Foreign tax credit


How to pay tax in Serbia?

The term withholding or WHT tax refers to the money that an employer deducts from an employee’s gross wages and pays directly to the government. The vast majority of people who are employed in the United States are subject to tax withholding. 

WHT is calculated and paid at the rate of 20% on payments such as dividends, royalties, authorship, intellectual property rights, and related rights, interest income, income from market research services, accounting and audit services, and other legal and business consulting services, income from a distributed surplus of a company in bankruptcy, revenues derived from the liquidation surplus of a company in liquidation, and lease payments for real estate and other assets made to a non-resident unless a DTT applies to provide a reduced rate or exemption.

tax save
tax save

A Serbian entity is entitled to a tax credit for the WHT paid on foreign-sourced dividends and underlying CIT paid abroad if the taxpayer holds a minimum of 10% of the shares in the subsidiary for at least one year before filing a return. If the taxpayer holds less, the tax credit should not exceed the amount of tax that would be paid in Serbia on that income, where the basis represents 40% of the received gross income. The credit can be carried forward by the parent company for five years.

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