If you have ever been interested in starting a business in Serbia, you probably know that the most popular legal form among residents and non-residents is a Limited Liability Company (LLC) or d.o.o. in Serbian. With an LLC, the possibilities of engaging in practically any activity are unlimited, while the owner’s liability is limited by the latter’s contribution to the company (which is very convenient). Serbian LLCs can be set up by residents and non-residents, individuals and legal entities.
If your company carries out business activities in the Serbian territory, it will have to pay taxes. Those payable by an LLC may be divided into four categories: VAT, income tax, salary tax, and additional taxes. If you need more information on how to pay taxes in Serbia, please follow the link and visit our portal. And if you have some questions, do not hesitate to use the live chat (or any other means of communication) to ask questions and get free advice.
Corporate Tax Payable by the Limited Liability Company in Serbia
First of all, let’s note that taxes in Serbia are not very high as compared to other European countries! For instance, the income tax rate your entity will have to pay amounts to 15%. The Serbian LLC is required to pay tax on the income generated in Serbia and worldwide.
If you pay the income in the form of dividends, the beneficiary will be liable for 15% more if he or she is a Serbian resident.
In the case of foreigners, the dividend tax depends on the country of fiscal residence. The rate may be as low as 5% if the recipient comes from a country that is a party to a double taxation agreement with Serbia (there are 63 such countries in total).
If the dividends are paid to a foreign company that is incorporated in a low-tax (offshore) jurisdiction, the tax rate may be much higher (25%).
You can take advantage of different benefits. If you use the IP Box regime, you will pay a corporate tax of 3%. In addition, if you have any R&D expenses, they will reduce the amount taken as a base for corporate income tax payment.
Value Added Tax Rate in Serbia
The standard Value Added Tax rate in Serbia is 20%. However, it may be reduced in some cases: for instance, public transport, medicines, daily newspapers, and basic food products are subject to a 10% VAT, while the export of products and services is subject to a zero VAT.
The general requirement is to pay VAT once a month. However, you can pay it once a quarter if your company’s turnover does not exceed RSD 50 million. You are required to submit a VAT declaration before the 15th day of each taxation period.
A company registered in one of Serbia’s numerous special economic zones may be completely VAT-exempt except for the situation when the goods are supplied to Serbia.
Salary Tax To Be Paid By Serbian LLCs
Serbian individuals pay a salary tax of 10%. However, if this tax is related to the income derived from real estate leasing, dividends, or business activities, the applicable rate may vary between 10% and 20%.
As for the social insurance tax rate, it amounts to 19.90% for employees and 16.15% for employers.
Thus, your LLC may pay the total salary tax that ranges between 59% and 65%.
If the LLC’s owner does not work for the company, the tax for him will not be paid. However, if he performs the director’s duties, his work will be paid for in the same procedure as applies to other employees.
In the case when the LLC owner works for another company, the Limited Liability Company may need to pay additional deductions to the pension fund. If the company that the LLC owner works for is located abroad, the Serbian LLC is not required to pay a social insurance tax if the respective country is a party to a social insurance agreement with Serbia. If no agreement has been concluded, the LLC will have to pay about 90 euros a month.
The country also provides benefits you can take advantage of. If the salary of a Serbian citizen is above average, he or she may get a 70% discount in social deductions and income tax for 3 years. And if you are a startup founder, you will pay no contributions or salary tax in the first 3 years urdu techy.
Other Taxes Applicable to a Serbian LLC
There are a few other tax categories that an LLC will have to pay:
- Real estate tax payable if you sell the property (it usually ranges between 0.4% and 2.5%)
- Customs duties and excise taxes. The highest amount is paid on tobacco cigarettes (57.6%). As for other products, the rates may vary between the above amount and 0%.
- Serbian Chamber of Commerce membership fee.
- Utility bills for company lighting. These are usually paid if the company income exceeds RSD 50 million, though other conditions may be applicable as well. The amount is calculated on an individual basis.
- Eco tax that amounts to about 43 euros a year (this is a fixed environmental protection tax).
Limited Liability Company Registration in Serbia
If you are a non-resident, it may be a good idea for you to set up an LLC in Serbia. As you see, the taxes are not exorbitant, especially if you compare them with Western European countries. If you establish a company in Serbia, you will be able to get a residence permit (and later obtain a local passport). As Serbia is about to join the EU, it may be tempting to get an EU passport without much trouble. What is more, a residence permit will help you to deal with the local banks much easier. Serbian banks are highly recommendable as they provide European-quality services at much lower prices. And just one more thing: utility bills in Serbia are among the lowest in Europe, so many companies come here to locate their production facilities equiim com.
