Non-resident legal entities have the obligation to calculate and pay withholding tax if they receive income from resident legal entities or entrepreneurs who keep business books in the Republic of Serbia based on:
- dividends and profit share in a legal entity;
- income from the copyright and related rights;
- interest;
- income from the leasing and sub-leasing of real estate and movable property on the territory of the Republic of Serbia;
- income from market research services, accounting and auditing services, and legal and business consulting services.
The prescribed rate
The prescribed rate of withholding tax is 20%, i.e. 25% on income generated by non-resident legal entities from jurisdictions with a preferential tax system, the so-called “tax havens”.
The tax rate at which the said income is taxed may be lower if it is prescribed by an international agreement on the avoidance of double taxation, in case the countries of residence of the payer and the recipient of the income have concluded such an agreement.
The conditions for the application of the preferential rates
The conditions for the application of the preferential rates prescribed by the agreements on the avoidance of double taxation are the possession of a certificate of residency of the recipient of income – a non-resident legal entity, as well as the provision of evidence that the recipient’s legal entity is the real owner of the realized income.
The taxpayer of the withholding tax is the non-resident legal entity receiving income, while the taxpayer is the payer of income, and the tax liability arises at the time of payment of income.
The Republic of Serbia currently applies agreements on the avoidance of double taxation with more than 60 countries.
