Services non-resident legal entities that are subject to withholding tax

Corporate Income Tax Law, which is applicable from 1 April 2018, the deduction tax is payable on the income of non-resident legal entities on the basis of fees from services:

1. market research,

2. accounting and auditing services as well

3. other services in the field of legal and business consulting,

regardless of where they are provided or used, or where they will be provided or used.

The essence is that – starting from April 1, 2018 – income that is paid to non-resident legal entities on the basis of all other services will no longer be subject to taxation with deduction (except in case of payment of income to legal entities from jurisdictions with a preferential tax system, the so-called ” countries of tax havens “).

Therefore, if you receive invoice from the foreign partner for market research, accounting or auditing, and other legal and business consulting activities, and with that country, Serbia has not signed a Double Tax Avoidance Agreement (UIDO), when paying a fee to that partner, file a tax return and calculate a tax deductible at a rate of 20% on gross income.

If the foreign partner is from a country with which Serbia has a signed UIDO, it is necessary that your foreign partner sends a Residence Certificate, but the tax is not paid in this case.

Other services in the field of legal and business consulting include services:

1. Tax advice,

2. Lawyers’ services,

3. management services to a resident legal entity, as well

4. any type of advice and consultation regarding the business of a resident legal entity.