Article 50j of the Corporate Income Tax Law stipulates the possibility of recognizing the right to a tax credit for 30% of the capital investment amount made in a newly established company that performs innovative activities. A newly founded company that carries out innovations is a company which:
- was not found more than three years ago,
- which predominantly carries out activities under the Law on Innovative Activities,
- fulfils the five cumulative conditions prescribed by the Corporate Income Tax.
Conditions
Five conditions that companies must meet:
1) the company’s annual income does not exceed RSD 500,000,000, by the latest financial reports available at the time of financial investment;
2) since its foundation, the company has not distributed dividends, that is, profit shares, and will not distribute them within three years from the date of the financial investment;
3) the centre of business activities is located on the territory of the Republic of Serbia;
4) the owner didn’t establish the company by a status change under the Law governing commercial companies;
5) the company fulfils any of the three alternative sub-conditions in each tax period, starting from the first subsequent period from the period in which the company establishes and ending with the period in which the company fully deposit investment:
- Research and development costs make up at least 15% of total expenditures,
- Highly qualified employees make up more than 80% of all employees,
- The company’s owner is the user of the deposited intellectual property, resulting from the innovative activity he performs.
Additionally, the taxpayer must fulfil the following conditions to use the tax credit:
- Before the investment, the taxpayer alone or jointly with all related parties did not own more than 25% of shares in the newly founded company;
- The taxpayer must fully deposit the investment that increases the capital of the newly established company that performs innovative activities;
- The taxpayer has not reduced the investment continuously within three years from the purchase date.
Restrictions
There are also certain restrictions regarding the realization of the right to a tax credit. It relates to the highest amount of tax credit that the individual taxpayer can grant, which is RSD 100,000,000, and the highest amount of tax credit that an individual taxpayer can get in one tax year, which amounts to RSD 50,000,000.
Rulebook
The Rulebook on the conditions and manner of exercising the right to a tax credit for investing in a newly established company that performs innovative activities closely regulates exercising the right to a tax credit based on the investment in a newly established company that carries out innovative activities.