The taxation of income from internet advertising is becoming an increasingly important topic, especially when it comes to payments to foreign companies such as Google and Facebook. At the beginning of each year, Serbian companies using these services face the question of whether they need to obtain new certificates of tax residency for foreign legal entities in order to apply double taxation avoidance agreements.

According to agreements Serbia has with many countries, income from internet advertising services is considered business profit and is taxed only in the country where the company is registered. This applies as long as the foreign company does not operate through a permanent establishment in Serbia. This means that Serbian companies are generally not required to calculate and pay withholding tax when making payments for these services.

However, one of the key questions that arises each year is whether Serbian companies need to obtain tax residency certificates for each calendar year. While these certificates are typically valid for only one year, in cases where payments are made to companies operating in countries that have a double taxation avoidance agreement with Serbia, it is often not necessary to obtain new certificates every year.

This issue particularly affects businesses that invest heavily in digital marketing and rely on foreign platforms for advertising. Although practical issues with the application of double taxation agreements are rare, companies must remain cautious and keep track of regulations to avoid potential tax liabilities.

A key recommendation for companies using foreign advertising platforms is to regularly consult tax advisors and stay informed about legislative changes. This ensures compliance with tax regulations and helps avoid unexpected costs.

As the digital market evolves, there is a possibility that tax regulations will change in the future, potentially affecting how these services are taxed. Currently, Serbian companies that pay for internet advertising services from foreign providers do not have a withholding tax obligation. However, it is crucial to stay updated on any potential changes in tax regulations.

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