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Double tax treaties with Norway and Kazakhstan pending ratification

10/11/2015

The double tax treaty with Kazakhstan and the new one with Norway are soon to be ratified in the Serbian Parliament, bringing new opportunities and better protection for residents of these two countries.

The Treaty with Kazakhstan

The treaty with Kazakhstan will introduce several reduced rates and exemptions, the most important ones being:

  • A 15% tax rate on dividends (10% rate for the holders of at least 25% of share capital);
  • A 10% tax rate on interest, royalties, management, consulting and technical services;
  • Tax exemption on capital gains realized from the sale of shares (if the shares derive less than 50% of their value from the real estate located in Serbia).

The New Treaty with Norway

The new treaty with Norway will replace the old one from 1983. Besides the wording that reflects the newer version of the OECD Model Convention eliminating numerous issues in the interpretation of the old treaty, the new treaty also introduces a few important changes:

  • The tax rate on dividends is reduced from 15% to 10% (5% for holders of at least 25% of share capital);
  • The treaty introduces a 10% tax rate on interest;
  • The tax rate for royalties on literary, artistic or scientific work, including cinematograph films and films or tapes used for radio or television broadcasting, is reduced from 10% to 5%;
  • Capital gains realized from the sale of shares which derive more than 50% of its value from real estate located in Serbia, may be taxed in Serbia;
  • Pensions, annuities and other similar payments, including payments in favour of the social security system, other than alimony payments, may be taxed at a 15% rate;
  • Introduction of special rules for taxation of profits and other income derived from or in relation to off-shore and related activities (exploring and exploiting of seabed and its natural resources, transporting supplies and personnel to such localities);
  • The deadline for initiation of the mutual agreement procedure is reduced from five to three years.

Authors

Picture of Nebojsa Pejin
Nebojša Pejin
Attorney-at-law
Belgrade