Serbia is becoming one of the countries with the most interest in cryptocurrency. As the digital asset landscape continues to expand and change, being informed about the complex regulatory environment, particularly with regard to taxes, is essential. Read on as we dive into Serbia’s crypto tax law, unpacking what it means for foreign investors and businesses, and flagging the opportunities to be had.

Understanding Serbia's Crypto Tax Law

As of 2022, the Serbian government adopted still another unequivocal stance, by setting clear guidelines for taxing profits from cryptocurrencies. Under this framework, we focus on the impacts of a flat 15% capital gains tax (CGT). It applies to the revenue earned from crypto trading. It is this gain that is taxable, meaning that when someone sells or exchanges cryptocurrency for a profit, 15% of the total profit of that sale must be taxed.

The tax specifically aims at the full, positive difference between the purchase price and sale price of crypto. This difference is referred to in the underwriting industry as the gross spread. This estimate looks at the gain that occurs between the sale of the cryptocurrency and its original purchase value. The acquisition value is as straightforward as it sounds—the amount you paid to acquire the digital asset. Business owners accepting crypto must track every single transaction and profit, as Serbian residents have to report the purchase price and sale price of any commodity they sell. You will need this information to complete your required Capital-Gains Return (PP ODG-3). Remember to submit it no later than 120 days after the end of the quarter in which the gain occurred.

The crypto capital gains taxation regime in Serbia is simple, as it has a flat 15% tax rate. This ensures more clarity and predictability for taxpayers, allowing for greater taxpayer understanding and compliance with their tax obligations.

Opportunities for Crypto Investors and Businesses

The 15% CGT is a pretty big elephant. Serbia’s tax law still provides numerous avenues for crypto investors and businesses to reduce their tax liability and improve their bottom line. These provisions are reinvestment relief, tax credits for R&D investments and startup tax relief.

Reinvestment Relief

Perhaps the most alluring ingredient of Serbia’s crypto tax law is the reinvestment relief. Both corporations and natural persons can enjoy the advantages of this provision.

  • For Corporations: Companies that reinvest their crypto gains into another Serbian company within 90 days can receive a 50% refund of the capital gains tax. This refund is typically processed within 12 months after the original sale.
  • For Natural Persons: A natural person who, within 90 days from the day of sale of digital property, invests the money acquired thereby in the share capital of a company or investment fund whose center of business or investment activities is in Serbia, acquires the right to deduction of 50% of capital gains tax.

The law provides tax relief specifically for blockchain technology by completely excluding capital gains from the sale of digital assets from the tax base. For individuals, the exemption is 50%, but if the proceeds from the sale are reinvested in the share capital of a resident taxpayer or an investment fund in Serbia in that same tax period, they are entitled to this exemption.

In order to receive these tax concessions, the firm needs to maintain its share capital. It is unable to fully offset it within two full calendar years of the year the investment is enrolled. Overall, we are excited about this provision and how it encourages long-term investment and stability within the Serbian economy. Even if an investment occurs after 90 days but within 12 months, a 50% tax refund is still available, providing flexibility for investors.

Incentives for Innovation

Serbia has very appealing incentives for companies that are conducting a lot of research and development (R&D).

  • Tax Credits for R&D Investments: Eligible investors can claim a tax credit equal to 30% of their investment in a domestic startup, provided they meet certain conditions.
  • R&D Tax Incentives: Companies conducting R&D in Serbia can reduce the cost of salaries for employees working directly on research and development projects.
  • Tax Exemption on R&D Salaries: The tax exemption on salaries of employees engaged in research and development came into effect on March 1, 2022, and has no expiration date.
  • Double Deduction for R&D Costs: Employers can use the R&D salary tax exemption together with the double deduction for R&D costs (an expense-based incentive).

Other Tax Considerations

There are other tax aspects to keep in mind when dealing with cryptocurrency in Serbia:

  • Tax Relief for Startups: New startups in certain high-tech or innovation-driven sectors may be eligible for tax breaks or reduced corporate income tax rates during their early years of operation.
  • Inheritance and Gift Tax: If an individual inherits or receives cryptocurrency as a gift, they pay a total of 2.5% in taxes, which may be lower than the capital gains tax rate.

By understanding these various tax implications and opportunities, crypto investors and businesses can make informed decisions and optimize their tax strategies in Serbia. Work with a qualified tax advisor to make sure you are meeting the law’s requirements in all respects. Beyond that, they can connect you with benefits they help you get.