• Tax Highlights - July 2019
Newsletter:

Tax Highlights - July 2019

18 July 2019

NEW RULEBOOKS ON INCENTIVES FROM CORPORATE INCOME TAX LAW AND TAX EXEMPTIONS FROM PERSONAL INCOME TAX LAW

The Minister of Finance has adopted a few rulebooks with regard to corporate and personal income tax.

All rulebooks were published in the Official Gazette of the Republic of Serbia, no. 50/19 of 12 July 2019.

Rulebooks related to corporate income tax specify the conditions for the use of certain tax incentives stipulated by the latest amendments to the Corporate Income Tax Law:

  1. The Rulebook on the Conditions and Manner of Exercising the Right to the Recognition of Doubled Costs Directly Related to the Research and Development in the Annual Tax Balance;
  2. The Rulebook on the Conditions and Manner of Exercising the Right to Tax Credit for Investment in the Capital of a Newly Incorporated Innovation Company;
  3. The Rulebook on the Conditions and Manner of Exemption of Qualified Income from the Corporate Income Tax Base.

These rulebooks will come into force on 20 July 2019.

The provisions of the aforesaid rulebooks apply to the determination, calculation and payment of tax liabilities as of 2019.

As regards personal income tax, the Minister of Finance has adopted the following rulebooks stipulating the conditions for the recognition of tax exemptions:

  1. Rulebook on Exercising the Right to Tax Exemption for Employee’s Income on the basis of Own Shares Acquired without a Compensation or at a Preferential Price;
  2. Rulebook on Exercising the Right to Tax Exemption for Organising Recreation, Sports Events and Activities for Employees.

The rulebooks will come into force on 20 July 2019.

RULEBOOKS RELATED TO CORPORATE INCOME TAX

The Rulebook on the Conditions and Manner of Exercising the Right to the Recognition of Doubled Costs Directly Related to the Research and Development in the Annual Tax Balance

This Rulebook specifies:

  • what research and development costs refer to and what they include;
  • what research and development costs cannot include and refer to;
  • the conditions for recognizing doubled research and development costs in the annual tax balance;
  • what a research and development project in the Republic of Serbia includes and refers to;
  • the documentation that a taxpayer needs to enclose to the tax balance for each research and development project;
  • the manner of keeping the records of research and development costs.

The Rulebook on the Conditions and Manner of Exercising the Right to Tax Credit for Investment in the Capital of a Newly Incorporated Innovation Company

The Rulebook prescribes the forms that a taxpayer submits along with the tax return for the year in which they invested in the capital of a newly founded innovation company. These forms are exclusively submitted electronically.

The Rulebook on the Conditions and Manner of Exemption of Qualified Income from the Corporate Income Tax Base

Qualified income is income generated by a copyright or related rights holder on the basis of the compensation for using copyrighted work in escrow or the subject matter of related rights, i.e. the assignment of the invention right in the compensation amount agreed under the licence agreement, adjusted in the manner prescribed by this rulebook.

This Rulebook specifies:

  • what qualified income includes;
  • the calculation of qualified income;
  • the calculation form for qualified income;
  • the conditions for the exemption of qualified income from the tax base;
  • documentation and records that have to be owned by a taxpayer that uses the right to the exclusion of qualified income from the tax base.

RULEBOOKS RELATED TO PERSONAL INCOME TAX

Rulebook on Exercising the Right to Tax Exemption for Employee’s Income on the basis of Own Shares Acquired without a Compensation or at a Preferential Price

This rulebook specifies the exercise of the right to tax exemption for the employee’s earnings on the basis of own shares acquired without a compensation or at a preferential price from the employer or from an employer’s related person.

Additionally, the rulebook defines:

  • the conditions under which the indicated tax exemption can be achieved as well as the necessary documentation;
  • what constitutes the evidence that the prescribed conditions are fulfilled.

Rulebook on Exercising the Right to Tax Exemption for Organising Recreation, Sports Events and Activities for Employees

The Rulebook specifies:

  • conditions for tax exemption for employer’s expenses for the purpose of creating conditions for employees’ recreation at work, which are related to the construction or refurbishment of premises and / or the purchase of recreational equipment.
  • conditions for the realisation of tax exemption for the compensation of collective employees’ recreation, as well as exemptions from the prescribed conditions;
  • conditions for tax exemption for the costs of organising employees’ activities aimed at improving their health and interpersonal relationships among employees and between the employer and employees.