Business associations play a key role in the economy of the Republic of Serbia, and their establishment, activities and legal framework are regulated by the Law on Associations and the Law on Business Companies. These associations gather a broad spectrum of legal entities that contribute to economic development and facilitate cooperation among entrepreneurs and business companies in achieving common goals.

Establishment and Legal Status of Business Associations

Business associations in the Republic of Serbia represent a special form of organization made up of multiple business companies or entrepreneurs aimed at achieving common goals. It is important to note that the purpose of achieving common goals is a distinctive feature, and the law precisely defines the nature of the associations, activities, and affairs. In other words, a business association cannot conduct profit-making activities but exists solely for the purpose of achieving joint objectives. Since these types of associations differ from others in legal commerce, their legal form is designated as a “business association” or “p.a.” or “pa” (short for “poslovno udruženje” in Serbian). A business association acquires legal personality through registration at the Agency for Business Registers, which means that from the moment of registration, it gains the ability to freely participate in legal commerce in accordance with the goals defined by its statute.

Membership in a business association is voluntary, and members can be both domestic and foreign business companies and entrepreneurs who share common interests with the association. The association may set special conditions for the admission of new members, usually defined by the statute or other internal acts. Also, members have the right to participate in the association’s activities, propose projects and initiatives, and use the services provided by the association.

Rights and Obligations of Business Associations

Business associations in Serbia have the right to:

Represent and advocate for the interests of their members before government bodies and institutions.

Give opinions on regulations and propose amendments to laws and other acts that impact the operations of their members.

Organize professional gatherings, seminars, workshops, and other forms of education for members.

Cooperate with similar associations and institutions in the country and abroad.

Implement projects of interest to members that contribute to business improvement, such as promoting domestic products, introducing new technologies, or developing markets.

The obligations of business associations include respecting the legal framework within which they operate, as well as the obligation for transparent operations and proper management of funds. The association is also required to regularly inform members about its work and decisions.

Although business associations are not profit-oriented, they can generate revenue from various sources, including membership fees, donations, sponsorships, as well as income from providing certain services. However, if they generate revenue through commercial activities, they may be subject to taxation in accordance with applicable tax regulations of the Republic of Serbia.

The management of finances in business associations must be transparent, and funds can only be used for purposes defined by the association’s statute. Otherwise, the competent authorities may take legal measures.

The Importance of Business Associations for the Economy

Business associations are an important mechanism for strengthening the competitiveness of domestic economic entities and the economy as a whole. Through joint efforts, companies and entrepreneurs can more easily overcome challenges, share experiences, and create stronger connections within the industry. These associations also often serve as a bridge between the private sector and the state, helping to shape policies that stimulate economic development. In other words, while unions and employer associations primarily work to improve relations and the position of employees and employers, business associations mainly serve to enhance the business climate and the position of economic entities in relation to the state.

Business associations in the Republic of Serbia play a key role in connecting business entities, improving the business environment, and promoting shared interests. The legal framework for their operation is clearly defined through the Law on Associations and the Law on Business Companies, but the success of these organizations depends on the active participation and cooperation of their members, as well as on the association’s ability to respond to the needs of the market and the economy.

Business Associations

In Republic of Serbia ownership rights to real estate are acquired through registration in the cadaster. Professional users, including lawyers, have a secure and efficient means of electronic communication and submission of requests in the form of electronic documents for property registration and issuance of real estate cadaster data.

Ownership rights to real estate are acquired through registration in the cadastre. A sale and purchase agreement for an apartment serves as merely the basis of acquisition (iustus titulus); however, the mode of acquisition (modus acquirendi) is essential, which involves registration in the cadastre. Various issues may arise if an apartment is not registered in the cadastre, as ownership is conferred only upon registration in the real estate cadastre.

The required documentation and procedure depend on each specific case. Primarily, it is necessary for the building in which the apartment is located to be registered in the real estate cadastre before the apartment itself can be registered. The procedure differs based on whether the building was constructed before regulations on building structures, whether the construction has building permit and inspection acceptance certificate, or if the construction was done illegally. For a new building with issued construction and inspection acceptance certificate, the competent authority in the unified procedure submits documents for the registration of the building in the real estate cadastre. However, for a building that is not considered a new construction, it is mandatory to obtain a certificate from the municipal department for construction works, which include apartment's square footage, room count, and floor level, for registering the apartment in the cadastre. If the competent authority is unable to issue such a certificate, information about the apartment can be registered based on the findings and opinions of a permanent court expert in the field of construction.

