Serbia Crypto Tax

In Serbia, cryptoassets are regulated under the Law on Digital Assets. It provides the basis for the taxation rules which are quite favourable due to the available tax reliefs and generally low tax rates. However, since Serbia is one of the eight current EU candidate countries, it’s important to keep in mind that it will eventually have to align with the EU taxation standards by, for example, raising its tax rates, as well as improving transparency and international cooperation for tax purposes.

The Tax Administration of the Republic of Serbia is responsible for the maintenance of the register of taxpayers, the collection of taxes and ancillary taxes, as well as tax control and tax assessment in accordance with the applicable law. Moreover, it detects tax criminal offences and their perpetrators and takes measures to prevent and eliminate the abuse of the tax system. Every crypto company newly registered with the Serbian Business Registry has 15 days to also register as a taxpayer with the Tax Administration.

Advantages of the Serbian Tax System

Serbia has around 70 agreements on the elimination of double taxation which prevents companies, investors, and individuals with international presence from being taxed twice by two different countries. They specify which country has the right to tax a taxpayer, however, actual tax rules aren’t stipulated as national tax authorities are obligated to levy taxes in accordance with general national legislation. Overall, these agreements can reduce tax burdens and provide certainty and security to persons engaged in cross-border activities.

Other notable advantages of the Serbian taxation system are the following:

• If a taxpayer invests in a newly formed company that is carrying out an innovative project, a tax credit of 30% of the invested amount becomes available with the maximum amount of tax credit capped at 100 mill. RSD (approx. 850,000 EUR)
• Research and development (R&D) expenses related to R&D activities conducted in Serbia can be double deducted for Corporate Income Tax purposes
• Eligible companies can avail of the exemption of 80% of capital gains from the sale of intellectual property rights and rights linked to scientific inventions
• A Serbian company is eligible for a tax credit for the Withholding Tax paid on foreign-sourced dividends and Corporate Income Tax paid abroad through its non-resident subsidiary if the company holds at least 10% of the subsidiary’s shares for at least 12 months before filing a tax return; the tax credit can be carried forward by the Serbian company for up to five years
• 80% of income sourced as royalties by the copyright or patent holders can be excluded from the tax base by decreasing this type of income for the amount of tax-deductible R&D expenses associated with the development of such copyright or patent
• A ten-year tax holiday can be used by companies that invest at least 1 bill. RSD (approx. 8,5 mill. EUR) into property, plant, and equipment, and employ at least 100 new workers throughout the entire tax holiday which is 10 years
• Resident payers of the Withholding Tax are generally entitled to decrease their tax liabilities paid abroad on interest and authorship fees, however, the tax credit can’t exceed the amount of tax paid on that income in Serbia, where the tax basis represents 40% of the generated gross income

Crypto Classification and Tax Implications

Pursuant to the Law on Digital Assets, a digital asset is defined as any digital record of value that can be bought, sold, exchanged, or transferred and that can be used as a medium of exchange or for investment purposes. They’re categorised into virtual currencies which are regulated by the National Bank of Serbia and digital tokens which are regulated by the Securities Commission and taxed in accordance with applicable general law. If you wish to gain further and more specific insights in relation to applicable legislation, our legal consultants here at  Regulated United Europe (RUE) will be pleased to assist you.

Regarding legal definitions, a virtual currency is defined as a type of digital property that’s not backed by the government, tied to a legal tender, and legally isn’t considered legal tender. However, it’s accepted by natural or legal persons as a means of exchange and can be bought, sold, transferred, and stored. The definition includes Bitcoin, Ethereum, Tether, and similar cryptocurrencies. A digital token is defined as a digital record that 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 Corporate Income Tax rate is 15% which is rather low compared to other European jurisdictions. Tax resident companies are taxed on their income sourced in Serbia and abroad. Non-resident companies are taxed only on their income sourced through a permanent establishment located in Serbia. A company is considered a tax resident of Serbia if it’s incorporated under Serbian law or has its place of effective management and control in Serbia.

Crypto companies operating in or from within Serbia are obligated to follow general corporate taxation rules as most crypto-related income is taxable. Tax returns are filed within 180 days following the end of the tax year. Advance instalments are made monthly by the 15th day of the following month for the prior calendar month. The amount due is calculated on the basis of the company’s Corporate Income Tax calculations 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

For resident companies, capital gains are taxed at the rate of 15% and capital losses can be carried forward on account of capital gains for five years. Capital gains realised in Serbia by a non-resident company from a resident company, a non-resident company, a non-resident or resident natural person or an open investment fund are subject to Capital Gains Tax at the rate of 20%.

Generally, capital gains are realised after the sale or other transfer of the real estate, rights pertaining to intellectual property, shares, stocks, securities, bonds, and various investment units. Capital gain is identified by calculating the difference between the purchase price and the selling price. If the sale didn’t generate any profit, there would be no taxable capital gain and no taxable event.

Pursuant to the Law on Personal Income Tax, all income sourced from the sale of digital assets is treated as a capital gain for Capital Gain Tax purposes and is being taxed at a 15% rate. This means that the sale and trading of cryptocurrencies and digital tokens are taxable.

