Tax Residency in Serbia
1. Criteria for Determining Tax Residency in Serbia
According to Article 4 of the Serbian Personal Income Tax Law, an individual is considered a tax resident of Serbia if they meet any of the following criteria:
- They have a permanent residence in Serbia.
- They are present in Serbia for more than 183 days in a calendar year.
- They have their center of vital interests in Serbia.
The center of vital interests is determined based on factors such as family ties, economic interests, and social connections.
For legal entities, tax residency is determined based on their place of registration or management.
2. Impact of International Tax Treaties on Tax Residency Criteria
Serbia has entered into numerous tax treaties with other countries to avoid double taxation and promote cross-border trade and investment. These treaties may modify or provide exceptions to the standard criteria for tax residency as defined in domestic law.
For example, the Serbia-Austria tax treaty provides that an individual is considered a resident of Serbia if they have a permanent home in Serbia or if their habitual abode is in Serbia. The treaty also includes a tie-breaker rule for individuals who are considered residents of both Serbia and Austria under each country's domestic law.
The Serbia-Germany tax treaty provides that an individual is considered a resident of Serbia if they have a permanent home in Serbia or if their center of vital interests is in Serbia. The treaty also includes a tie-breaker rule for individuals who are considered residents of both Serbia and Germany under each country's domestic law.
These treaty-specific modifications aim to provide clarity and prevent double taxation by establishing clear rules for determining tax residency in cases involving cross-border activities. They reflect the mutual agreement between Serbia and the other country to facilitate tax compliance and enhance economic cooperation between the two countries.
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