Serbia

  1. In your jurisdiction, what are the legal bases for eliminating double taxation further to a transfer pricing reassessment (European Arbitration Convention, mutual agreement procedures provided for by tax treaties)? In addition to the procedures set forth by such tax treaties, is there any other (formal or informal) domestic procedure in your jurisdiction?
  2. In addition – as the case may be – to the European Arbitration Convention, did your jurisdiction sign tax treaties with other States including an arbitration procedure? If yes, can you give the list of such States?
  3. In your experience, in your jurisdiction, how long does it take generally to eliminate the double taxation under the European Arbitration Convention and/or mutual agreement procedures set forth by tax treaties (and/or the domestic procedure if it exists)?
  4. In your jurisdiction, what are the starting point and time limit to initiate a procedure to eliminate double taxation resulting from a transfer pricing reassessment?
  5. If a reassessment is issued by your tax authorities, which State must receive the application for the international procedure to eliminate double taxation 1 The terms "international procedure to eliminate double taxation" mean the European Arbitration Convention or a mutual agreement procedure set forth by a tax treaty.  (your State? the other State concerned? both States?)
  6. What are the formal conditions to initiate an international procedure to eliminate double taxation? Is there a list of documents to provide? To which department of the tax authorities (name, address) must the request be sent?
  7. In which cases would the competent authority of your jurisdiction refuse to engage/participate to the international procedure to eliminate double taxation?
  8. Is tax collection suspended during the procedure?
  9. Assuming the procedure results in an agreement on a way to cancel double taxation, how is generally such agreement implemented in your jurisdiction?
  10. In your jurisdiction, is it possible to engage concomitantly an international procedure to eliminate double taxation and litigation in front of courts? If yes, is it necessary at some stage to abandon the litigation in order to conclude/finalize the international procedure?
  11. Any other interesting aspect not addressed above?

Legal bases for eliminating double taxation in Serbia are mutual agreement procedures provided by double tax treaties (hereinafter “MAP”) and administrative procedures in accordance with the domestic law.

By contrast, Serbia does not apply the European Arbitration Convention. Furthermore, the double tax treaty signed with Malaysia is the only treaty that does not provide for MAP.

2. In addition – as the case may be – to the European Arbitration Convention, did your jurisdiction sign tax treaties with other States including an arbitration procedure? If yes, can you give the list of such States?

Serbia does not have an arbitration clause in any of its double tax treaties.

3. In your experience, in your jurisdiction, how long does it take generally to eliminate the double taxation under the European Arbitration Convention and/or mutual agreement procedures set forth by tax treaties (and/or the domestic procedure if it exists)?

The length of MAP depends on many factors such as complexity of the case, availability of documentation, standpoints of the tax authorities, etc. In practice, it usually takes a few months to eliminate the double taxation via MAP.

4. In your jurisdiction, what are the starting point and time limit to initiate a procedure to eliminate double taxation resulting from a transfer pricing reassessment?

The starting point for calculation of the time limit for initiating a MAP is the notification of a reassessment.

The time limit for initiating a MAP is five years in the framework of the double tax treaties signed with the Netherlands and Norway), two years (in the framework of the double tax treaties signed with Italy and Indonesia), no time limit (in the framework of the double tax treaties signed with the UK, France and Sweden), while for all other countries which have a double tax treaty with Serbia the time limit is three years.

Still, even for countries without a time limit provided for by the double tax treaty, the statute of limitation provided for by domestic law would generally apply (five years, starting from the beginning of the year following the year in which the reassessment was done).

Pursuant to the provisions of the tax treaties, an agreement on a way to cancel double taxation is applicable regardless of any time limitations imposed by the domestic law. By way of exception, such a provision is not specified in the double tax treaties signed with the UK, France, Italy, the Netherlands, Belgium, Sweden, Slovakia, Indonesia and Montenegro. As a result, time limitations could apply in that framework.

It is advisable to initiate the MAP after the discussion with the tax authorities, but prior to the issuance of the tax bill.

5. If a reassessment is issued by your tax authorities, which State must receive the application for the international procedure to eliminate double taxation 1 The terms "international procedure to eliminate double taxation" mean the European Arbitration Convention or a mutual agreement procedure set forth by a tax treaty.  (your State? the other State concerned? both States?)

The State of the other taxpayer’s residence must first receive the application. The State which received the application will then notify it to the competent authority in Serbia and initiate MAP.

6. What are the formal conditions to initiate an international procedure to eliminate double taxation? Is there a list of documents to provide? To which department of the tax authorities (name, address) must the request be sent?

Formal conditions for initiating MAP are the following:

  1. MAP is initiated by the competent authority of the other State should the reassessment be performed abroad or in Serbia; 
  2. taxpayer seeking protection under the double tax treaty is a resident or citizen of the other State;
  3. time limit for initiating a MAP pursuant to a double tax treaty or statute of limitation pursuant to the domestic law has not expired.

There is no list of documents to provide for MAP purposes. In practice, the tax authorities require all the relevant documents to be submitted immediately.

The request is sent to the Serbian Ministry of Finance by the competent authority of the other State.

7. In which cases would the competent authority of your jurisdiction refuse to engage/participate to the international procedure to eliminate double taxation?

The Serbian Ministry of Finance may refuse to engage or participate in a MAP if the conditions provided for by the applicable double tax treaty are not met (time limit was exceeded, the person is not a resident or a citizen of the other State), the MAP was not initiated by the competent authority of the other State and if reassessment was due to tax evasion.

8. Is tax collection suspended during the procedure?

No, tax collection is generally not suspended during the procedure. However, the tax collection may be suspended upon the request from a taxpayer and subject to the discretionary approval of the tax authorities.

9. Assuming the procedure results in an agreement on a way to cancel double taxation, how is generally such agreement implemented in your jurisdiction?

The agreement is implemented via an official decision from the Serbian Tax Administration.

Correlative adjustments are generally performed in Serbia over the years reassessed in the other State. No interest is paid to the taxpayer.

Transfer pricing reassessment may trigger withholding tax as a secondary adjustment. However, certain DTTs concluded by Serbia have provisions which do not allow the application of a withholding.

10. In your jurisdiction, is it possible to engage concomitantly an international procedure to eliminate double taxation and litigation in front of courts? If yes, is it necessary at some stage to abandon the litigation in order to conclude/finalize the international procedure?

Yes, it is possible to engage concomitantly in a MAP and in a litigation in front of the Administrative Court. It is not necessary to abandon the litigation in order to conclude the international procedure, but the tax authorities may choose to suspend the international procedure until the decision from the Administrative Court.

11. Any other interesting aspect not addressed above?

The outbound reimbursement (e.g. from a Serbian to a French entity), reimbursing an adjustment in France by the French Tax Authorities could trigger additional withholding on this amount.