With the adoption of the Law on Digital Property, the tax treatment of the alienation of digital property is much more favorable than before, when the digital property was not regulated by our legislation.

INDIVIDUALS

According to the Law on Personal Income Tax, digital assets are taxed with capital gains tax, which arises from the difference between the sale and purchase price of digital assets. The tax rate to which capital gains are subject is 15%. Compulsory social security contributions are not calculated or paid on the income from capital gains. Also, the profit realized through the transfer of digital property is not subject to taxation with the annual personal income tax.

However, there are certain tax reliefs, and they are:

  • A taxpayer who invests funds generated by the sale of digital assets within 90 days from the date of sale in the share capital of a company resident in the Republic or the share capital of an investment fund, and whose center of business and investment activities are located in the Republic, is exempt from 50% capital gain, which means that the tax rate in these circumstances will be 7.5%;
  • If the taxpayer invests the funds generated by the sale of digital assets within 12 months from the date of sale for the above purposes, he is entitled to a refund of 50% of the paid capital gains tax.

The method of determining the amount of the purchase price is the biggest problem for determining the amount of the tax base because there is no concrete evidence that would be acceptable to the Tax Administration when determining the purchase price. The screenshot is the only material evidence you could obtain by trading on foreign exchanges, but its authenticity would be questionable. Safer zones are local stock exchanges that obtain a document containing the purchase price.

LEGAL ENTITIES

Law on Value-Added Tax

Following the amendments to the Law on Value Added Tax, a VAT exemption is envisaged in the case of the transfer of virtual currencies and the exchange of virtual currencies for funds under the Law on Digital Property. The transfer of virtual currencies and the exchange of virtual currencies for cash is a narrow formulation, and each transfer is considered separately whether it is subject to VAT, ie whether it can be subsumed under this formulation.

Law on Corporate Income Tax

The transfer of digital assets by a legal entity is treated as capital gain under the Law on Corporate Income Tax and is taxed at a tax rate of 15%. Every transfer of digital assets is taxed as a capital gain, except for a legal entity that deals with mediation in the transfer of digital assets, then the legal entity is subject to a different type of taxation.

The capital gain represents the difference between the purchase and sale price, while the purchase price represents the price that the taxpayer documents as actually paid.

Tax exemption if the capital gain is invested in another legal entity or investment fund that are residents of the Republic of Serbia and if the investment is made in the same year in which he obtained the capital gain.