On 14 December 2017, the Serbian Parliament adopted amendments to the VAT Law, which were published in the Official Gazette of the Republic of Serbia No.113/2017. The adopted amendments will go into force on January 1 2018, with exception of certain provisions for which it is particularly emphasized. On 14 December 2017, the Serbian Parliament adopted amendments to the Corporate Income Tax Law, which were published in the Official Gazette of the Republic of Serbia No.113/2017. The adopted amendments will go into force on January 1 2018, with exception of provisions regulating withholding taxation. The majority of provisions shall be applied starting from the filing of tax return for 2018. Please see a high level overview of these changes in the Tax Alert from Grant Thornton Serbia.

1. © 2017 Grant Thornton Serbia. All rights reserved.
Tax Alert
Amendments of Serbian Tax Laws
DECEMBER 2017
Amendments to the VAT Law
Introduction
On 14 December 2017, the Serbian Parliament adopted
amendments to the VAT Law, which were published in the
Official Gazette of the Republic of Serbia No.113/2017.
The adopted amendments will go into force on January 1
2018, with exception of certain provisions for which it is
particularly emphasized.
An overview of main amendments is introduced below.
Postponement of the application of the new Rulebook on
VAT records
The application of new Rulebook on keeping VAT records
and VAT calculation overview as well as obligation to submit
VAT calculation overview along with the monthly VAT return,
which was to apply from January 1 2018, is postponed for six
months.
Therefore, this important change in VAT reporting will start to
apply starting from the filling of tax return for July 2018 (for
monthly taxpayers) or July-September 2018 (for quarterly
taxpayers).
Supply of goods and services between concessionaire
and grantor of concession
The Law expands the list of goods and services which are
out of scope of VAT.
In case of supply of goods and services between
concessionaire and grantor of concession within the
framework of public-private partnership contract, it would be
considered that supply of goods and services did not occur if
the following conditions are met:
• The concessionaire and the grantor of concession are
VAT payers,
• Both parties would be entitled to fully deduct input VAT, if
such a supply would be considered as executed,
• The supply is realized within the contract on public-private
partnership with elements of the concession (concluded
in accordance with the Law on public-private partnership).
Tax exemption for supply of goods that passenger
despatches abroad in its personal luggage
Starting from January 1 2018, VAT exemption with the right
for input tax deduction will be applied for the supply of goods
which a passenger is dispatching abroad in the luggage
carried by him, with a certain additional/changed conditions:
• A passenger does not have a residence or permanent
residence in the Republic of Serbia,
• The VAT payer which perform the supply of goods has an
evidence that the goods have been shipped abroad,
• It is not case of supply of excise goods or goods for
equipping and supply of transport vehicles for private
purposes.
Tax exemption will be achieved by VAT payer in the tax
period in which he provides evidence about the shipment of
goods abroad.
The Law also enables the VAT reimbursement to foreign
taxpayers to be carried out through an intermediary as well,
provided that evidence about the shipment of goods abroad
is provided within 6 months from the date of invoice for this
supply.
Non-eligibility for input tax deduction
Changes were made with regard to the list of goods and
services which are not eligible for input tax deduction, so that
starting from January 1 2018:
• VAT payers are not entitled to deduct input VAT based on
expenses for drink for their employees and other work-
engaged persons;
Tax

2. © 2017 Grant Thornton Serbia. All rights reserved. 2
• VAT payers are entitled to deduct input VAT based on
expenses for food and drink for their employees and other
work-engaged persons in their own catering facilities, only
if taxpayer charges a fee for this supply; in this case,
taxpayer will be obliged to calculate and pay VAT on the
subject supply.
Adjustment of input tax deduction based on the Decision
of the tax authority
In case the tax authority in the audit procedure determined
that VAT payer incorrectly applied the reverse charge
mechanism as if he were a tax debtor and accordingly
computed VAT and at the same time deduct the same
amount of input VAT, tax authority will perform an adjustment
of input tax deduction via a decision.
In this case, VAT payer shall be allowed to reduce the
incorrectly calculated VAT on the basis of the Decision of the
tax authority.
The place of supply of the single tourist service
A new rule has been prescribed for determining the place of
supply of a single tourist service, which was missed to be
regulated by the latest changes to the place of supply rules.