Electronic counter for property registration in the cadastre: innovations in serbian administration

The introduction of the digital era into administrative processes is inevitable, and the latest amendments to the laws on the procedure of registration in the real estate cadastre and infrastructure in Serbia reflect this trend. These changes bring significant innovations for all stakeholders in the real estate market, from citizens to professionals. Primarily, the Republic Geodetic Authority has streamlined the business process of document submission and application filing for registration in the real estate cadastre by introducing the eCounter information system. The law stipulates that only authorized professional users of the eCounter system are exclusively eligible for submitting requests for registration in the real estate cadastre. Professional users, including lawyers with a concluded access and usage agreement for the eCounter system, have a secure and efficient means of electronic communication and submission of requests in the form of electronic documents for property registration and issuance of real estate cadastre data. The Electronic Counter for property registration contributes to efficiency, transparency, and process acceleration, reducing bureaucracy and enabling faster access to information.

One of the key changes is that an increasing amount of data will be accessible in digital format, enhancing both efficiency and transparency. Moreover, the new law introduces a system of a unique property identification number, facilitating searches and reducing the possibility of errors.

This innovation not only expedites processes but also enhances transparency and facilitates record-keeping for real estate. The Electronic Counter represents a crucial step toward a modern, efficient administration that reflects the needs of citizens in the digital age.

If you need to register your property in the real estate cadastre, we are at your disposal to provide expert support and legal services tailored to your specific need.

Guide to property registration in the cadaster via e-counter

A digital nomad visa represents a specific type of visa that allows individuals to travel and reside in various countries while working remotely. This type of visa has gained popularity among modern professionals who seek to leverage the flexibility of remote work and explore the world.

Digital nomad viza predstavlja specifičnu vrstu vize koja omogućava pojedincima da putuju i borave u različitim zemljama dok rade na daljinu. Ova vrsta vize je postala popularna među modernim profesionalcima koji žele da iskoriste fleksibilnost rada na daljinu i istraže svet.

Unlike traditional work visas that require employer sponsorship, digital nomad visas are specially designed for individuals who earn their income remotely. These visas are legally recognized and provide protection for remote workers, granting them the freedom to live and work in a foreign country without the fear of legal consequences. However, with this freedom come unique legal challenges that must be overcome. In this blog, we will explore how a digital nomad visa can empower remote workers by providing a legal framework for living and working in other countries.

Digital nomads are modern individuals who perform work online, whether they are self-employed (freelancers) or employed in remote positions that do not require a physical presence at a workplace. Their activities are related to computer-based tasks such as web design, graphic design, programming, marketing, dropshipping, cryptocurrencies, social media, and more. Therefore, they seek a comfortable place to settle and work. Key criteria when choosing a country to apply for a visa include internet speed, cost of living, visa application process, visa duration, and potential tax benefits. Additionally, personal preferences, geographical  location, climate, safety, and the overall environment also play a significant role in the decision-making process.

This is a hybrid type of visa that combines a work visa with a residence permit because individuals can only earn income through remote work, they are not allowed to be employed in the host country, but they are allowed to live alone or with their family during the visa's validity period. This, of course, is subject to meeting specific conditions regarding net income, bank account balance, healthcare coverage, and additional financial means for each family member living with them. Family members are also not granted the right to employment in the host country but are eligible for residence.

This way of working has seen significant growth after the global COVID-19 pandemic, as countries aim to attract a larger number of digital nomads with the benefits they offer, in return contributing to their economy, multiculturalism, and the emergence of new business ideas (start-ups). Digital nomads have the opportunity to travel, work from different parts of the world, and increase their income.

Understanding Legal Challenges for Remote Workers

With the increasing popularity of remote work, remote workers face various legal challenges. One of the most significant barriers is the lack of recognition and protection in foreign countries. Without the appropriate visa or work permit, remote workers may face deportation or other legal consequences. Additionally, tax obligations can become complex and confusing when working across borders. These challenges can create a sense of insecurity and instability for remote workers, hindering their ability to fully embrace the digital nomadic lifestyle.

