At the Seventh Session of the Second Regular Meeting of the National Assembly of Republic of Serbia, held on December 17th 2020, a set of amendments to certain financial laws was adopted, as follows:
1. Law on Personal Income Tax („Official Gazette of RS“ no. 24/2001, 80/2002…156/2020 – adjusted dinars amount, hereinafter: „LPIT“);
2. Law on Contributions for Compulsory Social Insurance („Official Gazette of RS“ no. 84/2004, 61/2005…153/2020, hereinafter: „LCCSI“);
3. Law on Value Added Tax („Official Gazette of RS“ no. 84/2004, 86/2004-ispr…153/2020, hereinafter: „LVAT“);
4. Law on Corporate Income Tax („Official Gazette of RS“ no. 25/2001, 80/2002…153/2020, hereinafter: „LCIT“).
The mentioned laws have been in force since January 1st, 2021, and the adopted amendments to the LCIT shall be applied when determining, calculating and paying the tax liability for 2021, that is for the tax period starting in 2021.
The most significant amendments to the LPIT concern the extension of the period of application of existing incentives for new employees until December 31, 2021 which incentives refer to refund of the part of the paid tax based on salary in the amount of 65 to 75 percent, depending on the number of new employees and a more detailed specification of the provisions related to the benefits based on the employment of a qualified new employee.
Also, the amendments to the LPIT increased the non-taxable amount of salary from 16,300 dinars to 18,300 dinars per month.
Taxation of income on the basis of ownership (income from capital) as well as on the basis of transfer of ownership rights (capital gain) on investment units of an alternative investment fund is regulated as described and tax treatment of income earned by a natural person through the transfer of digital assets has also been regulated, that is taxation of the transfer of digital assets through taxation of capital gains has been determined.
The obligation of a domestic legal person to calculate and pay withholding tax has been introduced, in the case when that domestic legal person makes a payment to an employer from another state on the basis of compensation for labor costs of a person sent to work with a domestic legal entity.
Furthermore, the amendments to the LPIT expanded the tax exemption achieved by gains from games of chance. Namely, the tax on gains from games of chance is not paid on the realized profit from special games of chance, including special games of chance when they are organized through electronic means of communication, in the sense of the law which regulates games of chance.
When it comes to LCCSI, the most significant amendments concern the exemption from the obligation to pay contributions for mandatory pension and disability insurance at the expense of the employee and at the expense of the employer, for the paid salary until December 31st 2021, for an employer who establishes an employment relationship with a new employee (which are also introduced in parallel within the amendments to LPIT).
In that sense, the period of application of the existing incentives for employment of new employees has been extended, which incentives refer to the refund of part of the paid tax on the basis of the new employee salary from 65 to 75 percent, depending on the number of new employees and the category of the employer who has the right to use the said incentives based on the employment of a qualified new employee is specified, so such employer is considered to be a legal person, entrepreneur, flat rate entrepreneur, farmer entrepreneur, representative office, branch of a foreign legal entity and a natural person.
The most significant changes in the LVAT are reflected in the fact that for the first time the form of invoice is explicitly determined and, in addition to paper invoices, the issuance of electronic invoices is also introduced. Namely, the taxpayer may issue an invoice in paper or electronic form if there is an agreement of the recipient to accept the invoice in electronic form, except in the cases where the obligation to issue an invoice in electronic form exists in accordance with the law, when the consent of the recipient is not required.
It is regulated in more detail what is not considered as secondary turnover of goods and secondary turnover of services, and in that sense, the rules governing secondary turnover have been amended.
Furthermore, the amendments to the LVAT stipulate that an open investment fund, that is an alternative investment fund, which does not have the capacity of a legal person, is considered a taxpayer, and a completely new regulation of special procedure for taxation of second-hand goods, including second-hand motor vehicles, works of art, collectibles and antiques is determined.
It is prescribed that VAT is not paid in the circulation of money and capital, that is a tax exemption is prescribed without the right to deduct the withholding tax when transferring virtual currencies and exchanging virtual currencies for cash funds in accordance with the law governing digital assets.
The registration procedure has been regulated for a taxpayer who has achieved a total turnover of more than 8,000,000 dinars in the VAT system in the previous 12 months and who has not filed a registration application within the legally prescribed period by stipulating that the registration application may be submitted after that period, that is, it will be submitted by the competent tax authority ex officio, and the rules on cancellation of invoices in which VAT is incorrectly stated have also been specified.
LCIT has not undergone significant changes and the adopted amendments are primarily directed to the harmonization with the new regulations governing digital assets and alternative investment funds.
In this regard, it was determined that the capital gain is realized by selling the investment unit of the investment fund, in accordance with the regulations governing investment funds and that the capital gain is also realized with the sale of digital assets, unless the taxpayer, in terms of the law governing digital assets, has a license to provide services related to digital assets and which has acquired such exclusively for the purpose of their further sale within the framework of performing services related to digital assets in accordance with that law.
Also, it is prescribed that capital gains realized from the sale of digital assets are not included in the tax base, if the funds from such sale are invested in that tax period in the share capital of a resident taxpayer, that is an investment fund established in accordance with regulations governing investment funds and whose center of business, that is investment activities is located on the territory of the Republic of Serbia.
Furthermore, the amendments to the LCIT specify the determination procedure for the purchase value of real estate acquired before January 1st, 2004 and stipulate that income earned by a non-resident legal person on the basis of membership in an alternative investment fund that does not have the capacity of a legal person is considered a dividend which is to be taxable with a withholding tax, unless otherwise provided by international agreements on avoidance of double taxation, as well as if the remaining net value of the assets of the open investment fund distributed to members is considered a capital gain.
Finally, it is specified which persons are considered to be new employees in terms of Article 50a of LCIT, so that such are not considered persons who, starting from the last day of the tax period preceding the investment period, were employed, directly or indirectly, within a related person as well as persons who are not directly employed by the taxpayer.