COVID-19 Tax & Legal Newsletter

Adopted Decree on postponing the deadline for obtaining the status of a qualified new employee

We hereby wish to inform you that the Government of the Republic of Serbia has adopted a Decree on postponing the deadline for obtaining the status of a qualified new employee (hereinafter: Decree) prescribed by the Personal Income Tax Law, during its session held on 24 April 2020. Decree was published in the “Official Gazette of RS” no. 60/2020 of 24 April 2020, and will come into force from the day of publishing it in the Official Gazette of RS.

Afore-mentioned Decree postpones the deadline from 30 April 2020 to 60 days from the date state of emergency is seized.

The full text of the Decree may be found on the following LINK (available only in Serbian language).

Adopted Decree amending the Decree on fiscal incentives and direct grants

We hereby wish to inform you that the Government of the Republic of Serbia has, on April 24 2020, adopted a Decree amending the Decree on fiscal incentives and direct grants to privately owned companies and on grants to citizens aimed at reducing the economic effects caused by the COVID-19 illness.

The full text of the Regulation may be found on the following LINK (available only in Serbian language).
 

Decree on the extension of deadlines for submitting yearly and consolidated financial reports

We hereby wish to inform you that the Government of the Republic of Serbia has, on a session held on April 16 2020, adopted a Decree on the extension of deadlines for holding regular company general assemblies and submitting yearly and consolidated financial reports for companies, associations, other legal entities and entrepreneurs, as well deadlines for the submission of corporate income tax returns and for self-employment tax returns and on the extension of licenses for certified auditors and licenses for real estate evaluation, that are expiring during the state of emergency caused due to the COVID-19 sickness resulting from the SARS-COV-2 virus (hereinafter “the Decree”).

Briefly, the Decree determines the extension of deadlines for:

• Holding regular company general assemblies;
• Submitting yearly and consolidated financial reports for companies, associations, other legal entities and entrepreneurs for 2019.,
• Submitting corporate income tax returns and self-employment tax returns and

the extension of licenses for certified auditors and real estate evaluators.

The details of the extensions for various deadlines and licenses may be found in the text of the Decree, that may be accessed via the following link (available only in Serbian).
 

Rulebook on the form for large entity grants

We hereby wish to inform you that a new form stating the data on persons for
whom a large legal entity is entitled to receive grants referred to in
Article 10 of the Decree on fiscal incentives and direct grants to privately
owned companies and on grants to citizens aimed at reducing the economic
effects caused by the COVID-19 illness has been published.

 Rulebook on the form for large entity grants you may find here.

Decree on fiscal incentives and direct grants to private companies and citizens aimed at reducing the economic effects caused by the COVID-19 illness

Decree foresees fiscal incentives for legal entities, including branches and representative office (hereinafter: legal entities) from personal income tax and social security perspective as well as non-refundable cash grants for the employees.

More information you may find here.

Income Tax Advances

According to the Decree on fiscal incentives and direct grants to private companies and citizens aimed at reducing the economic effects caused by the COVID-19 illness (hereinafter “Decree”) one of the foreseen fiscal incentive is to provide legal entities, including branches and representative offices of foreign entities (hereinafter: legal entities) possibility to postpone payment of income tax advances that are due on April 15, May 15 and June 15, 2020, until the submission of the final income tax return for 2020. This practically means paying these three advances is postponed until the end of June 2021 (for taxpayers whose fiscal year equals a calendar year). The payment of these three advances, will be made in a maximum of 24 equal monthly instalments without interest. Please note that, if the final income tax liability for 2020 is lower than the sum of only these three advances, the difference between the sum of these three advances and the final CIT liability will be due on the date of filing of the 2020 income tax return (June 2021). The above mentioned rules shall accordingly apply to taxpayers who file their tax returns for a period other than the calendar year beginning or ending in 2020.

As the Decree does not cover the remaining monthly tax advances for 2020, where advances for the first half of 2020 are assessed and paid based on the result generated in 2018, while for the second half of 2020 until mid-2021, the monthly advances are paid based on the 2019 result, in case the results from 2018 and 2019 are significantly higher than the result to be expected for 2020, it is our understanding that only after filing of the final 2019 tax return (by June 29th), tax payers can apply for changing/reducing future advance payments, following the regular procedure prescribed by Article 68 of the Serbian CIT Law. Amended advance payments shall be payable from the next month in which the request for change is filed, i.e. tax payer will also be required to pay the full June advance payment based on the 2019 result in case 2019 tax return is filed at the end of June 2020.

Delaying the payment of the income tax advances for March, April and May, due in April, May and June, assumes no dividend payments until end of 2020 and not reducing the number of employees by more than 10% in the period mid-March end of October.

It is expected that applying of this incentive in practice shall be automatized through TA information system in a way that due dates for these three advance payments shall be deleted from the tax calendar.
 

Manual for the Implementation of Fiscal Incentives and Direct Grants to Privately Owned Companies

The Ministry of Finance has issued the Manual for the Implementation of Fiscal Incentives and Direct Grants to Privately Owned Companies.

Тhe full text of the Manual can be found here.

The most frequently asked questions and answers of the Ministry of Finance have been published on the Ministry of Finance website which can be accessed by clicking on the following LINK (available only in Serbian language).

Тhe most frequently asked questions and answers of the Ministry of Finance (part 2) have been published on the Ministry of Finance
website. For more information, please see the following link.

Тhe most frequently asked questions and answers of the Ministry of Finance (part 3) have been published on the Ministry of Finance
website. For more information, please see the following link.

 

Decree on fiscal incentives and direct grants

We hereby notify you that the Government of the Republic of Serbia has, on April 10 2020, adopted a Decree on fiscal incentives and direct grants to privately owned companies and on grants to citizens aimed at reducing the economic effects caused by the COVID-19 illness (hereinafter “Decree”).

