The new Rulebook has been published in the Official Gazette of the Republic of Serbia No. 50/2019 dated 9 July 2019. This newsletter examines some of the key novelties that the Rulebook brings, such as:
The Rulebook entered into force on 20 July 2019 and will be applied for determination of CIT liability for FY 2019.
In accordance with the CIT Law, a taxpayer that invests in the share capital of a newly established company that performs innovative business activity (“the newly established company”) will be entitled to use a tax credit in the amount of 30% of the investment made, but under certain conditions which are set out in this Rulebook. The taxpayer is vested the right to use a tax credit 3 (three) years after the investment, but under the condition that it did not reduce its investment in a newly established company in such period.
In order to exercise its right, a taxpayer should submit the following documentation, along with the CIT return for the year of the investment:
- UID form – The statement on investment in innovative business activity; and
- UID 1 form – The statement on fulfilment of conditions by a newly established company that performs innovative business activity.
By submitting the UID form, a taxpayer confirms that the following conditions are met for obtaining a tax credit:
- that the investment was made in a newly established company that performs innovative business activity;
- that before the investment, a taxpayer, independently or with all related parties, did not own more than 25% shares, i.e. voting rights in a newly established company; and
- that investment was carried out by paying in share capital of a newly established company (as opposed to merely subscribing for share capital).
By submitting the UID 1 form (that has to be signed and stamped by the legal representative of the company in which investment was made), a taxpayer confirms that a newly established company complies with the conditions prescribed by the CIT Law. These conditions are related to the amount of annual revenue of a newly established company, center of business activity, dividend distribution etc.
After all conditions for obtaining tax credit are met, a taxpayer should submit UID 2 form – The statement on fulfilment of conditions by a newly established company that performs innovative business activity (that has to be signed and stamped by the legal representative of the company in which investment was made). By this form it is confirmed that a newly established company complies with the conditions related to level of R&D expenses, structure of employees and ownership over deposited copyrights.
Final amount of tax credit available for the reduction of the CIT liability is determined in the PK 5 form – Tax credit for investment in the share capital of newly established company that performs innovative business activity for period from ___ to ___ 20__.
All abovementioned forms should be submitted electronically.