A digital nomad visa offers many advantages for remote workers. First, it provides legal security, eliminating the fear of deportation or legal consequences. This allows remote workers to fully focus on their work and embrace the digital nomadic lifestyle without constant worries about being on the wrong side of the law. Furthermore, a digital nomad visa can provide access to essential services such as healthcare and banking, which are challenging to obtain without a registered residence. Finally, a digital nomad visa can open up new opportunities for networking and collaboration with like-minded individuals in the country that issues the digital nomad visa, enriching the professional and personal lives of remote workers.

Countries that have recognized this trend and decided to attract digital nomads by offering special visas have taken steps to enact legal regulations and streamline the application process (such as Spain, Greece, Cyprus, the Czech Republic, Portugal, Barbados, Costa Rica, Bermuda, and the Cayman Islands). These visas typically allow stays in the country for a specified period, usually ranging from a few months to one year, with the possibility of extensions. Often, a common requirement is that the individual must be employed by a foreign employer or earn the majority of their income through remote work (for example, in Spain, it is not allowed for income from a domestic employer to exceed 20% of the total monthly income). While the concept of digital nomad visas is relatively new, several countries have recognized the potential benefits of attracting remote workers. For example, Estonia launched its digital nomad visa program in 2020, allowing remote workers to live and work in the country for up to 12 months. Other countries, such as Barbados, Bermuda, and Croatia, have also introduced similar visa programs to attract digital nomads. These countries understand the economic value that remote workers can bring and have simplified the application process to make obtaining residence easier.

The requirements for obtaining digital nomad visas vary depending on the country. However, there are common criteria that remote workers typically need to meet. Applicants typically need to provide proof of income demonstrating a stable source of remote income. They may also be required to have health insurance coverage and provide a valid passport with at least six months of validity. In some cases, applicants for a digital nomad visa may be required to submit a detailed travel plan or explain their reasons for choosing that particular country. By meeting these requirements, remote workers can increase their chances of obtaining a digital nomad visa.

Once remote workers have chosen the country where they want to apply for a digital nomad visa, the application process can begin. The first step is to gather all necessary documents, including proof of income, health insurance, and a valid passport. It is important to thoroughly research the specific requirements of the chosen country to ensure that all necessary documents are provided. After the documents are in order, the application can be submitted to the relevant government agency or embassy. It is recommended to apply well in advance of the desired start date to allow time for the processing of the application. After the application is submitted, remote workers must be prepared to provide additional information or attend interviews as requested by the visa-issuing authorities. Navigating the legal process of obtaining a digital nomad visa can be complex and daunting. Seeking professional assistance, such as hiring an immigration and foreigner's law attorney, can be helpful in ensuring a successful application. Legal Framework in the Republic of Serbia The Republic of Serbia aims to regulate the issue of digital nomads, making their activities and residence legal and documented through residence registration. In this regard, the Law on Personal Income Tax, specifically Article 9b, stipulates the following: "Exempt from taxation is the income of a non-resident taxpayer who spends a maximum of 90 days in the territory of the Republic within a 12-month period that starts or ends in the respective tax year, if such income is earned from a non-resident principal who does not conduct business or activities in the territory of the Republic". Unfortunately, digital nomad visas have not yet been implemented in the Republic of Serbia, but there is hope that the legislator will include this visa in the legal framework in the near future.

The digital nomadic way of life offers numerous opportunities for remote workers, but it also comes with unique legal challenges. A digital nomad visa is a valuable tool that can motivate remote workers by providing legal security for living and working in foreign countries. By understanding the advantages of the digital nomadic lifestyle, as well as the countries that offer it and the application process, remote workers can navigate the legal process with confidence. Although the journey may be complex, the rewards of obtaining a digital nomad visa are priceless. Therefore, if you are a remote worker dreaming of living and working in foreign countries, explore the possibilities that the digital nomadic lifestyle can offer. Lawyers with expertise in labor, tax, immigration law, and foreigner&#39;s law can provide valuable assistance in resolving any uncertainties and offering expert legal support to ensure quality and uninterrupted work and residence.

Navigation through the Legal Process: How a Digital Nomad Visa Can Empower Remote Workers

Amendments were adopted to the Law on Employment of Foreigners nd the Law on Foreigners, which introduced modifications and facilitated the procedure for foreign nationals seeking employment in Serbia. Below is a summary of key facilities that will reduce administrative burden and procedures for employers, allowing them to hire qualified workers from other countries more quickly and more efficiently.

