Serbia Tax Deductions

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Serbia Tax Deductions

In Serbia, in addition to the deductions/credits mentioned above, deductions and business expenses may be claimed as specified below:

  • Offset of losses: - A loss may be offset up to 5 years forward. It is not possible to offset a loss from previous years backwards.
  • The losses of one or several associated enterprises may be offset in the consolidated tax statement at the expense of other associated enterprises in the group.
  • Employer's voluntary contributions to pension and health funds are allowable to an amount of 3,000 Dinars per employee per month.
  • If the concession-related enterprise earns profit prior to completion of the concession-related investment, it shall be exempt from profit tax.
  • Any enterprise engaged in vocational training, professional rehabilitation and employment of disabled persons is exempt from enterprise profit tax, in proportion to the share of such persons in the total number of its employees.
  • Taxpayer which invests in fixed assets in the scope of its registered business, its accounted enterprise profit tax shall be reduced by 20% of the investments made in that year.
  • The accounted enterprise profit tax of taxpayer which employs new workers is reduced by an amount that is equal to 100% of the gross wages/salaries paid to such employees plus the corresponding public revenues paid as a charge to the employer. This is valid for the first two years of employment.
  • Any taxpayer that invests over 1 billion Dinars in its fixed assets or such amount is invested in its fixed assets by another person, uses such funds in the conduct of its registered business in the Republic and employs during the investment period at least additional 100 persons, is exempt from enterprise profit tax for a period of ten years, in proportion to that investment.
  • Any taxpayer, who conducts a business in a region of particular interest to the Republic, is exempt from the enterprise profit tax for five years, subject to the conditions specified by the law.
  • The accounted enterprise profit tax of a parent enterprise, which is a resident taxpayer of the Republic, may be reduced by an amount corresponding to the tax its non-resident affiliate has paid in the other republic or another state on the profit from which the dividends included in the parent enterprise's income were paid and on such dividends.

Depreciation of Fixed Assets in Serbia

Three depreciation methods are used in Serbia: straight-line, per unit, and declining balance method.

  1. Change of depreciation method is permissible only in case of switching over from the declining balance to the straight-line method.
    In that case, the remaining value of an asset or group of assets is divided into equal depreciation installments for the remaining service life.
  2. When the straight-line depreciation method is used, the annual depreciation rates set in the nomenclature of assets for depreciation and the asset service life derived from them are applied.
  3. When the per unit depreciation method is used, the asset depreciation base is divided by the expected volume of units, and depreciation is determined by multiplying the obtained quotient by the actual units in the accounting period or accounting year.
  4. When by applying per unit depreciation the taxpayer's total depreciation is increased by more than 5% of the depreciation calculated by the straight-line method, the calculation of depreciation by the per unit method shall be subject to the approval of the competent tax office.
  5. When the declining balance method of depreciation is applied to the existing value of an asset or group of assets, it is permissible to apply the depreciation rates referred to in item 2.
    Above increased by the following coefficients:

Service life Coefficient
Up to 4 years 1.5
Up to 7 years. 2.0
Over 7 years 2.5

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