In July 2019, the National Assembly of the Republic of Serbia adopted a law by which it ratified the Convention on Mutual Assistance in Tax Matters (“Convention”). By joining the Convention, Serbia is becoming actively involved in international efforts in preventing a tax evasion.

The Convention regulates assistance between the parties to the convention (link) in procedures for determining and recovering taxes. Such administrative assistance consists of:

  • exchange of information, including simultaneous tax examinations and participation in tax examinations abroad;
  • assistance in recovery, including measures of conservancy, and
  • service of documents.

The main goal of the Convention is to facilitate a proper determination of tax obligations and help the taxpayer to realize its rights through international cooperation. The Convention finds a co-ordinated effort between states necessary to foster all forms of administrative assistance in tax matters.

Serbia has limited the application of the Convention to individual income tax and corporate profit tax. In that regard, Serbia has reserved the right not to provide any form of assistance to other parties with respect to other categories of taxes listed in the Convention.

Mutual assistance of the parties to the Convention includes:

  • exchange of information on request – at the request of the applicant state, the requested state shall provide the applicant state with any information significant for the administration or enforcement of internal laws related to the taxes covered by the Convention;
  • automatic exchange of information – two or more parties shall automatically exchange the information regarding categories of subjects and in accordance with the procedures mutually agreed upon;
  • spontaneous exchange of information – party shall, without prior request, forward to another party information of which it has knowledge in the respective circumstances;
  • simultaneous tax examinations – an arrangement between two or more parties to examine simultaneously, each in its own territory, the tax affairs of a person or persons in which they have a common or related interest, with a view to exchanging any relevant information which they so obtain;
  • tax examinations abroad – at the request of the competent authority of the applicant state, the competent authority of the requested state may allow representatives of the competent authority of the applicant state to be present at the appropriate part of a tax examination in the requested state;
  • recovery of tax claims – at the request of the applicant state, the requested state shall in accordance with the Convention, take the necessary steps to recover tax claims of the applicant state as if they were its own tax claims;
  • service of documents – at the request of the applicant state, the requested state shall provide the recipient with documents, including those relating to judicial decisions, which emanate from the applicant state and is related to a tax covered by the Convention.

With regard to tax examinations abroad, Serbia has in general reserved the right not to accept, as the requested state, requests from other parties’ authorities for representatives of competent authorities of the applicant state to be present at the appropriate part of a tax examination in Serbia as the requested state.

Regarding the spontaneous exchange of information and exchange of information on request, Serbia has declared that, in accordance with its internal legislature, its authorities may inform its resident or national prior sending notifications related to him/her to other parties in accordance with the Convention.

Key takeaway

By joining the Convention, the conditions for improving administrative assistance in tax matters between Serbia and other countries have been established. It can be expected that international cooperation involving Serbian tax authorities will now be significantly improved.

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