Entry into Force of the Protocol Amending the Double Taxation Agreement with Switzerland

The Protocol between the Government of the Republic of Serbia and the Swiss Federal Council amending the Agreement on the Avoidance of Double Taxation with respect to Taxes on Income and on Property entered into force on 18 July 2025, and its provisions will apply as of 1 January 2026.

One of the main amendments concerns the exchange of information – the Protocol now provides for the exchange of data relating to all categories of taxes, including information held by banks and other financial institutions.

The Protocol further clarifies rules on the allocation of profits between enterprises and related parties. It stipulates that adjustments to the profits of a permanent establishment may not be made after five years, except in cases of tax evasion or intentional non-compliance. In addition, the other contracting state is required to make a corresponding adjustment where the same profits have already been taxed in the first state.

A notable amendment relates to the taxation of capital gains. Serbia and Switzerland are now entitled to tax gains realised by a resident on the disposal of shares or interests in companies, where more than 50% of their value is derived, directly or indirectly, from immovable property situated in the other contracting state.

These changes are expected to provide greater legal certainty in tax planning for residents of both states, ensure alignment with international standards, and strengthen the capacity of tax authorities to address tax avoidance and treaty abuse.