Starting from January 1 2018, the place of supply of a single
tourist service is the place where the service provider has its
head office or permanent establishment, if the services are
provided by permanent establishment that is not located in
the same place where the service provider has its head
office.
Taxation of the investment gold
In order to develop the investment gold market and to further
reconcile Serbian VAT Law with the EU VAT regulations, a
special taxation regime for investment gold is introduced.
According to new provisions, VAT shall not be payable on:
• The supply and import of investment gold as well as other
prescribed specific supplies / operations related to
investment gold,
• Intermediary services relating to supply of investment
gold.
VAT taxpayers supplying investment gold not subject to VAT,
are entitled to input tax deduction on the basis of purchase of
investment gold as well as other specifically listed goods and
services which are directly related to the production or
processing of gold.
The Law also gives taxpayers the option to calculate and pay
VAT on supply of investment gold, with a special procedure
and notification of competent tax authority. These VAT
payers has the right to deduct input VAT.
Extension of the right for VAT reimbursement to the
buyer of the first apartment
Until the adopted amendments to the Law, the buyer of the
first apartment was entitled to VAT reimbursement only if the
contract price has been paid directly, to the seller’s current
account.
The latest changes enables VAT reimbursement in all cases
when contract price is paid to the corresponding seller’s
account in accordance with local regulations. This enables
VAT reimbursement based on purchase of the first apartment
under mortgage or execution in the enforcement procedure.

3. © 2017 Grant Thornton Serbia. All rights reserved. 3
Amendments to the Corporate Income Tax Law
Introduction
On 14 December 2017, the Serbian Parliament adopted
amendments to the Corporate Income Tax Law, which were
published in the Official Gazette of the Republic of Serbia
No.113/2017.
The adopted amendments will go into force on January 1
2018, with exception of provisions regulating witholding
taxation. The majority of provisions shall be applied starting
from the filing of tax return for 2018.
An overview of main amendments is introduced below.
Calculation of tax depreciation of intangible assets and
assets consisting of immovable and movable parts
The amendments to the Law envisage the new method of
calculating tax depreciation on intangible assets, which
essentially equates depreciation expenses of intangible
assets for accounting and tax purposes.
Starting from the income tax return for 2018, tax depreciation
of intangible assets will be carried out using the straight-line
method, for each asset separately, to the base which is the
acquisition value of the assets, whereby the depreciation rate
would be determined by the taxpayer itself on the basis of
useful life of the asset and in accordance with accounting
regulations.
In addition to the aforementioned amendment, new Law
prescribes also a different way of classification of fixed asset
consisting of immovable and movable parts for tax
depreciation purposes. Actually, a fixed asset within which
immovable and movable part constitute a single functional
entity, is classified into appropriate depreciation group
according to the applied accounting treatment of these
assets.
Deductibility of expenses for bad debt provisions
Since former provisions of the Law stipulated that expenses
for bad debt provisions will be tax deductible only if at least
60 days has expired from the deadline for collection of
receivables, it was not clear whether this prescribed deadline
is calculated up to the end of the tax period or until the date
of approval of financial statements.
New provisions specify this requirement for tax deductibility
of expenses for bed debt provisions. The prescribed deadline
of 60 days is calculated up to the end of the tax period,
irrespective of the different requirements set by the
accounting regulations.
Write-off of bank’s receivables
The Law specify the conditions for the tax recognition of
expenses for direct writte-off of bank’s receivables based on
non-performing loans.
Starting from the filing of income tax return for 2017,
expenses for direct write-off of bank’s receivables on the
basis of non-performing loans, performed in accordance with
the National Bank of Serbia’s regulations, shall be
recognized for tax purposes, although no proofs of the claims
has been provided according to the general conditions..
Capital gain / loss determination
The Law clarify the manner of determining capital gain / loss,
since it was not clearly regulated by provisions of the former
Law.
Two provisions were amended:
• For the purpose of determining the capital gain, the sale
price shall be the contract price (or market price in case
of related party transaction) without transfer tax or value
added tax (in case sales of such a property is subject to
VAT);
• For the purpose of determining the capital gain, the
purchase price of any asset which is subject to capital
gain tax shall be adjusted to the market (fair) value if the
positive revaluation effects have been reported wholly as
revenue of the period in which the revaluation was made.
According to the former legislation, this provision has
been applied only to real estate intended for investment.
