The Ministry of finance and the Government of the Republic of Serbia accepted the economical measures in order to help the economy, affected by the consequences of the Coronavirus epidemic, during the emergency state. The Regulation of fiscal conveniences and direct giving to economical subjects in the private sector is also officially published.
The regulation on economical measures in order to help the economy determines:
- Fiscal conveniences and direct giving to the economical subjects in the private sector from the budget of the Republic of Serbia for help and moderation of the consequences during the COVID-19 epidemic
- The VAT treatment for the distribution of goods and services that will be without compensation, but only in case of medical purposes
- The payment of one-time money help to all adult citizens of the Republic of Serbia
The Regulation of fiscal conveniences and direct giving to economical subjects in the private sector and money help to the citizens in order to moderate the economical consequences of the COVID-19 epidemics is published 10.04.2020 in the ’Official Gazette of the Republic of Serbia’ under number 53-3119/2020.
1. Who can use fiscal benefits and direct giving?
The Regulation of measures during the emergency state contains the fiscal conveniences and direct giving that can be used by the companies in the private sector (the economical subject who are not users of the public funds). Those are:
- The companies in the private sector, if they didn’t reduce the number of employees for more than 10% in the period from 15.03. until the date of publishing of the Regulation 10.04.2020. (the employees who concluded the fixed-term contract with the employers before the 15.03., but in the period between 15.03.2020 and 10.04.2020 this contract expired are not included in this number),
- The conveniences can be used by the entrepreneurs, agricultural entrepreneurs and the flat-rate entrepreneurs, who registered the temporary stoppage of work earliest on 15.03.2020 (who put the company ’on hold’ earliest on the 15.03. and not before)
- The private sector, or legal entities if they are established and registered with the suitable authorities or organisations before the 15.03.2020 (if they became the VAT payers)
The economical subjects in the private sector are:
- The legal entities residents who are the same time the taxpayers of the income tax for legal entities
- The entrepreneurs residents of the Republic of Serbia (the entrepreneurs, the flat-rate entrepreneurs, the agricultural entrepreneurs and the other-persons entrepreneurs)
- The branches and the subsidiaries of foreign legal entities
In continuance, we will give you the details of fiscal conveniences. If you have certain dilemmas about the Regulation, HLB T&M Consulting accounting company can be cooperative and give necessary explanations.
2. What fiscal benefits for companies are related to?
The regulation for economical help contains fiscal conveniences for companies or economic subjects (legal entities, a subsidiary and a branch office of a foreign company) related to postponement of due payment of certain public revenues. Public revenues for which you can get postponement are due for payment in the period from 01.04.2020 to 30.06.2020 (for March, April and May 2020.), and exceptionally till July 31, 2020 for taxes and contributions for June 2020 (that are paid for June until the end of July 2020.
The fiscal conveniences of economical measures are related to
- Taxes and contributions on salaries and compensation of salaries (the income tax as well as contributions for mandatory social insurance) for March, April and May 2020. (or April, May and June 2020. for taxpayers who paid for March of this year) are postponed for 04.01.2021)
- Advanced payments for income taxes of legal entities for March, April and May 2020. until the submission of the final tax application of legal entities on income tax for 2020. It is also for the taxpayers with the business year that is different from the calendar year; for a tax period that starts or ends in 2020. for the advanced payments that are due for payment in 15.04., 15.05. and 15.06. 2020 (until the submission of the final tax application on the income tax for the legal entities for the suitable tax period).
3. How legal entities can use fiscal benefits?
To use these measures related to fiscal conveniences and direct giving legal entities must choose to use them. In that case, it is necessary to submit the Individual tax application of accounted taxes or the PPP-PD forms (for the accounting period, or the month for which they use fiscal conveniences and direct giving)
It is important to emphasize that the Tax application on revenues from work relation is submitted on one form and the Tax application on revenues outside the work relation on the other. This is important for employers who pay the salaries on more than one basis. This practically means that complete revenues aren’t shown on the same form and that revenues from work relation and revenues outside the work relation are separated.
The employers that choose to use the conveniences don’t submit the additional application, but they only enter the date 04.01.2021 in the field ’the date of payment’. All the other things are the same; it is necessary to fill the tax application and account for the income. It is recommended that this job about accounting salaries, taxes and contributions is entrusted to the experienced accounting agency that will do it correctly and submit the electronic tax application.
What is important for everybody (employees) is the fact that the contributions are considered as paid (for those that are postponed). Based on that, the rights they can use are:
- Pension and disability insurance,
- Health insurance,
- The rights in case of unemployment,
- The rights on financial support for families with children.
3.1 Legal entities that don’t have the right on postponement of tax commitments
According to the accepted Regulation of economical measures and conveniences for economical subjects, there are legal entities that can’t use these rights. Next legal entities don’t have right on the postponement of legal obligations:
- Banks,
- Insurance and reinsurance companies,
- Companies for managing voluntary pension funds,
- The givers of financial leasing,
- Paying institutions and the institutions of electronic money.
