The Government of the Republic of Serbia adopted on 10.04.2020. Regulation on Fiscal Benefits and Direct Benefits to Private Sector Companies to Mitigate the Economic Consequences of COVID-19. With this Regulation, which comes into force on the day of its publication in Sl. The Gazette of the Republic of Serbia shall be governed by:

  • fiscal benefits and direct payments from the budget of the Republic of Serbia to private sector entities in order to mitigate the economic consequences of COVID-19;
  • VAT treatment of turnover of goods and services without fee for medical purposes;
  • payment of one-off financial assistance to all adult citizens of the Republic of Serbia from the budget;
  • prohibition of dividend payment.

Business entities which have right on support

All business entities that are not covered by the List of users of public funds determined in accordance with the Rulebook on the list of users of public funds ("RS Official Gazette", No. 93/19), namely:

  • resident legal entities according to the Corporate Income Tax Law;
  • resident entrepreneurs (entrepreneurs, lump-sum entrepreneurs, entrepreneurs farmers and entrepreneurs of other persons, according to the Personal Income Tax Law); and
  • branches and representation offices of foreign legal entities.

The following large legal entities do not have the right to defer tax liabilities:

  • Banks;
  • Insurance and reinsurance companies;
  • Voluntary pension fund management companies;
  • Financial leasing providers and
  • Payment institutions and electronic money institutions.

Private entities in private sector may use the fiscal benefits and direct benefits provided by this Decree, under condition that starting from 15 March 2020 until the date of entry into force of this Decree they have not reduced the number of employees by more than 10%, excluding employees employed concluded a fixed-term employment contract with a private sector entity before March 15, 2020 for the period ending March 15, 2020, until the date this Decree enters into force.

Fiscal benefits and direct benefits may also be used by entrepreneurs, entrepreneurial farmers and lump-sum entrepreneurs who have registered temporary cessation of activity at the earliest on March 15, 2020.

Private sector entities may use the fiscal benefits and direct benefits under this decree if they were established and registered with the competent authority or organization before March 15, 2020, or if they became VAT taxpayers in mentioned period.

Fiscal benefits

Deferral of maturity for payment of certain public revenues maturing in the period from 1 April to 30 June 2020 in accordance with the relevant tax laws, and exceptionally until 31 July 2020 for taxes and mandatory social security contributions paid pay on salaries for the month of June 2020 paid in accordance with the regulations governing work, and delay their payment, as follows:

  • personal income tax on salaries and wages and mandatory social security contributions on salaries and wages, as well as taxes and contributions on personal salaries of entrepreneurs and entrepreneurs of farmers, for the month of March, April and May 2020, respectively at the choice of taxpayers for the months of April, May and June 2020 for those taxpayers who paid wages and salaries, as well as the personal salaries of entrepreneurs and farmers entrepreneurs for the month of March 2020, in part or in full, by the date this Decree enters into force;
  • advance tax on self-employment income for March, April and May 2020 for entrepreneurs and farmers entrepreneurs who have opted for personal salaries and entrepreneurs of other persons;
  • advance payment of taxes and contributions on self-employment income for March, April and May 2020 for entrepreneurs and entrepreneurs farmers who have not opted for payment of personal salaries, as well as advance payments of taxes and contributions on self-employment income for March, April and May 2020 for lump sum entrepreneurs;
  • corporate income tax advance payment for March, April, and May 2020, or for taxpayers with a business year other than the calendar year, corporate income tax advance payment due on April 15, May 15 and June 15, 2020. years.

Business entities - legal entities, including branches and representative offices of foreign legal entities, may be delayed for payment:

  • taxes and contributions on salaries and wages until 4 January 2021;
  • corporate tax advance payments for March, April, and May 2020 until the submission of the final corporate tax return for 2020, that is, for taxpayers with a business year different than the calendar year for the tax period beginning or ends in 2020, for income tax advance payments due on April 15, 2020, May 15, 2020, and June 15, 2020, until the submission of the final corporate income tax return for the relevant tax period.

A legal entity that chooses to use the fiscal benefits and direct benefits according to this Decree shall file an Individual Income Tax Return on calculated tax and contributions (PPP-PD Form) for employment income, in particular from the PPP-PD Form for out-of-work income, so one PPP-PD Form are not stated both employment and non-employment income.

Legal entity that chooses to use the fiscal benefits and direct benefits under this Decree in the PPP-PD Form for employment income for the accounting period - the month for which it uses the fiscal benefits and direct benefits under this Decree in field 1.4. - payment date, inserts the date 04 January 2021.

Contributions which payments are deferred in accordance with this Decree shall be considered as paid for the purpose of exercising entitlement to pension and disability insurance, health insurance, entitlement to unemployment and financial support to families with children.