Amendments were adopted to the Law on Employment of Foreigners nd the Law on Foreigners, which introduced modifications and facilitated the procedure for foreign nationals seeking employment in Serbia.

Below is a summary of key facilities that will reduce administrative burden and procedures for employers, allowing them to hire qualified workers from other countries more quickly and more efficiently.

One o the most significant changes beneficial for employers is introducing a single work and residence permit for foreign workers. This change has the potential to significantly simplify the administrative processes for employers wishing to hire foreign workers. Instead of facing two separate procedures to obtain residence permits and work permits, employers can now use a single integrated application process. This will speed up the process and eliminate unnecessary bureaucratic steps.

Furthermore, the Ministry of the Interior must pass a decision on a residence and work permit within just 15 days of application. Such swift processing will help reduce waiting times and enable employers to plan the employment process more quickly and effectively.

The new rules also bring changes to the conditions for the obtaining of work permits. Specific categories of foreigners, such as those coming for studies, scientific research, international student exchange or family reunion, will no longer be required to obtain special work permits to be able to work in Serbia. This is particularly important for employers who employ experts in these fields, as the procedure will be simplified and faster.

The extension of temporary residence permits to three years instead of one year, as is currently the case, will mean less administrative burden for employers and foreign workers. It will also ensure greater stability and predictability for employers who employ foreign workers for more extended periods.

The digitalization of processes, including the possibility to file applications online and access administrative services via an online portal, will further facilitate managing employment procedures and permit administration for employers. In addition, biometric documents will replace traditional permits and stickers, improving safety and reducing the risk of document loss or abuse.

Novely Arrangements under the Law on Foreigners: Facilities and Changes regarding Working and Staying in Serbia

In recent years, Serbia has witnessed a significant increase in immigration, with people from various countries coming to live and work in Serbia. To ensure a legal stay in Serbia, foreigners must go through a process that involves obtaining specific documentation and submitting applications to the relevant authorities. This comprehensive guide will provide valuable information on the different types of stays in Serbia, including short-term stays, temporary residence permits, and permanent residency.

In recent years, Serbia has witnessed a significant increase in immigration, with people from various countries coming to live and work in Serbia.

Residence permit in Serbia

A short-term stay in Serbia refers to a visit lasting up to 90 days, either with or without a visa. For this type of stay, foreigners do not require special approval from the Ministry of Internal Affairs (MUP), which is responsible for matters related to foreigners' stay in Serbia. However, regardless of the need for approval, it is mandatory for foreigners to register their stay with the competent police station within 24 hours of arrival if foreigner provides own accommodation. On the other hand, entrepreneurs and legal entities that provide accommodation services with or without compensation are obliged to register foreigner within 24 hours from the moment the accommodation service is provided. So here it is very important to understand that it is not the responsibility of foreigners to report themselves to the competent police station, but that obligation is the responsibility of the owner of the accommodation.

Where and how foreigner can register short-term stay?

A foreigner's stay is reported at the police station responsible for the territory where the apartment/hotel or some other type of accommodation is located. When registering your residence, you need to fill out a form that you can get at the police department. In it, it is necessary to specify data related to the identity of the foreigner and the time of entry of the foreigner to the territory of the Republic of Serbia, as well as information related to the owner of the accommodation.

A person registering a foreign national’s short-term residence address shall provide the following listed below to a police officer for inspection purposes:

a foreign travel document or other document held by a foreign national and

other documents depending on who registers a short-term residence address, i.e.:

proof of real estate ownership in which a foreign national resides on a short-term basis

extract on the Serbian Business Registers Agency (in Serbian abbrev. APR)

a foreign national’s short-term residence address;

b) a natural person, if a foreign national resides at his/her residential address:

identity card of a person visited by a foreign national;

c) a natural person, if a foreign national resides  at an address different to the residence address of the person registering a foreign national's short-term residence:

identity card of a person visited by a foreign national

proof of legal grounds for the use of the real estate in which a foreign national resides on a short-term basis (real estate purchase agreement, flat tenancy agreement, etc.);

A foreign national, who neither uses accommodation services nor resides at a private address of either a natural or legal person, shall register his/her short-term residence address by submitting the following documentation below for inspection purposes:

a foreign travel document or another document held by a foreign national

proof of legal grounds for the use of the real estate in which he/she resides on a short-term basis (real estate purchase agreement, flat tenancy agreement, etc.) or other proof of residence in a certain place.

