May 2025 - Creative Finance

After the adoption of financial statements, companies that make a profit have the legal option or obligation to distribute it. Find out all about the rules for paying dividends and paying taxes on them.

Foreign currency payments include all international transactions that use foreign currency, whether expressed in foreign currency or dinars, between residents and non-residents. Whether they are transfers, payments for goods and services, deposits, or capital transactions, such transactions play a key role in the global economy, providing companies and individuals with the ability to pay to and be paid from their foreign partners.

International double taxation, or rather its avoidance, is becoming increasingly important both in the world and in Serbia, given the increasingly intensive capital investments, the opening of foreign companies, the participation of foreign companies in the privatization process, the employment of foreign individuals, the inclusion of Serbia in international financial transactions, etc.

By concluding agreements on the avoidance of double taxation, primarily with countries that are its most important economic partners, and then with other countries, Serbia is taking steps to eliminate the problem of international double taxation and thereby contributing to its inclusion in the international division of labor and the intensification of its economic and financial ties in the world arena. This is especially important in the current context of significant changes within the reform of the economic and tax system, which creates new conditions for doing business in Serbia based on the principles of profit and equal treatment of all forms of ownership.

By concluding agreements on the avoidance of double taxation, first with countries that are its most important economic partners, and then with other countries, the Republic of Serbia wants to achieve the following goals:

• ensuring full protection of its residents from international double taxation;

• creating fiscal and legal security necessary for conducting international business (providing support to Serbian companies operating abroad);

• attracting foreign investors to the Republic of Serbia and ensuring a positive effect of the benefits and exemptions provided for by domestic tax legislation in order to encourage investment and reinvestment of foreign capital;

• preventing tax discrimination at the international level;

• ensuring the exchange of information and improving cooperation between the tax administration of Serbia and the administrative state with which the agreement has been concluded, which is a prerequisite for effectively combating international tax evasion.

In addition, the agreement on the avoidance of double taxation ensures:
• the complete elimination or reduction of tax barriers that hinder or impede the free movement of capital, goods, services, technology and persons;
• stimulation of capital investment by residents of one contracting state in the economy of the other contracting state;
• that tax rates on income received in Serbia or in the other contracting state based on dividends, interest, royalties and fees for services are determined by this agreement and not by the domestic legislation of the contracting states (in the absence of the agreement, the tax rates would be much higher);
• improved cooperation between the tax authorities of Serbia and the other contracting states, thereby reducing the possibility of tax evasion by their residents; and
• general application of the principle of equal taxation of individuals and legal entities of the Republic of Serbia carrying out activities in the other contracting state in relation to individuals and legal entities of that other state carrying out the same activities under the same or similar conditions.

Taking into account all of the above, it can be generally concluded that the implementation of agreements on the avoidance of double taxation creates a legal prerequisite for more efficient economic activity and competitiveness of companies from Serbia in another contracting state or companies from another contracting state in Serbia, which represents a significant contribution to the improvement of bilateral economic and financial cooperation.

All taxpayers who have transactions with related parties are required to prepare and submit a transfer pricing report to the Tax Administration when submitting their tax balance sheet and income tax return.