A legal entity, except the legal entities which do not have the right to deferral of tax liabilities, has the right to defer payment of the tax due and contributions, or advance payment of corporate income tax, whose maturity for payment is deferred in accordance with this Decree, up to a maximum of 24 equal monthly installments without interest payments, as follows:

  • for taxes and contributions on salaries and wages in the amount of liabilities whose maturity is deferred; and
  • for corporate tax advance payments in the amount of corporate tax advance payments whose payment maturity is deferred, but mostly in the amount of the final corporate income tax liability for 2020, that is, for taxpayers with a business year different than the calendar year, in the amount of the final liability for the tax period beginning or ending in 2020.

Direct payments from the budget of business entities in the private sector

Payment of grants to undertakings in accordance with this Decree, which may be used solely for the payment of wages and salaries to employees.

An entrepreneur and entrepreneur farmer who pays tax income and contributions to self-employment income, who has not opted for payment of personal salaries, the right to defer maturity to pay advances on taxes and contributions to self-employment income, as well as defer payment of these obligations, applying the rules relating to the deferral of maturity for payment and the deferral of payment of corporate income tax advances.

The entrepreneur and the entrepreneur farmer shall postpone the maturity for payment of taxes and contributions on the wages and salaries of their employees, as well as the postponement of payment of these obligations by the appropriate application of the rules set out in the regulation concerning legal entities regarding the postponement of maturity for payment and deferral of payment of taxes and contributions on salaries and wages.

Entrepreneur and entrepreneurial farmer who pay self-tax income for self-employment income and have opted for payment of personal salaries, the right to defer the due date for advance for payment of self-employment income, as well as to defer payment of these obligations, shall be exercised by applying the rules of this Decree relating to deferral of maturity for payment and deferral of payment of corporate tax advance.

The entrepreneur and the entrepreneur farmer shall postpone the maturity for payment of taxes and contributions on their personal salaries, as well as on the wages and salaries of their employees and defer payment of these obligations, by applying the rules set out in the regulation relating to legal persons regarding the postponement of payment and by delaying payment of taxes and contributions on earnings and earnings.

Lump sum entrepreneurs are deferred due to pay their tax advance payments and contributions on self-employed income for March, April and May 2020 for January 4, 2021 and defer payment of these liabilities at 24 equal monthly installments, without interest payments , for the duration of the deferred tax payment.

A lump sum entrepreneur shall postpone the maturity for payment of taxes and contributions to the salaries and wages of his employees and defer payment of these obligations by appropriate application of the rules of this Decree relating to legal entities regarding the postponement of maturity for payment and deferral of payment of taxes and contributions on earnings and wages.

Entrepreneur, lump-sum entrepreneur, entrepreneur farmer, entrepreneur other person, legal entities classified as micro, small and medium in accordance with the law governing accounting, may be entitled to the payment of grants from the budget, as follows:

  • in May 2020, in the amount received as a product of the number of full-time employees for whom salaries and wages were filed, the PPP-PD Form for the accounting period March 2020 and the amount of basic minimum net earnings for March 2020;
  • in June 2020, in the amount received as a product of the number of full-time employees for whom salaries and wages were submitted Form PPP-PD for the accounting period April 2020 and the amount of basic minimum net earnings for March 2020;
  • in July 2020 in the amount obtained as a product of the number of full-time employees for whom salaries and wages were filed Form PPP-PD for the accounting period May 2020 and the amount of basic minimum net earnings for March 2020.

The number of employees of entrepreneurs, lump-sum entrepreneurs, farmers' entrepreneurs and entrepreneurs of another person is increased by 1 (one), unless the entrepreneur, lump-sum entrepreneur, farmer entrepreneur or other person has the status of an employee or pension beneficiary at the same time.

The number of employees is also increased by the number of part-time employees by increasing the total number of employees for each part-time employee in proportion to the agreed percentage of full-time employee engagement, which is determined on the basis of data from the PPP-PD Form for the relevant accounting period.

The number of employees is reduced by the number of employees for whom the payment of salaries, i.e. remuneration, for the accounting period is entirely borne by other payers, and whose payments have the type of income (OVP) from 204 to 211 in the tax return for deduction tax (RS Official Gazette, Nos. 74/13 ... and 96/19).

A legal entity classified as a large legal entity in accordance with the law governing accounting may use the right for a grant in the amount obtained as a product of 50% of the basic minimum net salaries for March 2020 and sum up the numbers:

  • full-time employees for whom a decision on termination of employment was issued from 15 March 2020 in accordance with Article 116 of the Labor Law (“RS Official Gazette”, Nos. 24/05, ... and 95 / 18) and for which the PPP-PD Form has been submitted by the employer - large legal entity
  • full-time employees for whom a decision on termination of employment was issued from 15 March  2020 in accordance with Article 117 of the Labor Law, pursuant to a decision of the competent state authority issued in connection with COVID-19 and for which the employer - a large legal entity has submitted a PPP-PD Form.