Witholding tax on income from services of a non-
resident entity
This is one of the most important amendment to The Law,
which significantly facilitates taxation of services paid by a
residents to a non-residents by a witholding tax.
The former tax legislation provided for broad and rather
unclear rules for determining of services which are subject to
witholding tax. On the other hand, the latest amendments to
The Law envisage that withholding tax shall be charged and
paid on income earned by a non-resident entity from a
resident entity based on the specific services (regardless of
the place where they are provided or used), which are:
• Market research services,
• Accounting and audit services,
• Other services in the field of legal and business
consulting.

4. © 2017 Grant Thornton Serbia. All rights reserved. 4
New rules for taxation of income from services of non-
resident entities will start to apply to all payments based on
specified services starting from April 1, 2018, regardless of
when the subject services were provided.
Deadline for filling a witholding tax return
Deadline for witholding tax return filling and payment of
witholding tax has extended. Starting from April 1 2018,
deadline for filling a tax return and payment of witholding tax
is three days from the date of payment of income, for all
types of income earned by a non-resident entity which are
subject to calculation and payment of witholding tax.
Bankruptcy and liquidation
According to the adopted amendments, it is prescribed the
obligation for taxpayers under the bancruptcy or liquidation,
to file income tax return also in case of suspension of
liquidation or bunkruptcy procedure.
Taxpayers under liquidation, starting from August 1, 2018,
shall be obliged to submit tax balance and income tax return
within 60 days from the day of initiation, completion or
suspension of liquidation procedure.
Additionally, for taxpayers under bunkruptcy, starting from
August 1, 2018, the period of bunkruptcy will last from the
moment of enforceable decision on continuing the
bankruptcy procedure until the enforceable decision on the
conclusion of the bankruptcy procedure, or until the
enforceable decision on the termination of the bankruptcy
procedure due to the sale of bankruptcy debtor as a legal
entity.
Tax incentives for investment in fixed assets
The Law provides for certain changes to the provisions
governing tax incentives for investments in fixed assets of at
least RSD 1 billion and additional employment of at least 100
persons.
The Law specifies conditions with regard to newly employed
persons. According to the adopted amendments to The Law,
newly employed persons shall be the persons employed by
the taxpayer during the investment period, so that at the
moment of fullfilling the conditions for tax exemption the
taxpayer has at least 100 additional employees for an
indefinite period of time in relation to the number of
employees for an indefinite period of time at the last day of
the period preceding the period in which the taxpayer has
started the investment. Thus, the fullfilment of the prescribed
condition was facilitated since the former tax legislation the
number of newly employed persons compares with the total
number of employees (employed for fixed and indefinite
time).
Transfer pricing rules
In the field of transfer pricing, two amendments have been
made.
The conditions for submission of short (simplified) version of
transfer pricing report, which has been regulated by the
Transfer Pricing Rulebook, now are introduced into
provisions of the Law.
The taxpayer is eligible for simplified version of transfer
pricing report and accordingly is not obliged to adjust the
revenues and expenditures on the basis of transfer prices in
its tax balance, provided that the following conditions are
met:
• A transaction with a related party is one-off and
amounting up to RSD 8 million, or
• The total value of transactions with one related party
during the tax period is amounting up to RSD 8 million.
The Law also specifies that total value of transaction, for the
purpose of materiality threshold determination, should not
include interest on loans, given and received advance
payments as well as value added tax.
The second amendment relates to transactions of sales of
assets which are subject to capital gain. In case of sale of
assets to a related party which is subject to capital gain tax,
there is no obligation for taxpayer to submit the transfer
pricing documentation. Adjustment of revenues and
expenses based on these transactions in tax balance shall
be carried out using capital gain rules, so that taxpayer is not
obliged to additionally adjust revenues or expenses based on
these transactions using transfer pricing rules.

5. © 2017 Grant Thornton Serbia. All rights reserved. 5
Amendments to the Personal Income Tax Law and Social Security Contributions Law
Introduction
On 14 December 2017, the Serbian Parliament adopted
amendments to the Personal Income Tax Law and to the
Social Security Tax Law, which were published in the Official
Gazette of the Republic of Serbia No.113/2017.
The adopted amendments will go into force on January 1
2018, with exception of certain provisions for which it is
particularly emphasized.
An overview of main amendments is introduced below.
Non-resident income taxable according to local
regulations
The Law precisely defines what is considered to be a non-
resident income realized on the territory of the Republic of
Serbia, which is taxed according to local regulations.