A temporary residence permit allows foreigners to stay in Serbia for a period longer than 90 days, up to three years, with the possibility of extension. To obtain a temporary residence permit, foreigners must submit an application, either in person to the Police Directorate for the City of Belgrade-Directorate for Foreign Nationals or regional Police directorates оr by e-Government portal, along with supporting documents. These documents include, a valid personal or official passport, proof of sufficient funds, registration of either short-term or residential address in the Republic of Serbia, evidence of health insurance coverage, proof of prescribed administrative fee payment and justification for the purpose of stay, such as employment, education, scientific research, family reunification, and more. The request for an extension of the temporary residence permit must be submitted to the competent authority no earlier than three months and no later than 30 days prior to expiry of an approved temporary residence permit. A foreign national shall reside in the Republic of Serbia in accordance with the purpose for which his/her temporary residence has been approved.

 proof of sufficient funds during the planned stay (A foreigner fulfills this requirement if they provide evidence of a minimum monetary amount in their non-resident account in Serbia. This amount entails the official minimum wage in Serbia for each month of stay, multiplied by the number of months of the planned stay)

registration of either short-term or residential address in the Republic of Serbia

proof of health insurance coverage (A foreigner is required to provide proof of private health insurance or health insurance from their country of origin, provided that this insurance can be applied in Serbia based on a bilateral agreement or government decision. There is one additional option available for foreigners: instead of the documents mentioned above, a foreigner can provide evidence of a sufficient amount of funds to cover potential medical expenses in the Republic of Serbia during their stay)

proof of prescribed administrative fee payment

justification for the purpose of stay, such as employment, education, scientific research, family reunification, etc.

The request for an extension of the temporary residence permit must be submitted to the competent authority no earlier than three months and no later than 30 days prior to expiry of an approved temporary residence permit. A foreign national shall reside in the Republic of Serbia in accordance with the purpose for which his/her temporary residence has been approved.

Permanent residency in Serbia can be granted by the Ministry of foreign affairs under certain conditions. These conditions include having resided in Serbia for more than five years based on a temporary residence permit, being married to a Serbian citizen or a foreigner with permanent residency for at least three years, being a minor on a temporary residence permit with one parent being a Serbian citizen or having permanent residency with the consent of the other parent, being of Serbian origin, or when granting permanent residency is deemed humanitarian or in the interest of Serbia.

As Serbia continues to attract people from all over the world, it's essential to understand the various types of residence available and the appropriate procedures for legal settlement. Whether you are planning a short-term visit, seeking temporary residence, or aiming for permanent residency with the professional legal support of our law firm, the process becomes easier. Our team specializes in providing the necessary services for immigration, employment, and stay of foreign nationals in Serbia. Whether you need guidance, assistance in filing applications, or help in gathering the required documentation, our law firm is here to support you every step of the way."

Digital assets have become an inevitable part of modern business, and investment in this type of property is a trend that is increasingly expanding in the business world. In Serbia, the legal framework that regulates digital assets is defined by the Law on Digital Assets ("Official Gazette of RS", no. 153/2020).

Digital assets have become an inevitable part of modern business, and investment in this type of property is a trend that is increasingly expanding in the business world.

In the fall of 2020, the Draft Law on Digital Assets was presented, which was adopted on December 29, 2020, in the National Assembly and became applicable from June 29, 2021. It is commendable to note that Serbia is among the first countries to regulate this area, which represents an important step in adapting our legal system to new technological and economic trends.

According to the law, digital assets are defined as "a digital record of value that can be digitally bought, sold, exchanged, or transferred and can be used as a means of exchange or for investment purposes". This definition encompasses various types of digital assets, including virtual currencies and digital tokens. 

Virtual currency is digital property not issued by any public institution, not guaranteed by the central bank, and not recognized as legal tender. It lacks the legal status of money or currency, but physical and legal entities accept it as a medium of exchange, and it can be bought, sold, exchanged, and stored electronically. From this definition, it can be concluded that virtual currencies cannot be used as legal tender, as the only legal tender in Serbia is the dinar. 

