqalane Taho about how inflation, e-invoicing and technology are affecting the laser printing firm in a post-COVID world.
Tax directors have called on companies to better secure their data as they generate ever-increasing amounts of information due to greater government scrutiny.
Incoming amendments to the treaty could increase costs on non-resident Indian service providers.
Experts say the proposed minimum tax does not align with the OECD’s pillar two regime and risks other countries pulling out.
The Malawian government has targeted US gemstone miner Columbia Gem House, while Amgen has successfully consolidated two separate tax disputes with the Internal Revenue Service.
ITR's latest quarterly PDF is now live, leading on the rise of tax technology.
ITR is delighted to reveal all the shortlisted firms, teams, and practitioners for the 2022 Americas Tax Awards – winners to be announced on September 22
‘Care’ is the operative word as HMRC seeks to clamp down on transfer pricing breaches next year.
We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree