Serbia: An overview of transfer pricing in Serbia

Anastasia Sagianni

For some multinationals operating in Serbia in 2013 it was not the first year of implementation of the transfer pricing rules. The law governing this area has been present in Serbia for more than a decade. More specifically, transfer pricing rules have been present since July 1 2001, but the Serbian Rulebook that was enacted on July 2013 gave clarity to the country's transfer pricing rules. Nonetheless, multinational companies operating in Serbia already had their transfer pricing policies in place due mainly to the fact that their headquarters were in countries with established transfer pricing rules.

For the large majority of entities, 2014 was the first year of implementation regarding transactions that took place during 2013. For those entities the procedure was demanding both for their financial departments and their advisers.

Is there a 'right' or 'wrong' way to prepare a transfer pricing study?

The application of the arm's-length principle requires the ability to see the nature of each inter-company transaction by understanding also under what circumstances those transactions took place, interpreting comparable situations and applying judgment. Moreover, since transfer pricing is not an exact science, there is no right or wrong but there are some risky areas where taxpayers should be very careful. For example, by saying merely that the applied margin is in accordance with the group's policy you do not document that the transaction is in accordance with the arm's-length principle. Also by preparing a transfer pricing study which does not include a justification for the selected TP method you may face a pitfall because in a potential transfer pricing audit tax authorities in Serbia may have another opinion about the selected method.

Anastasia Sagianni (anastasia.sagianni@eurofast.eu)
Eurofast Global, Belgrade office
Tel: +381 11 3241 484
Website: www.eurofast.eu

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