Serbia Crypto Tax

Crypto Classification and Tax Implications

Under the Law on Digital Assets, a digital asset refers to any digital record of value that can be bought, sold, exchanged, or transferred and used as a medium of exchange or for investment purposes. They are divided into digital currencies that fall within the scope of the National Bank of Serbia’s regulation, and digital tokens falling under the Securities Commission’s regulation and are taxed in accordance with the applicable general law. If you need more information about this topic and want further details regarding the enacted legislation, please get in touch with our legal advisers here at Regulated United Europe (RUE).

Legal definitions of virtual currencies spell it out as one form of digital property, not backed by the government and representing a legal tender, and legally is not a legal tender. Nonetheless, it’s accepted by natural or legal persons as a means of exchange and can be bought, sold, transferred, and stored. As will be seen from this definition, it talks of Bitcoin, Ethereum, and Tether and other similar cryptocurrencies. A digital token is any form of digital record, which, amongst others, contains one or more ownership rights, incorporated by the token issuer. They can include the right to access specified products or services, management rights, or participation in profits.

Corporate Income Tax

In Serbia, the standard rate of Corporate Income Tax amounts to 15%, somewhat low compared to other European jurisdictions. Resident companies are taxable on income sourced both in Serbia and abroad. Non-resident companies are taxed only with respect to the income that originated through a permanent establishment in Serbia. A company will be treated as a tax resident of Serbia if it is incorporated under Serbian law or has its place of effective management and control in Serbia.

Due to the fact that most revenues from crypto are taxable, crypto companies conducting activities either from or within Serbia are obliged to adhere to general corporate taxation regulations. Tax returns are filed no later than 180 days as of the end of the tax year. The advance installment is paid monthly on the 15th day of the next month for the previous calendar month. The amount due, however, is based on its Corporate Income Tax calculated for the previous year. The due date for the final settlement of Corporate Income Tax liability is the date of filing the annual tax return.

Capital Gains Tax

In the case of resident companies, capital gains are taxed at 15% and the capital loss may be carried forward on account of capital gains for five years. The capital gains realised in Serbia by a non-resident company from the resident company, non-resident company, non-resident or resident natural person or open investment fund shall be liable to Capital Gains Tax at the rate of 20%.

Generally, capital gains are realised in the case of a sale or other transfers of real estate, any right pertaining to intellectual property, shares, stocks, securities, bonds, and various units of investment. The capital gain can be calculated by finding the difference between purchase and selling price. If the sale did not result in any profit, there would not be any taxable capital gain and, hence, no taxable event.

According to the Law on Personal Income Tax, any income obtained from the sale of a digital asset constitutes one type of capital gain for the purposes of Capital Gain Tax, and shall be taxed at a rate of 15%. The sale and trading of cryptocurrencies and digital tokens are liable.

Correct calculation of the tax-liable amount and the losses requires recording and documenting every crypto transaction by proving the origin of the cryptocurrency. In such cases where insufficient proof of purchase price is available, the tax authority assumes that the purchase price is zero, and the entire sale price of the cryptocurrencies or digital tokens shall be the taxable base.

Value-Added Tax

VAT at a standard rate in Serbia amounts to 20%, and it was established in accordance with EU Sixth VAT Directive. The standard rate principally applies, in practice, to nearly all products and services sold in Serbia, while a zero rate, without the possibility of deducting the input VAT applies to trading in shares and other securities, insurance, and reinsurance. Most crypto-related services are subject to the standard rate; however, transfer and sale of cryptocurrencies are subjected to a 0% rate without the right of deduction of the tax.

The usual taxable period in Serbia is a calendar month, although it may differ depending on several conditions. In the case of a small taxpayer whose annual turnover for the previous business year does not exceed the amount of 50 mill. RSD (approx. 425,000 EUR), the taxable period is then a calendar quarter. Concerning newly established businesses, during the first and second calendar years of operation, the taxable period shall be a calendar month. VAT returns are submitted within 15 days from the expiration date of each taxable period.

Withholding Tax

In Serbia, a standard rate of Withholding Tax is 20%, and it applies to dividends, interests, royalties, various legal and business consulting services, certain incomes realized from a distributed surplus of a company in bankruptcy, revenues obtained from the liquidation surplus of a company in liquidation, lease payments for real estate and other assets granted to a non-resident.

The rates and exemptions may be lower if so provided by a bilateral double taxation treaty. To be eligible under such a treaty, a non-resident recipient must deliver a tax residence certificate with a stamp of the relevant public authority from the state where the recipient resides.

Payroll Taxes in Serbia

Any Serbian employer is obligated to withhold taxes on behalf of the employee. Social Security Contributions are to be borne jointly by an employee and employer. The employers’ contributions are considered operating expenses, while the employees’ ones are deducted from the gross salary. The employers pay at a rate of 10% for pension and disability insurance and 5.15% for health insurance. Personal Income Tax shall also be withheld, and its rates vary from 10% to 20%, depending on the size of income.