Taxation of property in Serbia

Serbia has a property tax, which is levied on a regular basis on the basis of ownership of real estate (ownership or right to use real estate).
Accordingly, taxpayers are right holders, users of real estate (Article 4 of the Law).
The object of taxation with this tax is the acquisition of real estate (Articles 2, 10 of the Law), including:

• acquisition of the right of ownership, including the right of ownership to a land plot with an area of more than 10 acres;
• the right to lease, including an apartment or a house, in favor of an individual;
• the right to use land for development with an area of ​​more than 10 acres;
• obtaining real estate on the basis of a leasing agreement.

The obligation to pay tax arises on the date of the legal transaction. The obligation to pay tax arises on the day following the provision of the opportunity to use the property (for example, in accordance with the terms of the contract). If the property cannot be used (not ready for use), then the obligation to pay tax arises on the first day of the start of operation. At the same time, there are special provisions that prevent non-payment of tax due to a delay in bringing the property into a condition suitable for its operation (Article 10 of the Law).
The right to lease an apartment or house is subject to taxation when renting for a period of more than 1 year or for an indefinite period (Article 2 of the Law).
In a number of cases, the transfer of real estate is not subject to taxation, in particular (Article 12 of the Law):

• the land plot under the building subject to taxation is subject to benefits;
• if the property is acquired by an entrepreneur (accountant) for resale, then no tax is paid in the year of purchase and during the next year of ownership;
• a land plot of an entrepreneur who keeps accounting records, which is used for agricultural production.

Procedure for declaring and paying tax
The tax period is a calendar year (Article 38б of the Law).
As a general rule, individuals do not need to submit a tax return, since the tax is calculated by the tax authority, which sends the corresponding decision to the taxpayer. The obligation to transfer to the tax authorities the information necessary for calculating the tax is assigned to the state authorities and notaries who draw up the transaction. At the same time, an individual has the right to submit an application for a tax deduction or benefit (if applicable) to a notary when processing a transaction or to a tax authority within 30 days (Article 33б of the Law). However, when changing data on the area of real estate, a declaration is required.

The tax is payable by individuals on a quarterly basis (advance payments) within 45 days from the beginning of the respective quarter in the amount of 1/4 of the annual amount. Also, the tax can be paid at a time, with subsequent offset for the corresponding quarter. If the annual amount of tax exceeds advance payments, the difference is payable within 15 days from the date of delivery of the relevant decision of the tax authority (Article 39 of the Law).

Accounting entrepreneurs must independently submit a declaration within 30 days after the execution of a real estate transaction - both obtaining and transferring the right to real estate, and also before March 31 of each year (Articles 33в, 33г of the Law). Entrepreneurs pay tax quarterly (advance payments) within 45 days from the beginning of the corresponding quarter in the amount of 1/4 of the annual amount. If the annual tax amount exceeds the advance payments, the difference is payable by March 31 of the following year (Article 39в of the Law).

Tax calculation

Property tax is calculated based on the value of real estate, which is determined differently depending on the status of the taxpayer (an individual who is not an entrepreneur or an entrepreneur). The tax for individuals is determined based on the useful area of real estate and the average price per square meter, which is determined by the local government on the basis of the price of transactions for the past period in the relevant zone and is published annually no later than November 30 of each year. The tax for entrepreneurs is determined based on the value reflected in the books under the fair value method in accordance with IFRS at the end of the year (Articles 5-7a of the Law). The tax authority, at the request of the taxpayer, within 15 days must provide the necessary information to determine the amount of tax (Article 9 of the Law).

The tax rate is determined by the local government within the following values (Article 11 of the Law):

• up to 0.4% for real estate of taxpayers-entrepreneurs who keep accounting records;
• up to 0.3% for land plots of taxpayers who do not keep accounting records;

For real estate (except for land plots) of taxpayers who do not keep accounting records, the rates are determined as follows:

• up to 0.4% - at a cost of up to 10 million dinars;
• the amount at the rate applicable for objects worth up to 10 million dinars + up to 0.6% of the cost from 10 million to 25 million dinars;
• the amount at rates for objects worth up to 25 million dinars + up to 1% of the cost from 25 million to 50 million dinars;
• the amount at rates for objects worth up to 50 million dinars + up to 2% of the cost over 50 million dinars.

The amount of tax for a residential building or apartment in which the taxpayer lives and in which he is registered at the place of residence is reduced by 50%, but not more than 20,000 dinars. Moreover, if the area of housing does not exceed 60 m², such housing is not rented out and persons over 65 years of age are registered in it, then the tax is reduced by 75% (Article 13 of the Law).

The objects of taxation with the tax on the transfer of rights in Serbia are transfer operations (Article 23 of the Law):

• rights to real estate;
• intellectual property rights;
• rights to a used motor vehicle (with the exception of a moped, a motor cultivator, a tractor, and a working machine), as well as to used water and aircraft;
• the right to use the land for development;
• the right to permanent use of the parking space.