Briefly, the Decree details the following:

• Fiscal incentives for companies – legal entities in the form of delayed payment deadlines for salary taxes and social security obligations and corporate income tax installments;
• Fiscal incentives for entrepreneurs in the form of delayed payment deadlines and the delay in the payment itself for installments for taxes and contributions on self-employment income;
• Direct grants to privately owned companies in the form of non-refundable cash grants;
• The application of a 0% rate of VAT for free of charge supplies of goods and services performed by VAT payers to the Ministry of health, the National Health Insurance Fund or any publicly owned medical institution, with the accompanying right to deduct input VAT, as of the day the state of emergency was implemented; and
• A one-off cash grant for all citizens of the Republic of Serbia of legal age.

We will notify you of the specifics of the adopted measures, and you may access the Decree itself via the following link (available only in Serbian).
 

The Government of the Republic of Serbia adopted а Decree amending the Decree on Administrative Deadlines

We hereby wish to inform you that the Government of the Republic of Serbia at its session held on March 26, 2020 adopted a Decree amending the Decree on Administrative Deadlines, which stipulates that in the procedures for determining, paying, collecting and controlling public revenues of taxpayers and customs payers, the application of this Decree is limited solely to the deadlines for filing legal remedies against first instance decisions and conclusions of the competent tax and customs authorities.

In other words, when it comes to tax-administrative and customs-administrative procedure, the only deadlines affected by the provisions of the aforementioned Decree are the deadlines for filing legal remedies against first-instance decisions and conclusions.

Accordingly, and with respect to the amended text of the Decree, for the duration of the State of Emergency in the aforementioned procedures:

• The parties cannot bear the consequences of their failure to comply with the deadlines (eg, failure to meet the deadline to submit appeal against a decision of the Tax Administration will not lead to the loss of the right to appeal); and

• In case of submissions and notifications that trigger deadlines that cannot be extended, when performed during the state of emergency they will be considered performed after the expiry of 15 days from the end of the state of emergency (eg. delivery of a decision on control by the Tax Administration will be considered completed only after the expiry of 15 days from the end of the state of emergency, from when the deadline for filing the appeal will be calculated).

Note: We will keep you up to date on any further tax measures that will be adopted in the coming period.

Decree on Administrative Deadlines

We hereby wish to inform you that the Government of the Republic of Serbia at its session held on March 24, 2020 adopted a Decree on Administrative Deadlines. We also emphasize that the Decree may have an impact on the tax procedure, reporting and settlement of obligations. We will give you more details on this topic in the coming period.

The full text of the Regulation may be found on the following link (available only in Serbian language).
 

The Government of the Republic of Serbia adopted Regulation on Tax Measures

We hereby wish to inform you that the Government of the Republic of Serbia at its session held on March 20, 2020 adopted a Regulation on Tax Measures for Mitigation of Economic Consequences Caused by the Disease COVID-19 Induced by the SARS-CoV-2 Virus.

During the state of emergency, the Regulation envisages the following:

• For the amount of more or less paid taxes and incidental charges, besides interest, interest shall be calculated and paid at a rate equal to the annual reference rate of the National Bank of Serbia.

• Taxpayers participating in deferred tax payment schemes and who do not adhere to agreed repayment plan measures will not be a subject to enforced collection procedures, starting from the installment due in March 2020, the tax authorities will not annul or terminate compulsory collection agreements and decisions and interest shall not be calculated at all on the tax debts that has been deferred, either by delaying the execution of the final tax act or by delaying payment of the tax due.

The full text of the Regulation may be found on the following LINK (available only in Serbian language).

 

Instruction for Legal entities - Perimit for movement of employees

We hereby wish to inform you that the Ministry of Economy has published the Instruction for Legal Entities (available only in English), which prescribes the exact
manner of issuing a permit for movement of employees during the curfew. 

 

1. Initiative for counteracting the effects of COVID-19 pandemic – projects financing

The Innovation Fund of the Republic of Serbia has announced a public call for innovative projects that will help in the control of the effects of the COVID-19 pandemic..

The initiative is intended for micro, small and medium companies, which already have developed prototypes, products, services and technologies that might be scaled in the short period of time and become available for utilization and that provide solutions for shortcomings and problems related to health and well-being of population, caused by pandemic and state of emergency.

Financed projects may last up to 30 days, with the possibility of extension, in case of specific circumstances.

Maximum amount of financing is RSD 6 million per project, whereas Innovative Fund’s co-financing could cover up to 85% of total project costs, while  remaining 15% should be provided by user, from its own resources.

Applications submitted earlier will have priority in evaluation procedure.

More information about the initiative can be found on following link
The Innovation Fund

2. Establishment of digital platform for services opened during the state of emergency

In addition, Digital Solidarity platform has been established, in order to facilitate overall functioning during the state of emergency. Companies that intend to participate are required to provide information about service name, category (remote work, remote learning etc.), logotype (of platform or company), name of company which is the owner of service, access link, period in which service can be used free of charge, short description of service (up to 500 characters). Information should be provided on the address kancelarija@ite.gov.rs, with nenad.paunovic@gov.rs in cc.

3. National Bank of Serbia’s moratorium on credit repayments

The National Bank of Serbia has adopted
decisions on March 17 2020 whereby it has instituted a suspension in the
repayment of debtor liabilities (for those debtors that opt for it). Namely,
during the state of emergency, banks and leasing agencies will not compute
interest on due and unpaid receivables, no enforced collection proceedings will
be initiated and no other legal actions will be taken towards clients. In
addition, banks and leasing agencies will not be able to refund any expenses
arising due to the aforementioned decisions from clients.

More information regarding this item may be found here (at the moment of writing, only in Serbian).