The number of employees is also increased by the number of part-time employees for whom a decision on terminate work was made, by increasing the total number of employees for each part-time employee in proportion to the agreed percentage of part-time employee engagement relative to full-time work time, which is determined based on PPP-PD data for the respective accounting period.

The non-repayable funds payable to:

  • in May 2020, in the amount of the product, 50% of the basic minimum net salary for March 2020 and the number of employees increased in accordance with paragraph 2 of this Article, for which wages were paid by the employer of a large legal entity, the PPP-PD Form for March 2020;
  • In June 2020, in the amount of the product, 50% of the basic minimum net salary for March 2020 and the number of employees increased in accordance with paragraph 2 of this Article, for whose remuneration the employer - large legal entity submitted the PPP-PD Form for April 2020;
  • in July 2020, in the amount of the product, 50% of the basic minimum net salary for March 2020 and the number of employees increased in accordance with paragraph 2 of this Article, for whose remuneration the employer - large legal entity submitted the PPP-PD Form for May 2020.

The large legal entity shall submit to the competent organizational unit of the Tax Administration and the competent organizational unit of the Treasury Department a paper list of persons for which that large legal entity is entitled to direct grant no later than the 20th of the month for the payment of grants made in the following month.

The list of persons shall be submitted on the form prescribed by the minister responsible for finance.

Large legal entities - banks, insurance and reinsurance companies, voluntary pension fund management companies, financial leasing providers, as well as payment institutions and electronic money institutions - do not have the right to pay grants.

Private-sector economic operators accept the use of fiscal benefits and direct benefits prescribed by this regulation by submitting a PPP-PD Form with a marked payment date of 4 January 2021.

Businesses may use the fiscal benefits and direct benefits provided for in this Decree:

  • for all three months if the PPP-PD Form is submitted by the end of April 2020;
  • two months if they first submit the PPP-PD Form by the end of May 2020 and
  • one month if they first submit the PPP-PD Form by the end of June 2020.

Private entities in private sector that do not submit PPP-PD Forms, i.e. who do not have employees and are not entrepreneurs, or entrepreneurs farmers who have opted for personal salary payments, use fiscal benefits and direct benefits in accordance with the provisions of this Decree.

The private entities in private sector lose the right to use the fiscal benefits and direct benefits provided for in this Decree if, during the period from 15 March 2020 until the expiry of the period of three months from the last payment of direct benefits reduce the number of employees by more than 10% employees who concluded a fixed-term employment contract with a private-sector entity before March 15, 2020 for the period ending March 15, 2020, until the expiration of a period of three months from the last payment of direct benefits.

The fulfillment of the conditions for loss of the right to use the fiscal benefits and direct benefits prescribed by this Decree shall be checked every last day of the month starting from April 2020, ending October 31, 2020, with the fulfillment of the conditions for the loss of the right to use the fiscal benefits. the benefits and direct benefits prescribed by this regulation may be controlled beyond 31 October 2020 within the time limits for the statute of limitations on the right to determine and collect taxes and incidental tax charges by the statutory law governing the tax procedure and tax administration.

Business entities that lose the right to use the fiscal benefits and direct benefits provided for in this Decree shall:

  • pay all liabilities for which they have been granted a deferred payment together with the interest accrued at the rate at which interest is payable for late payment of tax liabilities, calculated from the day on which the said obligations are due for payment in accordance with the laws governing payment of the corresponding obligation, not later than five days from the date of termination of the right to use fiscal benefits and direct benefits; and
  • repay direct payments with interest calculated at the rate at which interest is calculated for late payment of tax liabilities, starting from the day on which individual direct payments were paid to them, not later than five days after the day of termination of the right to use fiscal benefits and direct benefits .

The payment of direct payments to private sector entities that accept direct payments prescribed by this Decree shall be made from a special purpose account opened for this purpose with the Ministry of Finance - Treasury Directorate, on the basis of electronically submitted information from the Ministry of Finance - Tax Administration for payment by to business entities.

For the purpose of payment of direct payments to a business entity, a special purpose account is opened - payment of direct payments - COVID-19 with a bank which, at the moment of entry into force of this Decree, maintains a current account of that business entity.

Business entities that have current accounts opened with several banks at the moment of entry into force of this Decree shall submit, no later than April 25, 2020, through the electronic services of the Tax Administration, information on the name of the bank with which the special account will be opened.

The Tax Administration, through the Treasury Administration, submits to the National Bank of Serbia the data in electronic form, based on which the bank opens a separate account. The Bank is obliged to open this account within the deadline set by the National Bank of Serbia for the submission of this information, which may not be longer than seven days from the date when the data was provided to the Bank, and no later than April 30, 2020.