At the same time, transactions of transfer of rights are not subject to taxation if (Article 24a of the Law):

• such transactions are subject to VAT;
• transfer transactions are carried out as part of the liquidation of companies;
• replacement of the vehicle or boat during the warranty period.

The payers of this tax are (Article 25 of the Law):

• persons transferring the right of ownership (including intellectual property) or the right of use, except for the right to use land for development;
• persons acquiring the right to use land for development;
• persons acquiring property rights to a used motor vehicle, with the exception of a moped, a motor cultivator, a tractor and a working machine.

Also, some transactions are exempt from taxation, in particular (Articles 31-31б of the Law):

• when investing rights in the capital of a Serbian company;
• when acquiring the rights to cars for use in a taxi or renting out or for the operation of a driving school for a period of at least 5 years;
• in the case of the acquisition of residential real estate by a citizen of Serbia, subject to the conditions specified by the Law.

Procedure for declaring and paying tax
As a general rule, it is not required to submit a tax return in relation to the transfer of rights to real estate, if it is drawn up by a notary in the prescribed manner. In this case, the taxpayer provides the necessary information and a statement of the right to tax exemption to the notary, who transfers the information to the authorized body (Article 34 of the Law). In relation to the purchase of used cars, a declaration is also not required (Article 35a of the Law). When buying a car from an individual, there is no need to come to the tax authority to receive a decision on the amount of tax, but you can calculate and pay the tax electronically on the web-site. With regard to transfers of intellectual property rights, information for tax calculation is provided by the agency that regulates such transactions (Article 42a of the Law).
Instructions on the procedure for electronic declaration can be found here.

In these cases, the amount of tax is calculated by the tax authority. Otherwise, the taxpayer must submit a tax return within 30 days after the relevant transaction (Article 36 of the Law).

The tax is payable by individuals within 15 days from the date of delivery of the relevant decision of the tax authority. Tax on the purchase of used cars is paid before the renewal of the car certificate (Article 40 of the Law).
Without payment of tax, registration of rights to real estate or rights to a vehicle is not carried out (Articles 38, 40 of the Law).

Tax calculation

Transfer tax is calculated based on the transaction price, if it is not lower than the market price. In this case, the tax authority has the right to determine the amount of tax based on the market assessment. In this case, he must, within 60 days after receiving the declaration, determine the tax based on the market valuation (Article 27 of the Law).

The tax on used cars is determined based on the engine size (320 RSD per cm³), engine power (6400 RSD per kW) and the vehicle's age factor. Such a coefficient is determined according to the following scale (Article 27a of the Law):

• 100% - up to 2 years;
• 90% - from 2 to 3 years;
• 80% - from 3 to 4 years;
• 70% - from 4 to 5 years;
• 60% - from 5 to 6 years;
• 50% - from 6 to 7 years;
• 45% - from 7 to 8 years;
• 40% - from 8 to 9 years;
• 35% - from 9 to 10 years;
• 30% - older than 10 years.

Therefore, the calculation of the tax base for a used car is calculated using the formula:

Tax = (320*engine size + 6400*engine power)*vehicle age.

The tax rate is 2.5% of the relevant tax base.

The objects of taxation with inheritance and gift tax in Serbia are the operations of receiving (Article 14 of the Law):

• rights to real estate;
• intellectual property rights;
• rights to a used motor vehicle (with the exception of a moped, a motor cultivator, a tractor and a working machine), as well as to used water and aircraft;
• the right to permanent use of the parking space;
• cash, deposit, bank deposit, money claim, digital property.

At the same time, they do not pay inheritance tax and gifts, in particular (Article 21 of the Law):

• children, spouse and parents;
• persons living together continuously during the previous year, in relation to the apartment.
• former spouses in respect of jointly acquired property during its division.

If a resident of Serbia receives an inheritance or a gift located abroad, then the amount of tax paid in Serbia may be reduced by the amount of tax paid in another country (Article 22 of the Law).

Procedure for declaring and paying tax

As a general rule, it is not required to submit a tax return if the receipt of property is formalized by a notary in the prescribed manner. In this case, the taxpayer provides the necessary information and a statement of the right to tax exemption to the notary, who transfers the information to the authorized body (Article 34 of the Law).

In these cases, the amount of tax is calculated by the tax authority. Otherwise, the taxpayer must submit a tax return within 30 days after the relevant transaction (Article 35 of the Law).

Instructions on the procedure for electronic declaration can be found here.

The tax is payable by individuals within 15 days from the date of delivery of the relevant decision of the tax authority. Without payment of tax, registration of rights to the relevant property subject to registration in state registers is not carried out (Articles 38, 40 of the Law).

Tax calculation

The tax base for inheritance and gift tax is determined in a manner similar to that for property rights transfer tax, including a special procedure for used vehicles (Article 16 of the Law). In addition, the tax base is reduced by the amount of debts and encumbrances received (Article 34 of the Law).

The tax rate differs for heirs / donee on the basis of kinship (Article 19 of the Law):

• for relatives 1.5% of the relevant tax base;
• for persons who are not relatives - 2.5%.