Serbia: Reactions to the application of FATCA regulations in Serbia
International Tax Review is part of Legal Benchmarking Limited, 4 Bouverie Street, London, EC4Y 8AX
Copyright © Legal Benchmarking Limited and its affiliated companies 2024

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Serbia: Reactions to the application of FATCA regulations in Serbia


Aleksandra Rafailovic

The application of FATCA regulations by some Serbian Banks, and more specifically the required consent for collection and delivery of personal data and information about their bank account to the IRS as a prerequisite to open a bank account, have provoked strong reactions from Serbian citizens. The Foreign Account Tax Compliance Act (FATCA) is a set of regulations adopted in the United States to combat offshore tax evasion by US citizens and companies.

Although an official agreement with Serbia still has not been signed, after signing a Letter of Intent on the conclusion of the international agreement regarding the implementation of the provisions of FATCA regulations, as of July 1 2014 Serbia was placed on the list of participating jurisdictions.

On the other hand, the Association of Serbian Banks has conducted an independent registration and the banks have begun implementing FATCA regulations as of July in fear of increased taxation on certain financial transactions (30%) or even termination of business relationships with banks which are outside the FATCA system.

This implementation and commitment includes the identification of "specified US persons"; complying with any required due diligence/verification procedures; annual reporting of information on US accounts (year-end account balance or gross receipts and gross withdrawals or payments from the account); deducting and withholding a 30% tax on payments paid to account holders who do not supply the required information (recalcitrant account holders), or paid to a non-participating FFI.

The category for "specified US persons" includes everyone with: US citizenship or permanent residence; US address (resident or correspondence); US place of birth; US telephone number; Power of Attorney for signatory authority, granted to person with US address; or a standing order for funds' transfer to an account maintained in the US or received from a US address (for example a US pension). For legal entities, a "substantial US owner" is deemed to exist in cases where a US resident holds more than 10% of shares (be it in value or vote) in a foreign corporation, partnership or trust.

In Serbia, according to the Law on Personal Data Protection, the provision of personal data details to foreign sources represents a serious and punishable offense. A check performed by the Commissioner for Information of Public Importance and Personal Data Protection determined that out of 29 banks operating in Serbia only 14 are gathering information, but none of them are sending data out of Serbia.

Some banks have followed the example of Western European banks, choosing a status as "a participating foreign financial institution without United States customers" which resulted in termination of relationship with existing US clients and refusal to work with US clients in future, rather than entering into an expensive and complicated procedure, and facing possible penalties for mistakes in procedures or direct refusal to cooperate.

Implementation of FATCA has caused strong reactions all over the world. The number of Americans who have renounced their US citizenship as the only way to avoid double taxation and violation of their privacy has tripled in 2013. Some financial institutions have announced that in case of problems with practical feasibility of implementation (bureaucracy, cost increase, additional employment and so on) they could withdraw their investments from the US. The real consequences and potential benefits of the FATCA set of regulations remain to be seen.

Aleksandra Rafailovic (

Eurofast Global Belgrade

Tel: +381 11 3241484


more across site & bottom lb ros

More from across our site

There will always be multinationals trying to minimise tax by pushing the boundaries of their cross-border arrangements, Rob Heferen claimed
HMRC’s attempts to crack down on fraudulent tax relief claims are well-meaning, but the agency risks penalising genuinely innovative businesses, writes Katy Long of ForrestBrown
Argentina, Brazil, Mexico and South Africa are among the countries the OECD believes could benefit from the simplified TP rules
It comes despite an offshore enabler penalty existing in the UK throughout the entire period
It is extraordinary that tax advisers in the UK can offer their services without having to join a professional body. This looks like it is coming to an end, Ralph Cunningham writes
Meet the esteemed judges who are assessing the first-ever Social Impact Awards
The ‘big four’ firm has also vowed to spend more on nurturing junior talent; in other news, Blick Rothenberg has hired a pair of tax partners
However, making APAs harder to reach could ‘pose problems’ for UK businesses
Microsoft's director of benefits taxation tells ITR about having no normal days, family inspiration and what makes tax cool
The 61-year-old has run the firm’s UK business since 2020
Gift this article