When Serbia adopted the Law on Determining the Origin of Property and Special Taxation in 2020, it was presented as one of the government’s most powerful tools in the fight against corruption, tax evasion and unexplained wealth. More than five years later, however, the practical results remain modest compared with the expectations that accompanied its introduction.
The legislation was designed to allow the Tax Administration to investigate cases where an individual’s assets and spending significantly exceed declared income. Where taxpayers cannot demonstrate the legal origin of their wealth, authorities may impose a special tax of 75% on the unexplained difference. The law formally entered into practical application in 2021 following the adoption of implementing regulations and the establishment of specialized procedures within the Tax Administration.
At the time of its adoption, the measure attracted significant public attention because it was perceived as a mechanism capable of addressing one of the most sensitive issues in Serbian society: the visible gap between officially declared income and the lifestyles of some individuals. Government officials argued that the law would strengthen the fight against corruption, improve tax compliance and increase public confidence in state institutions.
The actual implementation, however, has been far less dramatic than many expected.
According to available data and previous analyses, only a limited number of cases have progressed through the complete process of financial investigation, tax assessment and collection. While authorities have conducted numerous preliminary risk analyses and reviews, the number of final decisions imposing the special 75% tax remains relatively small compared with the scale of wealth discrepancies often discussed in public debate.
One reason lies in the complexity of the investigative process itself. The law requires tax authorities to establish a substantial discrepancy between declared income and accumulated assets before formal proceedings can begin. Once such a discrepancy is identified, taxpayers retain the right to provide documentation proving legal sources of funds, including inheritances, gifts, loans, foreign income, historical savings and other legitimate sources that may not have been captured through standard tax reporting systems.
The evidentiary burden creates a lengthy and resource-intensive process. Financial investigators must reconstruct asset accumulation over multiple years, often involving domestic and international transactions, real estate acquisitions, business interests and family-related transfers. Such investigations require extensive administrative capacity and frequently lead to appeals and judicial reviews.
Critics argue that the law has not produced the deterrent effect originally promised. Anti-corruption advocates have repeatedly pointed out that the number of completed cases remains too small to create a meaningful perception that unexplained wealth is being systematically investigated. Some observers also note that the law functions primarily as a tax mechanism rather than a criminal anti-corruption instrument, meaning that even when unexplained assets are identified, the outcome is generally financial rather than criminal in nature.
Supporters of the legislation counter that its impact should not be measured solely through the number of publicly known cases. They argue that the existence of the law itself encourages greater tax compliance and provides authorities with an additional instrument for examining suspicious wealth accumulation. Furthermore, complex investigations often require several years before producing final outcomes.
The broader question is whether Serbia’s institutional framework possesses sufficient capacity to fully exploit the potential of such legislation. International experience shows that asset-origin investigations are most effective when supported by integrated databases covering taxation, banking transactions, real estate ownership, company registries and international information exchange mechanisms. Building such systems requires significant investment, technical expertise and inter-agency coordination.
The law also highlights a recurring challenge in public policy. Legislative adoption often generates expectations of rapid change, while practical implementation depends on administrative resources, investigative capabilities and judicial efficiency. In the case of Serbia’s asset-origin framework, the legal mechanism exists, but the pace of enforcement has proven considerably slower than many anticipated.
Five years after its adoption, the legislation remains an important component of Serbia’s tax and anti-corruption architecture. Yet the limited number of visible outcomes suggests that transforming legal authority into measurable enforcement remains a far more difficult task than passing the law itself. The effectiveness of the framework will ultimately be judged not by its existence, but by its ability to consistently identify unexplained wealth, withstand legal scrutiny and deliver credible results that strengthen public confidence in the rule of law.
