Bookkeeping in Serbia regulates the keeping of prescribed financial books and reports.. Bookkeeping in Serbia is governed by the legal regulations of the Republic of Serbia, but also by the regulations of the International Federation of Chartered Accountants (IFAC), which regulate the keeping of business books and the preparation and filing of financial reports. In addition to the above mentioned topics, the Accounting Regulations also prescribe the specific activities of a licensed accountant, namely filing tax returns, calculating income, issuing and receiving invoices in electronic form, preparing transfer pricing studies, but also numerous other supporting tasks companies in order to perform them in the best possible way.
Authorized accountant
Bookkeeping in Serbia is regulated by the Accounting Law which says that every accounting agency must employ a person with the title of Chartered Accountant. The title of Chartered Accountant is obtained by passing numerous examinations in the Association of Accountants and Auditors of Serbia or the Chamber of Chartered Accountants, i.e. member associations of the International Federation of Chartered Accountants IFAC. A certified accountant must be registered in Serbian Commercial Register.
The aim of certification of accountants for the Bookkeeping in Serbia is to enable significant reduction of tax evasion and suppression of gray economy, as well as better collection of tax revenues and great savings in data processing time. Therefore, in Serbia it is possible to submit annual financial reports with all additional elements only if it is signed by an externally appointed Authorized Accountant.
Annual Financial Statement Preparation
Annual financial statements of a company must be prepared and signed by a licensed accountant. Annual financial statements are a set of financial reports that, among other things, determine the profit from the company’s operations and the corresponding tax on the company’s profit. The deadline for filing a complete set of financial statements which is the most important part of bookkeeping in Serbia is the last day of March next year.
In addition to the regular final financial statement, a tax balance must be filed on the prescribed forms for corporate income tax. The deadline for filing the tax balance for corporate income tax is the last day in June next year. The reports are filed electronically only, using a qualified electronic signature by a certified accountant or legal representative. The specified deadlines for the sector of bookkeeping in Serbia is the deadline for the submitting the annual financial statements may differ. Namely, the fiscal year in Serbia follows the calendar year.
However, a legal entity registered in Serbia may submit a request to change the fiscal year in order to submit annual financial statements within the deadlines in which the foreign parent company does so.
VAT declaration in Serbia
The general VAT rate in Serbia is 20 percent and depending on the rate, Serbia belongs to the group of countries with lower tax rates in Europe. Currently, there are no announcements to increase the tax rate. Since the introduction of VAT in Serbia 20 years ago, there has been only one increase from 18 percent to the current 20 percent. If the annual turnover of the company does not exceed 8 million dinars, or about 70,000 euros, the company is not obliged to be registered in the VAT system. This can certainly be done voluntarily, even if the minimum turnover of 8 million dinars is not reached.
The tax return is filed on a monthly or quarterly basis as a regularly part of bookkeeping in Serbia. For all VAT payers with a turnover of less than 50 million dinars, i.e. a turnover of less than 430.000 euros per year, the company is obliged to file a VAT return quarterly, i.e. four times a year. Businesses with a turnover of more than 50 million dinars are required to file VAT returns monthly by the 15th of the month for the VAT paid in the previous month. All taxpayers filing VAT returns are required to file VAT returns monthly for the first two years after their registration in the VAT system.
Bookkeeping in Serbia – payroll
Employers are obliged to pay social contributions for their employees. Each employee has the possibility to electronically check the data on the paid contributions. Social contribution amounts are divided into two nearly equal groups, at the expense of the employee and at the expense of the employer. In addition to the contribution, the employer is obliged to pay income tax for the employee at the rate of 10 %. The employer can have internal or external bookkeeping in Serbia.
Cumulatively they amount to:
- pension insurance 24 %;
- health insurance 10,3 %;
- unemployment insurance 0,75 %.
Bookkeeping in Serbia – electronic invoicing
Electronic invoicing for the bookkeeping in Serbia is defined by the Law on Electronic Invoicing, which provides for the inclusion of the private sector in the system of mandatory issuance of electronic invoices as of January 2023. Only entrepreneurs who pay tax on a flat rate basis are exempt from this obligation. For them, participation in the electronic invoicing system is voluntary. All other business entities must register to receive and send electronic invoices.
This system is similar to such systems from other European countries. It consists of a central register of electronic invoices, to which all electronic invoices of all participants in the business chain are sent. Electronic invoicing was introduced with the intention of better controlling the collection of VAT and suppressing part of the gray economy.
Transfer Pricing in Serbia
The objective of the transfer pricing rules is to determine whether prices are formed in transactions between related parties as if they were not related parties in the specific case. The preparation of transfer prices is prescribed by the Law on Corporate Income Tax of Legal Entities and the Rule Book on Transfer Pricing. The above-mentioned regulations establish the obligation for legal entities to record transactions with related parties in a separate document and to apply one of the prescribed methods for these transactions.
For recorded transactions with related parties, the legal entity is obliged to apply one of the methods prescribed in the OECD rules:
- Comparable uncontrolled price (CUP) method;
- Resale price method;
- Cost plus method;
- Transactional net margin method (TNMM);
- Transactional profit split method.
Bookkeeping in Serbia – other services
Accounting may include various other services. In addition to the preparation of transfer pricing studies, one of the services that is often required for newly established companies is the assignment of an address at which a company will be registered. The above-mentioned service is most often used when establishing a company in Serbia, when the newly established company has not yet selected the premises where it will carry out its activities.
Another frequent service provided by the provider of the bookkeeping in Serbia is the liquidation of the company. Liquidation includes preparation of liquidation balance sheet, payment of all due liabilities to the Republic of Serbia, payment of invoices to suppliers and deletion of the company from the Commercial Register of Serbia. The accounting department also performs online payment services and provides assistance in setting up a business, preparation of an electronic certificate, obtaining work permits, tax advice, VAT refund etc.