Tax Alert

Law on Changes and Amendments to the Personal Income Tax Law

National Assembly of the Republic of Serbia, on the 29^th of December 2015 passed the Law on Changes and Amendments to the Personal Income Tax Law (hereinafter referred to as the Law).

The Law specifies certain provisions and introduces numerous changes, from which the most important are listed below:

• Income from immovable property is included as the separate type of income (previously considered as an income from capital);
• For residents assigned abroad that are temporary performing work for legal entities – Serbian residents, tax base is the amount of salary, which they would, in accordance with the law, general act and employment contract, receive in Serbia for the same or similar work performed. 
• Non – taxable amount of the per diem for business trip abroad for the employees outside of public sector is determined in the amount of EUR 50 per day;
• Non-taxable amount for the reimbursement of transportation costs on a business trip and for business purposes, when the usage of a private car is approved shall be up to the amount of 30% of the 1L petrol price multiplied by the number of liters spent;
• Deadline for applying the existent tax relief for employing new employees is extended from the 30^th of June 2016 to the 31^st of December 2017;
• Ease of the criteria for determining a newly employed person for which the employer is entitled to the aforementioned relief is foreseen;
• Tax relief for micro and small legal entities, respectively entrepreneur, is foreseen for employing at least two new employees, in the manner of 75% tax refund for the taxes withheld to the employee’s salary paid out until the 31^st of December 2017;
• Novelties regarding the taxation of lump sum income – levied by way of Tax Assessment issued by the Tax Authority;
• Income from capital now includes taking from the property and using the services of legal entity by the owner of the entity for his private needs is now considered as income from capital, and what is considered as dividend is now closely determined;
• Income from renting the immovable property is no longer considered as income from capital;
• Income from immovable property the income acquired from leasing the property, and also from subleasing the property by the tax payer;
• Tax rate for income from immovable property is 20%, while standard deductions are 25%. exceptionally standard deductions are 50% when the income arises from renting apartments, rooms and bed to a traveler or a tourist for which residential fee is paid;
• Taxation of rewards, monetary benefits and other benefits in kind to a natural person not employed with the payer of aforementioned income occurs when the amount of those income exceeds RSD 12,000 from one payer of the income;
• Tax payer is obliged to file a tax return within 30 days at most from the day in which the tax payer gained or began gaining income from the transfer of the rights affecting capital gain or loss;
• The deadline foreseen for filing a self-assessment tax return is 30 days, beginning on the day of generating income, (instead of previous 45 days deadline);
• Withholding tax is paid for the income tax from immovable property, if the payer of the income is a legal entity or an entrepreneur;
• Tax on capital gain is now levied by way of Tax Assessment issued by Tax Authorities and paid after the delivery of the assessment within the deadline;
• Determines the deadline for paying tax on capital gain of 15 days from the moment of delivering the Tax Assessment.

Transitional and final provisions of the Law

Procedures for determining and collection of taxes for capital gain, which are not finalized to the day of this Law coming into force, shall be resolved in accordance with the provisions of this Law.

Employer which exercise the right to a tax relief for newly employed people in accordance with the previous provisions of the PIT Law, and for which the deadline is the 30^th of June 2016 is entitled to continue to use aforementioned relief until the 31^st of December 2017.

Employer, which concludes an employment with a newly employed person from 1^st of January 2016, may opt whether to use the reimbursement of part of the taxes paid or to use the relief foreseen for certain employers (micro and small legal entities and entrepreneurs) such as reimbursement of 75% of taxes paid if it employs at least two new employees.

Changes and amendments of the Personal Income Tax Law came into force on the 1^st of January 2016, except those related to taxation of income from immovable property applicable as of the 1^st of January 2017. 

Law on Changes and Amendments to the Law on Mandatory Social Security Contributions

National Assembly of the Republic of Serbia on the 29^th of December 2015 passed the Law on Changes and Amendments to the Law on Mandatory Social Security Contributions (hereinafter referred to as the Law).

The Law specifies certain provisions and introduces numerous changes, from which the most important are listed below:

• Extension of the deadline for applying the existing relief for the employment of new employees from the 30^th of June 2016 to the 31^st of December 2017.
• Ease of the criteria for determining a newly employed person for which the employer is entitled to the aforementioned relief is foreseen;
• New article of the Law on Mandatory Social Security Contributions which foresees the relief for employment of new employees for micro and small legal entities, respectively entrepreneurs - employer from the aforementioned category ,which employs at least two new employees, is entitled to a 75% reimbursement of social security contributions due both by the employee and employer, withheld from the employee’s salary until 31^st December 2017;
• Employer that commence business activities after the 31st of October 2015 is also entitled to this type of relief.

Transitional and final provisions of the Law

Employer that exercise the right to a relief for newly employed people in accordance with the old provisions of the Law on Mandatory Social Security Contributions, for which the deadline expires on the 30th of June of 2016, is entitled to continue to use that relief until the 31st of December 2017.

Employer, which concludes an employment with a newly employed person from the 1st of January 2016., may opt whether to use the reimbursement of part of the social security contributions or to use the relief foreseen for certain employers (micro and small legal entities and entrepreneurs) such as reimbursement of 75% of paid social security contributions if it employs at least two new employees.

Changes and amendments of the Law on Mandatory Social Security Contributions came into force on the 1st of January 2016.