Even though Serbia hasn’t signed many double tax treaties so far, the number of them has been growing every year because of the necessity of attracting foreign capital.
For example, in 2011, there were double tax treaties signed with: Albania, Austria, Azerbaijan, Belgium, Belarus, Bosnia and Herzegovina, Bulgaria, China, Croatia, Cyprus, Czech Republic, Korea, Denmark, Egypt, Estonia, Finland, France, Ghana, Germany, Greece, Hungary, Italy, Iran, India, Ireland, Kuwait, Latvia, Libya, Lithuania, Macedonia, Malaysia, Malta, Moldova, Netherlands, Norway, Pakistan, Poland, Qatar, Romania, Russia, Slovakia, Slovenia, Sri Lanka, Spain, Sweden, Switzerland, Turkey, Ukraine, united Kingdom, Zimbabwe.
Usually, the double tax treaties prevent the taxation of the incomes of a foreign company in the country of origin and in the country where it performs business. The avoidance is made trough exemption (when there is no tax paid in Serbia) or through credit (when the paid tax is deducted in the foreign country)
The double tax treaties signed by Serbia also provide smaller withholding taxes on dividends, interests and royalties for the companies with foreign capital. Usually the withholding tax on dividends, interests and royalties is 20% for local companies and the individuals are taxed with 10% for dividends and interests and 20% for royalties.
Smaller withholding taxes apply if the foreign investor owns a part of the company’s capital. For example, if the foreign investor owns 25% of a Serbian’s company’s capital and he/she is from Estonia, Greece, Austria, Ireland, Libya, Spain, Qatar or Malta, the withholding tax on dividends is 5%.
Usually a withholding tax of 10% is applied for the signatory countries, except for Belarus, taxed with 8% and Belgium and Egypt, taxed with 15%. The taxes can be exempt in special cases for Finland, France, Germany, the Netherlands, Norway and Sweden. The treaties with these countries were signed by the former Federal Republic of Yugoslavia.
The royalties are taxed with a rate between 0% and 10% for the treaty countries.
The capital gains are not taxed in the country of origin (the country which has signed a double tax treaty with Serbia), if some criteria are met. In general, the gains derived from the sale of real estate are taxed, but also the gains derived from the sale of shares with a majority of value derived from the real estate located in the country of origin.