To correctly calculate and verify the taxable amount and losses, it’s crucial to record and document all crypto transactions, including obtaining proof of the origin of cryptocurrencies. If there’s no sufficient proof of the purchase price, the tax authority considers that the purchase price is zero, and the taxable base is the entire sale price of the cryptocurrencies or digital tokens.

Value-Added Tax

In Serbia, the standard VAT rate is 20% and it’s aligned with the EU’s Sixth VAT Directive. While the standard rate generally applies to most products and services sold in Serbia, a 0% rate without the right to deduct the input VAT is applied to, inter alia, trading in shares and other securities, as well as insurance and reinsurance. Many crypto-related services are subject to the standard rate, however, the transfer and sale of cryptocurrencies are also subject to a 0% rate without the right to deduct the tax.

A calendar month is the standard taxable period in Serbia, although it may vary depending on several conditions. If a taxpayer’s annual turnover doesn’t exceed 50 mill. RSD (approx. 425,000 EUR), the taxable period is then a calendar quarter. For new businesses, the taxable period is a calendar month for the first and second calendar years of operation. VAT returns are filed within 15 days following the end of each taxable period.

Withholding Tax

In Serbia, the standard Withholding Tax rate is 20% and it’s levied on dividends, interest, royalties, various legal and business consulting services, income received from a distributed surplus of a company in bankruptcy, revenues sourced from the liquidation surplus of a company in liquidation, and lease payments for real estate and other assets made to a non-resident.

Reduced rates and exemptions may be applicable if a bilateral double taxation agreement stipulates so. To avail of such an agreement, a non-resident recipient must provide a tax residence certificate stamped by the relevant public authority from the recipient’s country of residence.

Payroll Taxes in Serbia

All Serbian employers are obligated to withhold taxes on their employees’ behalf. Social Security Contributions are paid jointly by employers and employees. The contributions payable by employers are treated as operating costs, while the contributions payable by employees are withheld from gross salary. For employers, the rates are 10% for pension and disability insurance, and 5,15% for health insurance. Personal Income Tax also must be withheld and the rates range from 10% to 20% depending on the size of income.

How do I pay taxes on crypto in Serbia in 2024?

In 2024, the taxation of cryptocurrency income in Serbia continues to follow updated regulations designed to adapt the national tax system to the growing use of digital currencies. Serbian cryptocurrency legislation is focused on creating a transparent environment for trading and investment, while ensuring compliance with tax obligations.

Basics of Cryptocurrency Taxation

In Serbia, income from trading cryptocurrencies is considered capital gains and is subject to taxation. This means that any profit derived from the sale of cryptocurrency for a price exceeding its acquisition value is taxable. Key aspects of taxation include:

• Capital gains tax: Income from the sale of cryptocurrencies is taxed as capital gains. The capital gains tax rate in Serbia for income derived from cryptocurrency needs to be clarified according to the latest tax guidelines as it may be updated.
• Income tax: If cryptocurrency trading is considered a regular business activity, income may be subject to ordinary income tax. In such cases, business registration and proper accounting is required.

Reporting and Accounting

Investors and traders must keep detailed records of all their cryptocurrency transactions, including transaction dates, volumes, purchase and sale prices, and any related expenses that may be deductible. This data is necessary to calculate the tax base and determine the amount of tax payable.

Procedure for Payment of Taxes

Taxpayers are obliged to declare their income independently and pay the relevant taxes within the established deadlines. In order to pay taxes on income from cryptocurrencies, a tax return must be completed, indicating all the necessary information on profits and losses.

Tax Benefits and Exemptions

Tax incentives may apply in certain cases, e.g. for long-term holding of assets. However, the specific conditions and requirements for such incentives should be clarified based on current tax laws and guidelines.

Conclusion

Understanding the tax laws governing cryptocurrency transactions in Serbia is key to ensuring tax compliance and optimising tax liabilities. It is important to note that information on tax rates and regulation may be updated, so taxpayers are advised to keep up to date with the latest legislative changes and consult with tax professionals for up-to-date information and advice if necessary.

 

Table with the main tax rates in Serbia:

These rates reflect the main aspects of the Serbian tax system, including the taxation of personal income, corporate income, capital gains and value added. The rates are subject to change and need to be updated in accordance with the latest tax laws and regulations.

If you wish to benefit from relatively low tax rates and tax incentives in Serbia, as well as ensure that your crypto business complies with applicable rules, our highly qualified and experienced legal consultants here at Regulated United Europe (RUE) will be pleased to assist you.

We very well understand and closely monitor local and international taxation rules applicable to cryptocurrency businesses, and strive to ensure that our clients not only comply with local regulations but also operate in a tax-efficient way. Moreover, we’re more than happy to help you with the formation of a new Serbian crypto company, crypto licensing, and financial accounting. Book a personalised consultation now to receive comprehensive legal advice which will set the stage for your success.

Also, lawyers from Regulated United Europe provide legal support for crypto projects and help with adaptation to MICA regulations.