Digital tokens are digital records that contain property rights, such as claims to a specific monetary amount or managerial rights. The issuer of a digital token may include certain rights or services in it, or the right of the digital token user to receive specific services. One of the essential reasons for dividing virtual currencies and digital tokens from a regulatory and supervisory perspective is that the National Bank of Serbia (hereinafter: NBS) is responsible for virtual currencies, while the Securities Commission (hereinafter: Commission) is responsible for digital tokens. Here we will list the secondary legislation issued by the Commission, which NBS and every physical or legal entity should consider when providing services related to digital assets.

Rulebook on whitepapers and subsequent whitepapers related to digital tokens;

Rulebook on preventing market abuses in the digital token market;

Rulebook on advertising an initial offer of digital tokens without an approved whitepaper and advertising related to digital tokens without an approved subsequent whitepaper;

Rulebook on the conditions for managing the information and communication system of providers of services related to digital tokens;

Rulebook on the conditions and manner of determining and verifying the identity of a natural person using electronic means of communication;

Rulebook on the content and form of records kept by providers of services related to digital tokens holding users&#39; funds or digital tokens;

Rulebook on the method of calculating minimum capital and reporting on minimum capital of providers of services related to digital tokens;

Rulebook on detailed conditions and procedures for granting and revoking consent for the provision of services related to digital tokens in a foreign country;

Rulebook on implementing the provisions of the Law on Digital Assets related to granting permission for providing services related to digital tokens and the consent of the Securities Commission. 

Decision on implementing the provisions of the Law on Digital Assets related to granting permission for providing services related to virtual currencies and the consent of the National Bank of Serbia;

Decision on the method of calculating minimum capital and reporting on minimum capital of providers of services related to virtual currencies;

Decision on detailed conditions and procedures for supervising providers of services related to virtual currencies and issuers and holders of virtual currencies;

Decision on the content of the registry of providers of services related to virtual currencies and the detailed conditions and manner of keeping that registry;

Decision on detailed conditions and manner of keeping records of holders of virtual currencies;

Decision on the content and form of records kept by providers of services related to virtual currencies holding users&#39; funds or virtual currencies;

Decision on detailed conditions and procedures for granting and revoking consent for the provision of services related to virtual currencies in a foreign country;

Decision on the conditions for managing the information and communication system of providers of services related to virtual currencies;

Decision on conducting foreign currency payments in connection with transactions involving digital assets;

Decision on preventing market abuses in the virtual currency market;

Decision on implementing the provisions of the Law on Digital Assets related to approving a whitepaper for issuing virtual currencies.

In case a natural or legal person wishes to issue digital tokens, the request for approval of publishing a whitepaper should be sent to the Commission for approval. A whitepaper is a document similar to a prospectus in the issuance of securities, which the issuer is obliged to publish and which contains information about the issuer of digital assets, the digital assets themselves, and the risks involved. It allows investors to make a rational investment decision and assess the risks associated with investing in digital assets.

It is essential to note that all financial institutions supervised by NBS (banks, insurance companies, financial leasing companies, payment institutions, etc.) cannot hold digital assets or instruments related to digital assets. They are also prohibited from providing services related to digital assets or being users of such services.

2. Legislative Framework for Digital Assets

The Law on Digital Assets represents the first legal act in Serbia that recognizes and regulates the field of digital assets. Alongside this law, other tax laws have been amended to introduce digital assets into the Serbian legal system as a taxable category. Until 2020, digital assets were not regulated by any law, and they were not defined as a taxable category, which did not prevent the Tax Administration from treating digital assets as income not explicitly listed as taxable by the law, thus subjecting them to a tax rate of 20%.

3. Tax Treatment of Digital Assets for Individuals

The Law on Personal Income Tax (hereinafter: PIT Law) regulates the taxation of income for individuals obtained from the sale or transfer of digital assets. According to this law, individuals are required to calculate, report, and pay capital gains tax on the profit made from the sale of digital assets. The tax rate for capital gains for individuals is 15%. This is also the most common practice in countries like the United States, Australia, and the United Kingdom. This means that if taxpayers have a positive difference between the purchase and sale price of digital assets, they must pay a 15% tax on the realized difference. It is essential to note that in the case of a negative difference or capital loss, the taxpayer can offset it against future capital gains within a period of 5 years. According to the PIT Law, the purchase price of digital assets would be the amount documented by the taxpayer as actually paid to an authorized service provider related to digital assets, such as an exchange, while the selling price would be the price at which the individual made the sale. In the case of mining, the purchase price would be the cost incurred by the taxpayer in acquiring digital assets, which can be documented (e.g., electricity bill, purchased equipment, etc.).