According to the adopted amendments, non-resident income
shall be subject to taxation according to Serbian tax
legislation, in cases it is earned on the basis of:
• The work done by a non-resident on the territory of the
Republic of Serbia, or
• Rights arising in the territory of the Republic of Serbia,
including property rights on the territory of Serbia owned
by a non-resident.
The Law also stipulates that tax return for non-residents shall
be filed to the tax authority on whose territory the taxpayer
has earned income, or based on taxpayer’s place of
residence or based on the tax representative’s place of
residence.
Exclusions from taxation
The Law extends types of income which are excluded from
taxation, so that from January 1 2018 personal income tax is
not payable, among others, on earnings derived from:
• Financial assistance for persons not employed with the
payer, for purpose of treatment in the country or abroad,
in the amount of documented actual costs of treatment as
well as documented related travel and accommodation
costs;
• Financial assistance for persons not employed with the
payer, which is not the equivalent for their work
performed / counter-service in relation to the payer - in
the amount up to 12.375 RSD per one payer per year.
Salary income tax
Several changes / amendments were made regarding
taxation of salaries:
• The non-taxable amount of salary is increased to RSD
15.000 per month for person with full-time engagement
and is applied starting from salary paid for January 2018;
• The following types of income are treated as a salary and
accordingly are subject to taxes and contributions on
salary income:
 Income earned by employee in connection with their
work with the domestic employer, but paid by
entity/person which is considered to be a related party
with domestic employer. Moreover, the employee
receiving such income shall be obliged to calculate
and pay contributions itself, within 30 days from the
day of income payment;
 Income received by the person after the termination of
employment, which is related to its work with the
employer or is derived from the acquired rights during
the employment. This applies to, for example,
payment of bonuses, remunerations for unused
vacations etc.
 Income earned by employee from securities granted
by employer or by entity / persons which are
considered to be related parties with employer, at the
moment of acquiring the right of disposal;
• Insurance premiums which the employer pays for all
employees for both collective life and non-life insurance
are not considered to be a salary and accordingly is not
subject to payment of taxes and contributions;
• Taxable amount for assigned persons – Serbian
residents, shall be amount they would earn in the
Republic of Serbia working on the same or similar jobs,
regardless of whether these persons were sent abroad for
the purpose of carrying out work for a domestic employer
or for the purpose of vocational training and
specialization;

6. © 2017 Grant Thornton Serbia. All rights reserved. 6
Exemptions from salary income tax
The Law specifies certain provisions governing exemptions
from salary tax as well as application of the prescribed non-
taxable amounts.
The Law stipulates that tax exemption for allowances for
business trips in the country and abroad shall be applied if
the respective allowances are determined in a manner and in
accordance with the specific regulation of the competent
state authority.
The Law also stipulates that non-taxable amount based on
the use of the personal car for business purposes, is
determined on the basis of price / consumption of the motor
fuel, not only petrol (as it was regulated by former regulation).
It was introduced a new tax exemption, for income earned by
employee for purpose of treatment in the country or abroad,
in the amount of documented actual costs of treatment as
well as documented related travel and accommodation costs.
Payment of contributions on income not subject to
taxation
The Social Security Contribution Law introduces a new rule,
according to which all income earned by employee which is
not subject to calculation and payment of taxes according to
The Personal Income Tax Law, will not be subject to
calculation and payment of contributions for mandatory social
security as well.
Extension of application of existing tax reliefs for newly
employed persons
In order to improve the economic environment and stimulate
employment, period of application of existing tax incentives
have been extended.
The right of employer to a refund a prescribed percentage of
paid salary tax and paid contributions (enabled by former tax
regulation), is extended until December 31, 2019.
New type of tax reliefs for start-ups
The Law also introduces a new type of tax incentives for
newly established companies and registered enterpreneurs,
which are allowed for tax exemption and manadatory social
security exemption on shareholder’s salary, entrepreneur’s
salary as well as salary of employees, for up to 9 newly
employed persons.
The reliefs could be achieved upon fulfillment of the
prescribed conditions, for salaries paid for 12 months starting
from the day of starting the business.
These new provisions will apply starting from 1 October 2018
and may be used by an entity established until 31 December
2020.
