Insights

Tax Alert - February 2015

Rulebook on Work Permits

The National Assembly of the Republic of Serbia adopted the Law on Employment of Foreigners on November 25th 2014 (published in the Official Gazette of RS No. 128/2014) that came into force on December 4th 2014. Article 38 of the Law prescribes that the Minister in charge of employment issues will enact the corresponding legislation on the basis of the authority granted by this Law within 3 months from the date of entering into force.

The Rulebook on Work Permits (Official Gazette of RS No. 136/2014) has entered into force on December 20th 2014. The aim of this Rulebook is to define the procedure of work permit issuance, i.e. extension, as well as the method of certifying the fulfillment of the conditions required. Moreover, it specifies the types of evidence needed for the issuance, i.e. extension of the work permit. Additionally, the Rulebook prescribes the form and contents of the work permit.

The Rulebook provides an exhaustive list of documentation needed for each type of work permit as well as the form in which it has to be submitted to the competent authorities (original, photocopied or certified translation of the evidence in question). Finally, the Rulebook includes six different forms corresponding to appropriate types of work permits prescribed by the Law.

 

2014 Annual Personal Income Tax

Based on the published data on average annual salary per employee paid out in 2014 in the Republic of Serbia, the non-taxable threshold relevant for determining 2014 annual personal income tax filing liability is set at RSD 2,211,336. Hence, natural persons – tax residents and non – residents whose total annual income exceeds the said amount are subject to 2014 annual income tax. Data related to non-taxable and taxable amounts and personal deductions relevant for 2014 annual income tax can be found in the table below:

Description

Amount in RSD

Non-taxable threshold

2.211.336

Income taxable at 10%

4.422.672

Income taxable at 15%

Over 4.422.672

Personal deduction for taxpayer*

294.845

Deduction for dependent family member*

110.567

*Total amount of deduction cannot exceed 50% of income to be taxed

New Ministry of Finance rulings and Administrative Court decisions

Several Ministry of Finance rulings have been published in the past period, as well as two Administrative Court decisions, aimed at clarifying and elaborating the implementation of provisions of various tax laws, including: the Law on Tax Procedure and Tax Administration (“Law on TPTA”), the Law on Value Added Tax (“VAT Law”), the Law on Corporate Income Tax (“CIT Law”) and the Law on Mandatory Social Security Contributions (“SSC Law”). The following have been selected:

Administrative Court decision confirming that the inaction of an administrative authority cannot result in damages for the taxpayer

An exporter, who was prevented from obtaining certain evidence issued by the competent administrative authority, cannot suffer damages resulting from the administrative authority’s failure to regulate electricity export procedures to the territory of Kosovo and Metohija.

In the abovementioned case, the exporter was unable to obtain the necessary documentation, serving as evidence necessary for claiming the tax exemption (JCI and PIT forms), as the competent administrative authority failed to regulate a procedure for the export of electricity to the said territory. Based on the facts of the case, the court decided that the taxpayer cannot suffer damages in this particular case. Furthermore, the court clarified that when interpreting tax facts of the transaction in question, the economic substance of the transaction has to be taken into account, in accordance with Article 9 of the Law on TPTA (substance over form rule).

(Administrative Court Decision, 9 U. 15278/2012 from November 21st 2014)

Administrative Court decision confirming the nonexistence of an obligation to correct the amount of claimed input VAT in case of subsequently granted discounts

In case a discount, cassa sconto, is subsequently granted by the supplier to a VAT-payer, without altering the contract price, the VAT-payer that received the goods and services is not obligated to make a correction to the amount of claimed input VAT. Namely, a subsequently granted cassa sconto is not deemed to be an alteration of the contractually agreed upon price on its own. Consequently, it is regarded that the VAT base is not altered solely by the virtue of the granted discount. In that respect, the Administrative Court has decided that the claimant (buyer) is not obligated to perform a correction (reduction) of input VAT, in accordance with Article 31 para 1 of the VAT Law.

In other words, the Administrative Court has taken a position that a VAT-payer was not obligated to correct (reduce) the amount of input VAT in this case, and, therefore, the VAT-payer cannot be sanctioned in case it fails to do so. Nonetheless, this decision does not affect the possibility of altering the VAT base and corresponding VAT, as a result of subsequently granted discount.

(Administrative Court Decision, 3 U. 6710/2011 from February 19th 2014).

The place of supply of centralized support accounting services provided by a VAT-payer to foreign related companies 

The place of supply for centralized support accounting services is considered to be the place of the service recipient. These services encompass, amongst other, recordkeeping of sales and supplies, of fixed assets as well as other activities carried out through accounting software used by both the service recipient and supplier. Consequently, VAT is not computed on services provided by a VAT-payer to foreign related companies, due to the fact that the place of supply is deemed to be abroad in this case.

(Ministry of Finance Ruling, no. 413-00-308/2014-04 from November 19th 2014)

Claiming the right to a tax credit based on investments performed during 2012, when payments to the supplier are settled by compensation

A taxpayer, who invested in the purchase of self-owned fixed assets, can claim a right to a tax credit pursuant to Article 48 of the CIT Law, even if payments to the supplier for such assets are carried out through compensation in the same tax period in which the purchase was performed.

(Ministry of Finance Ruling, no. 413-00-271/2014-04 from November 25th 2014)

Social security contributions for an individual – founder of a company, who is neither an employee nor a legal representative

The founder of a company, an individual not employed in that company that is insured on a different basis, is not obligated to pay mandatory pension and disability contributions. However, it should be noted that representing the company or performing management duties is deemed as labor.

Moreover, mandatory social security contributions are also not paid for income received by the abovementioned individual (founder) from participation in profits proportional to its share in the company.

(Ministry of Finance Ruling, no. 011-00-523/2013-04 from November 27th, 2014)

Contacts:

Tatjana Milenkovic

Senior Manager

+381 11 3812 168

tmilenkovic@deloittece.com  

 

Dejan Mrakovic

Manager

+381 11 3812 172

dmrakovic@deloittece.com

 

Filip Kovacevic

Manager

+381 11 3812 164

fkovacevic@deloittece.com

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