In December 2021, Serbia established a legal framework for taxing crypto assets. In enforcing these new revisions, the Tax Administration (Poreska uprava) is stepping up to the forefront. This is accomplished jointly with the National Bank of Serbia (NBS) and the Securities Commission (SEC). For the Serbian tax regime, most of the issues behind crypto transactions are well settled. It fills important gaps around capital gains and income from mining and staking, inheritance, and the tax treatment of businesses that operate in the crypto […] Whether you’re an individual or a business looking to dive into the world of digital assets in Serbia, knowing these rules is key.

Specifically, we want to applaud the inclusion of capital gains tax and income tax on crypto-related activities. Furthermore, it addresses inheritance tax and the regulatory environment that shapes these rules. It addresses reporting requirements, potential penalties for non-compliance, and tax incentives, which are available for crypto startups.

Capital Gains and Income Tax

In Serbia, people pay a flat 15% CGT on their net profits. The tax would only be applied to profits realized from the sale of a crypto asset. This implies that every dollar gained on the sale or trade of all cryptocurrencies is taxed beyond this rate.

Additionally, Serbia imposes 15% PIT on income through crypto mining, staking or earning salary in crypto. This last provision ensures that any income earned through these activities is taxed. It does this by simply aligning this income with the treatment of other kinds of income.

The Serbian tax code offers an attractive lure. In return for reinvesting the proceeds from a crypto disposal into a Serbian company or fund within 90 days, you can receive a 50% CGT rebate. This shifts the focus of investment to the local economy and builds competitive edges among Serbian businesses.

Reporting and Penalties

Serbian residents must submit Capital-Gains Return (PP ODG-3). They would typically have 120 days after the end of the quarter in which the gain happened to make this filing. This third reporting requirement helps ensure transparency and compliance with IRS tax regulations.

Serbian tax law imposes severe penalties for failure to timely pay taxes or pay taxes at all. Additionally, the country levies late-payment interest on any late tax payments. This interest is set at the National Bank of Serbia (NBS) reference rate plus 10 pp.

Serbia has the power to enforce strong administrative penalties for failure to comply. Resistance can result in sanctions of up to RSD 2 million for individuals, and up to RSD 10 million for legal entities. Those who willfully attempt to avoid paying taxes might be subject to misdemeanor prosecution. This might lead to a maximum sentence of up to one year in jail.

Inheritance, Legal Framework, and Special Considerations

Serbia is taxing crypto inheritance and gift transfers at a flat rate of 2.5%. Although this is true for the inheritance and gift tax, a wealth tax does not apply to crypto assets in Serbia.

The Law on Digital Assets came into effect in 2021. On top of all that, there’s the Personal Income Tax Law, the Corporate Income Tax Law, and the Value-Added Tax Law, which was revised in July 2021. These laws create the legal basis for regulating and taxing digital assets in Serbia.

In Serbia, licensed VASPs are required to implement KYC procedures. They have to file monthly reports of all their transactions. The goal of this measure is to improve transparency and deter illegal actions in the crypto industry.

Crypto capital losses may be used to offset other capital gains realized in the same year. In addition, these losses are able to be carried forward for up to five years, allowing for flexibility on the part of taxpayers.

Serbia considers a swap of one cryptocurrency or other asset for another to be two separate taxable disposals. This includes the CGT impact for each gain realized on the Bitcoin (BTC) portion of a swap transaction.

Serbia treats a salary or services remunerated in cryptocurrency as an employment income or business income, respectively. This MI income is imputed based on payment date. This just makes sure that such payments are taxed the same way other types of income are taxed.

Crypto start-ups in Serbia that are heavily involved in research and development (R&D) may be eligible for potential tax credits. This incentive is designed to inspire private investment, innovation and growth within the emerging Serbian crypto industry.