Taxation of income from self-employment
The Law defines more precisely the term of taxpayer which
pays taxes on income from self-employment. According to
new amendments of the Law, enterpreneur may have
different status:
• enterpreneur registered at the competent state authority
and paying tax on the actual income,
• enterpreneur registered at the competent state authority
and paying tax on the lump-sum income,
• enterpreneur – farmer which pays tax on actual income
from agriculture and
• enterpreneur – other person, including individuals VAT
payers in accordance with the applicable law as well as
individuals performing the activity regardless of whether it
is registered and paying tax on actual income.
The Law also stipulates the manner of keeping business
books for taxpayers which pays tax on income from self-
employment, which will apply starting from 2019:
 Enterpreneur taxed on actual income – under double-
entry bookeepiing system in accordance with the
Accounting Law,
 Enterpreneur-farmer - under single-entry bookeepiing
system in accordance with the Corporate Income Tax
Law,
 enterpreneur – other person - under single-entry
bookeepiing system in accordance with the Corporate
Income Tax Law,
 Enterpreneur taxed on lump-sum income – obliged to
keep only a book of turnover.
All types of taxpayers paying tax on actual income will be
obliged, starting from 2019, to fill the tax return and tax
balance to the competent tax authority up to the April 15 of
the year following the year for which the tax is determined.
Additionally, these taxpayers can opt, upon fulllfilment of the
prescribed conditions, to be taxed according to lump-sum
income, whereby the deadline for filing tax return for lump
sum taxation is extended to January 31 of the year for which
the tax is determined.

7. © 2017 Grant Thornton Serbia. All rights reserved. 7
Taxation of other income
According to the latest amendments to the Law, other income
includes, among others, rewards and other similar benefits to
persons not employed by the payer, arising from work or a
business relationship with the payer, which is subject to tax
on other income over prescribed amount of RSD 12,375.
With regard to the above, the list of applicable exceptions,
when there is no obligation for payer to calculate and pay tax
on other income providing documented travel expenses, has
been extended to persons who are members of the
management bodies of the legal entity sending them on a
business trip.
The Law also provides for the possibility that, upon fulfillment
of a certain conditions, income earned by individuals from
collecting and selling forest yields and medical herbs,
growing and selling mushrooms, bees and snails, as well as
selling agricultural and forest products, will be exempt from
taxation.
Self-ssessment and payment of taxes
A new rule was introduced for individuals – taxpayers that
earns salary and other income in / from another country or at
a diplomatic or consular mission of a foreign state or an
international organization. According to this rule, these
taxpayers are obliged to calculate and pay personal income
tax by self-taxation in all cases when the income is paid by
person / entity which is not obliged to calculate and pay
withholding tax, as well as in cases when withholding tax has
not been calculated and paid by the payer of income.
It is also emphasized that obligation to calculate and pay tax
on personal income by self-taxation has, among others, non-
resident taxpayer assigned to work in Serbia, on income
earned by employer in / from another country.
Determination of highest and lowest contribution bases
Starting from January 1 2018, the lowest and highest
contribution bases will be published once a year and will be
applicable for the entire calendar year for which contributions
are determined and paid.
Determination of contribution bases is prescribed as follows:
• A minimum monthly contribution base is the amount of
35% of the average monthly salary paid in the preceding
12-month period, starting from November in the year
preceding the year for which the contributions are
determined and paid, according to the published data of
the republic authority responsible for statistics;
• The maximum monthly contribution base is five times the
average monthly salary paid in the preceding 12-month
period, starting from November in the year preceding the
year for which the contributions are determined and paid,
according to the published data of the republic authority
responsible for statistics;
• The maximum annual contribution base is five times of
the sum of the average monthly salary paid in the
preceding 12-month period, starting from November in
the year preceding the year for which the contributions
are determined and paid.

8. If you need any assistance in determining consequences of new provisions
on your business and transactions, please contact:
About us
Grant Thornton in Serbia is a provider of audit, tax, advisory and accounting
services. With over 30 people in our office in Belgrade, we apply strong
technical guidance and breadth of experience to ensure that clients receive
a truly different experience.
Nataša Bučevac-Stojković
Senior Manager
T +381 (0)11 404 95 60
E natasa.bucevac@rs.gt.com
Grant Thornton Serbia
Kneginje Zorke 2/4, Beograd
T +381 (0)11 404 95 60
E office@rs.gt.com
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