Opening a special account does not entitle to direct benefits but gains the right to disbursement of funds to that account based on direct benefits, provided the conditions prescribed by this regulation are fulfilled.

Persons whose signatures have been deposited for the purpose of disposing of funds from the current account referred to in this paragraph, or persons who, by virtue of another document, have the authority to dispose of funds in that current account have funds in separate account.

The Bank is obliged to submit to the National Bank of Serbia, in accordance with the decision of the National Bank of Serbia governing the more detailed conditions and the manner of keeping that register, when submitting data on the special account to the unique register of current and other legal and natural persons' accounts kept by the National Bank of Serbia, and information that it is a separate account opened for the payment of direct benefits in accordance with this Decree.

The provisions of the framework agreement governing the conditions for opening, maintaining and closing a current account and executing payment transactions from that account shall accordingly apply to the special account referred to in that paragraph.

Exceptionally, for the opening and maintenance of special accounts, as well as for the execution of payment transactions and the provision of other services in connection with these accounts, the Treasury and the Bank may not charge any fees or other costs. The National Bank of Serbia does not charge to the Treasury and the Bank the fees or other costs for the execution of payment transactions in connection with these accounts in payment systems of which it is an operator.

On a daily basis, the Treasury Directorate receives from the National Bank of Serbia data in electronic form on special accounts maintained in the Single Account Register.

Based on the data, the Treasury Directorate informs the competent ministry of the amount of funds needed for the payment of direct payments to economic entities, after which the competent ministry transfers funds to a special purpose account.

Upon transfer of funds from the competent ministry, the Treasury Department transfers funds to business entities in separate accounts.

The funds in the special account are exempt from compulsory payment in terms of regulations governing compulsory payment, except by order of the Tax Administration for execution of compulsory payment in order to settle the financial obligations of an economic entity in case of loss of the right to use fiscal benefits and direct benefits.

The Bank extinguishes a separate account due to the termination of the direct benefit program within the meaning of this Decree or the loss of the right to use the direct benefit, that is, if the account was opened and the business entity did not acquire the right to use the direct benefit, in accordance with the notice of the Tax Administration.

In the event that the business entity does not transfer funds from the special account to the current accounts of persons for whom direct benefits have been received in accordance with this Decree by the date of termination of that special account, the bank shall transfer the funds from that account to a separate account.

VAT treatment of turnover without compensation for health purposes

VAT is not calculated and paid for the sale of goods or services performed free of charge by the VAT taxpayer to the Ministry of Health, the Republican Health Insurance Fund or a health institution in the public domain, and the VAT payer is entitled to deduct the previous tax on the basis of that turnover.

The VAT exemption applies to all deliveries with a day of turnover in the period from the day of introduction to the day of ending the state of emergency in the Republic of Serbia.

For the sale of goods or services, the VAT taxpayer is obliged to keep special records, which contain information on:

1) the name, address and PIB of the person to whom the goods or services were traded;

2) the price of the cost, that is, the purchase price of the goods or services whose turnover was performed.

Payment of one-time financial assistance to all adult citizens of the Republic of Serbia

After the end of the state of emergency, all adult citizens of the Republic of Serbia are paid one-off financial assistance in the amount of 100 Euros in RSD equivalent.

The procedure, manner and conditions for payment of one-off financial assistance shall be further regulated by the Government.

Prohibition of dividend payment

Private sector entities that opt for fiscal benefits and direct budgetary contributions cannot pay dividends until the end of 2020.

In the event of payment of a dividend, private sector entities lose the right to use the benefits and are subject to the rules prescribed for the loss of the right to use the benefits.

The prohibition referred to in this Article shall not apply to the payment of dividends in shares or shares of the dividend payer.

Penalties

A private sector entity that gains the right to direct benefits even though it is not entitled under this Regulation, uses these funds unintentionally or loses the right to direct benefits and does not repay the amount of direct benefits received in full, together with the associated interest, until the control procedure is initiated, a fine of 30-70% of the direct payments received shall be punished for the misdemeanor, not less than RSD 500,000 for the legal entity, or RSD 100,000 for the entrepreneur.

The responsible person in the legal person will also be fined from RSD 50,000 to 100,000 for the offense.

Private Sector Undertakings that exercise the right to defer payment of public revenue even though they are not entitled to it under this Decree or lose the right to defer payment of income in accordance with Article 12 of this Decree and do not pay it in full together with the associated interest until initiation of the control procedure, will be fined in the amount of 20-50% of the amount of deferred public revenues, not less than RSD 250,000 for a legal entity, or RSD 50,000 for an entrepreneur.

The responsible person in the legal entity will also be fined between 25,000 and 50,000 dinars for the offense.

The classification of business entities for the purposes of applying this Decree is based on the financial statements for 2018, and the entities established during 2019 and 2020 are small legal entities.