Supported byOwner's Engineer
Clarion Energy banner

How is withholding tax paid in Serbia on the income of non-residents?

Supported byspot_img

Depending on whether Serbia has signed a Double Taxation Avoidance Agreement (DTA) with the country of the non-resident, the rules apply to individual incomes that become subject to taxation.

The tax base is gross income, i.e. gross compensation paid by a resident to a non-resident legal entity on the basis of dividends and profit shares, income from copyright and related rights and industrial property rights, interest, fees from lease and sublease of real estate and movable property in the territory of the Republic of Serbia.

This obligation also exists for fees for market research services, accounting and auditing services and other services in the field of legal and business consulting, regardless of the place of their provision or use, as well as income based on the performance of pop, entertainment, artistic, sports or similar programs in the Republic of Serbia.

Supported by

Dividends and profit share

If the UIDO does not prescribe otherwise, withholding tax at the rate of 20 percent is calculated and paid on income earned by a non-resident based on dividends and profit shares in a legal entity.

These include dividends, inter-dividends and liquidation balance.

According to lawyers from the law office Stojković Advokati, the general rule is that the legal rate of 20 percent is applied to the tax base, but if the UIDO is applied, the average is the application of a privileged tax rate, which in most cases is five percent, if the non-resident owns a minimum of 25 percentage of equity participation. If the participation is less than 25 percent or the recipient of the dividend is a foreign natural person, the tax rate is 10 or 15 percent.

“Some agreements on the avoidance of double taxation prescribe an additional condition for the application of the preferential tax rate, in addition to the general conditions that must otherwise be met, namely that a certain percentage of capital participation has existed in the previous 365 days”, the lawyers explain.

Supported by

Liquidation residue

In terms of the Law on Corporate Profit Tax, the liquidation balance is considered a dividend, so the tax base is the difference between the liquidation balance and the amount of capital contributions.

If the difference is positive, tax is paid on the tax base calculated in this way. Along with the PDPO/S form that is normally submitted in this case, an additional DPDL/S form is filled out and attached by the liquidation manager.

Compensation from copyright and related rights and industrial property rights

Compensation from copyright and related rights and industrial property rights is compensation that a non-resident receives from a resident of the Republic of Serbia based on the use of copyright, rights related to copyright, as well as on the basis of industrial property rights.

Lawyers point out that copyright includes, among other things, written works (computer programs with accompanying technical and user documentation in any form of their expression), databases which, in accordance with the Law on Copyright and Related Rights, is considered a work of authorship, various technical achievements, etc.

“In order to economically exploit these rights, a license agreement, a franchise agreement and the like are concluded. These contracts precisely define copyright, i.e. compensation for the use of a specific right. We note that this is only about the use, but in no way about the sale of the mentioned rights, so the rights are not transferred, but the terms of their use are regulated by the contract”, say our interlocutors.

In accordance with the majority of UIDO, the country in which the source of income is located has the right to tax royalties at a preferential tax rate, i.e. less than 20 percent.

Sign up for business updates & specials.

Supported by


Supported byClarion Energy
Serbia Energy News
error: Content is protected !!