Transfer pricing in Serbia

Serbia has completed the reform of its transfer pricing legislation and has rather detailed rules in place for transfer pricing in Serbia.

Legal framework for application of tax rules on transfer pricing is given in following enacted documents:

  • Corporate Tax Law
  • Rulebooks enacted in accordance with Corporate Tax Law:
    • Rulebook on Transfer Pricing
    • Rulebook on list of jurisdictions with preferential tax system
    • Rulebook on tax return
    • Rulebook on “arm’s length interest rates”
    • And other legal acts
  • Income tax Law
  • Double taxation avoidance treaties
  • OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations 2010
  • Transfer pricing documentation for financial reports is mandatory. Content of this documentation is prescribed. Transfer pricing documentation needs to be filed to relevant tax office along with corporate income tax return each year for the previous year.

Transfer pricing rules are generally in line with the OECD approach and best international practice in this area, with certain local specifics:

  • Related parties criteria are broadly defined and include, among other, direct or indirect control or ownership of 25%, joint control and management, family relationships and residency in listed preferential tax jurisdictions.
  • All transactions with related parties are in scope of documentation. No materiality threshold is prescribed.
  • Transfer pricing rules apply to all types of related party transactions and to both, domestic and cross-border transactions.
  • The allowed methods are comparable uncontrolled prices, cost plus, resale minus, transactional net margin and profit split. In case none of these methods is applicable, the taxpayers are allowed to use any other method which would be deemed appropriate for specific transaction. None of the methods is considered preferred.
  • Transfer pricing documentation should encompass analysis of the business of the group and the individual entity, functional analysis, choice of method for testing the related party transactions, conclusion on whether the related party transactions are arm’s length and appendices.