A novelty in the law is that it allows for the payment of bonuses in digital assets to employees, which would then be part of their wages, and on which the employer would have to calculate and pay taxes and contributions. In this case, the purchase price for the employee would be the value on which the employer paid taxes and contributions. In such a case, the employee would be required to pay capital gains tax on the difference between the purchase price received from the employer and the price at which they would sell the digital asset to a third party.

Regarding the tax treatment of digital assets acquired through inheritance and gifts, the Law on Property Taxes (hereinafter: Property Tax Law) also applies, which provides for the taxation of digital assets acquired through inheritance and gifts. According to this law, if the testator and heir or donor and gift recipient are in the first line of inheritance (spouses and descendants), there is no tax obligation. If they are in the second line of inheritance (spouses and parents and their descendants) or any further line of inheritance or not related at all, the tax rate is 1.5%. Additionally, there is no gift tax on the value of digital assets up to 100,000 dinars from the same donor in a calendar year.

The PIT Law provides two tax incentives as significant encouragement for the development of the digital assets market in the Republic of Serbia. The first is tax exemption, where taxpayers who invest money obtained from the sale of digital assets within 90 days from the sale date in the basic capital of a company in Serbia or in the capital of an investment fund would be exempt from 50% of the capital gains tax. The second is also a tax exemption for taxpayers who have owned digital assets for at least 10 years, where they are entirely exempt from paying capital gains tax.

The deadline for submitting a tax return to determine capital gains tax is 120 days from the end of the quarter in which income from the sale of digital assets was realized. It is essential to note that capital gains income is not subject to mandatory social security contributions. Additionally, the profit made from the transfer of digital assets is not subject to annual personal income tax.

4. Tax Treatment of Digital Assets for Legal Entities

One of the most important laws concerning the taxation of digital assets for legal entities is the Law on Corporate Income Tax (hereinafter: CIT Law). According to this law, the profit of legal entities obtained from the sale or transfer of digital assets is subject to taxation, as it is for individuals, by capital gains tax. The main difference compared to the PIT Law, which regulates the taxation of capital gains for individuals, is that instead of being required to submit a tax return within 120 days, the determined difference, i.e., capital gain for legal entities, is included in the taxable profit, which will be paid through corporate income tax at the end of the calendar year. The purchase price is the amount that the taxpayer documents as actually paid, and if the property is acquired through mining, the purchase price will be the value of the digital asset recorded in the books of the taxpayer.

It is crucial to note that if a legal entity has permission to provide services related to digital assets and if a legal entity trades in digital assets as part of its core business activity, it is not required to pay capital gains tax.

In addition to capital gains tax, digital assets are also subject to Value Added Tax (VAT), but only in certain cases. Interpreting the Value Added Tax Law (hereinafter: VAT Law), the turnover of digital assets may be subject to VAT if it is not covered by the VAT exemption under Article 25, paragraph 1, item 1a) of the VAT Law, for example, if it involves the exchange of virtual currencies for other virtual currencies or digital tokens representing securities.

The VAT Law unambiguously stipulates a VAT exemption in the case of the transfer of virtual currencies and the exchange of virtual currencies for fiat currencies. However, it leaves open the possibility of calculating and paying VAT in the case of the turnover of digital tokens as securities. This creates a legal gap that the legislator or the Ministry of Finance needs to address to eliminate ambiguities and different interpretations.

As with the PIT Law for individuals, the CIT Law provides that capital gains made from the sale of digital assets will not be included in the tax base if the funds are invested within that tax period in the basic capital of a company or in the capital of an investment fund in the Republic of Serbia. This encourages companies to invest in other legal entities in the territory of the Republic of Serbia, which aims to strengthen competition and the growth of the digital assets market.

5. Legal Uncertainty and Future Development

Although the Law on Digital Assets represents a certain step in regulating the taxation of digital assets in Serbia, there is still legal uncertainty regarding certain aspects, such as the treatment of Non-Fungible Tokens (NFTs). The future development of this area may lead to further amendments to the law to adequately regulate the tax treatment of digital assets. 

Given the increasing popularity of digital assets and their significance in modern business, it is crucial that the tax system keeps pace with these changes and provides a clear and favourable tax treatment for digital assets. This will contribute to the development of the digital economy and Serbia's competitiveness in the global market.

Tax treatment of digital assets in Serbia