Bylaw on foreign service in Serbia – in use since 1st April of 2018

In the “Official Gazette of the Republic of Serbia” No. 18/2018, the Bylaw on Types of Services on the basis of which a non-resident legal entity generates income that is taxed with a deduction tax in Serbia, has been published and will apply since 1st April 2018.The aforementioned Bylaw specifies which are those services which will be subject to tax deduction in accordance with Article 40, paragraph 1, point 5 of the Law on Corporate Income Tax, and those are the following services:

  • market research,
  • accounting and auditing services
  • other services in the area of legal and business consulting.

The income of a non-resident legal entity on the basis of these services are taxed independently of the place where they are provided or used, or where they will be provided or used.

The essence of the this Bylaw is that starting from 1st April, 2018, revenues that are paid to non-resident legal entities on the basis of all other services will no longer be subject of taxation with a deduction tax (except in case of payment of income to legal entities in jurisdiction with a preferential tax system).

The Bylaw stipulates that market research services are services that relate to:

  • collecting information from the market related to the submission of data to a resident legal entity, which is used for planning, organizing and controlling the business process of a resident legal entity;
  • processing and analysis of collected data;
  • determining market characteristics and measuring market potential;
  • analysis of market participation;
  • sales analysis;
  • examination of competition;
  • testing new and existing products on the market.

Market research services are not considered advertising and propaganda services, including announcement services.

Accounting and auditing services are considered services related:

  • with the preparation of financial statements,
  • as well as the audit of the financial statements in terms of the audit and appraisal of the financial reports, based on which an independent expert opinion is given on whether the financial reports give a true and fair view of the financial position and business result of a legal entity in accordance with the relevant regulations for the preparation of the financial statements.

Services in the field of legal and business counseling are services related to every form of legal and business counseling, and particularly services:

  • tax consulting,
  • lawyer services,
  • management services to a resident legal entity,
  • any type of advice and consultations regarding the business of a resident legal entity.

Services in the field of counseling are not considered to be seminars, lectures, workshops, as well as services of mediation in the trade of goods and services.

Author: AKTIVA sistem – Serbian accounting company

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