Tax Alert, December 2019

We hereby wish to inform you that Law on Amendments to the Law on Property Taxes (LPT) has been adopted by the National Assembly of the Republic of Serbia on 6 December 2019, and will enter into force on 1 January 2020.

The overview of the aforementioned amendments will be presented in a more detailed way below. For any question regarding the application of the LPT, please contact Slobodanka Kolundzija, LL.M. and Milica Stublincevic, ACCA, our Managers in Tax Department via: skolundzija@deloittece.com and mstublincevic@deloittece.com.

The most important changes are presented below:

- For a taxpayer who keeps accounting books and who, from the beginning of the tax year, starts to report the value of the immovable property at fair value, or who has, from the beginning of the tax year, ceased to report the value of the immovable property in that way, the immovable property tax base for that tax year shall be determined by the rules which are applicable to taxpayers who do not report the value of immovable property at fair value.

Please note that this is the only amendments to the Article 7 of the LPT, i.e. that the provision stating that property tax base is the fair value of the property as determined in line with the Internal Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) has not been changed – in other words, even after the amendments fair value cannot be used as a property tax base if the taxpayer applies IAS/IFRS for SMEs.

On the other hand, based on the Law on accounting that will come into force on 1 January 2020, micro, small and other enterprises are allowed to use full IFRS, regardless of their size - meaning that if micro, small and other enterprises choose to apply the full IFRS they will fall under the provisions of Article 7 of LPT (use of fair value as the property tax base).

- Facilities that are considered as primary agricultural production facilities, for which exemption from property tax is prescribed in accordance with the LPT, include: facilities for accommodating agricultural machinery, raw materials, accommodation and storage of finished agricultural products, livestock stall, facilities for the cultivation and presentation of old indigenous varieties of plants and breeds of domestic animals and facilities for the cultivation of mushrooms, snails and fish.

- The obligation of taxpayers to file tax returns for assessing inheritance, gift and real estate transfer tax, when the inheritance, gift and transfer of property are performed on the basis of the document, which is drafted, certified or confirmed by a public notary (in case the tax liability arises on that day), as well as decisions made in exercising powers bestowed to him under the law (in case the tax liability arises on the day the decision becomes final), shall be abolished. Namely, public notaries shall submit these documents to the competent authority for cadaster through e-counter, and through centralized software-hardware platform named Servisna magistrala organa, together with other documents as prescribed by Article 34 of the LPT. Cadaster has the obligation to forward the documents to the Tax Administration, upon receipt.

- It has been specified that the property tax return for immovable property for which the tax liability arises based on an act/decision of the public notary, may be filed through the public notary only by a taxpayer which does not keep books, considering that such taxpayers self-asses their property tax and file tax return electronically.

- In case a taxpayer is obliged to file inheritance property tax return on the territory of one or more organizational units of the Tax Administration, it is suggested to file a single tax return (according to the place of residence, domicile or a seat), and not according to the place of each real estate. Exceptionally, a tax return shall be filed according to the location in case the gift includes only the real estate. This reduces the administration activities in case a taxpayer inherits real estate on the territory of several organizational units of the Tax Administration based on a single decision.