4. The deadline for payment of postponed taxes and contributions
Legal entities have the right to postpone the payment of due contributions on 24 equal monthly installments without paying the interest. As we have mentioned before, the postponement can be used for:
- Tax and contributions on salaries and compensations in the amount of due postponed contributions,
- For the advanced tax payment on income of legal entities in the amount of the advanced payment whose due for payment is postponed, and most in the amount of complete commitment based on the income tax of legal entities for 2020., or taxpayers whose business year is different from calendar one in the amount of complete commitment for a tax period that starts or ends during 2020.
When it comes to the entrepreneurs, they can also postpone the payment of commitment and the payment without the interest, and divide the commitment for the tax payment on 24 monthly installments.
If your legal entity decides to use these fiscal conveniences and postponement on paying tax commitments, you should hire an experienced advisor and the accounting services that will fill in the tax applications correctly and account for all the taxes in the right way.
4.1 Fiscal benefits for the entrepreneurs
The Regulation on fiscal measures for help to the economy contains fiscal conveniences for the entrepreneurs that are related to the postponement of due tax commitments and their payment. Those who have the right to use these conveniences are:
- the entrepreneur, the agricultural entrepreneur and the other-person entrepreneur who with the self-taxation pays the taxes and contributions on income from the independent business, but who didn’t choose to pay personal salary,
- the entrepreneur and the agricultural entrepreneur who pays the tax and contributions on income from the independent business, but who chose to pay personal income,
- Flat-rate entrepreneurs
The entrepreneur, the agricultural entrepreneur and the other-person entrepreneur who pays the tax and contributions on income from the independent business by self-taxation, but who didn’t choose to pay the personal income has the right to postpone the due advanced payment for paying taxes and contributions on the income from the independent business, as well as postponement on payment of all these taxes for 04.01.2021. Also, they have the right to postpone the due on payment of tax commitments for salaries and contributions of all the employees. This payment can be divided into 24 equal monthly installments.
The entrepreneur and the agricultural entrepreneur who pays the tax and contributions on income from the independent business and who choose to pay the personal income has the right to postpone the due advanced payment for paying taxes and contributions on the income from the independent business as well as to postpone the payment. Additionally, if they pay personal income, they can postpone the due of commitment and paying taxes and contributions on salaries. If they have employees, they can also postpone the payment of tax commitments on their salaries. These commitments are also postponed for 04.01.2021 and payment can be divided into 24 equal monthly installments.
The flat-rate entrepreneurs or the flat-rate tax entrepreneur can also postpone the due tax commitments as well as their payment. In that case, they can also postpone the advanced payment on income tax and contributions from their independent business for March, April and May 2020. Same as in the previous cases, the due is postponed for 04.01.2021 and the payment of commitments can be divided into 24 equal monthly installments (no interest paid).
In order to use these measures, it is necessary to chose them in the same way as the legal entities. It is necessary to correctly fill in and submit the Individual tax application and enter the correct date od payment (04.01.2021).
If you need an experienced and reliable partner for accounting services HLB T&M Consulting accounting company can answer all your demands.
4.2 Direct incentives to the companies in the private sector
Direct giving to the economical subject from the private sector are related to payment of irretrievable money funds from the budget of the Republic of Serbia. It is the amount of three minimal net salaries, that could be used by the employees.
The right on payment of irretrievable money funds for the employees have:
- The entrepreneur
- The flat-rate entrepreneur,
- The agricultural entrepreneur,
- The other-person entrepreneur,
- The legal entities divided into micro, small and medium enterprises.
According to the accepted regulation on measures during the emergency state, the irretrievable funds for the employees will be paid in May, June and July 2020. The correct the amount that will be transferred to companies on their separate accounts in this way:
- May 2020 – the transferred amount is the product of the basic minimal net salary for March 2020 and the number of employees with full working hours (for who the PPP-PD form for March is submitted)
- June 2020 – the amount is calculated in the same way (the product of number of employees with the full working hours for who the PPP-PD form for April is submitted and the minimal net salary for March 2020).
- July 2020 – the amount is calculated in the same way (the product of number of employees with the full working hours for who the PPP-PD form for May is submitted and the minimal net salary for March 2020).
When it comes to the entrepreneurs – the entrepreneur, the flat-rate entrepreneur, the agricultural entrepreneur and the other-person entrepreneur, the total number of employees in accounting is increased for one. That is not the case only if the entrepreneur at the same time has the status of employee or if he is a pensioner.
When it comes to part-time employees, the employers can have the right for them to use the postponement of due tax commitments and their payment. The total number of employees will be increased by the number of part-time employees. For each of those employees, the total number of employees will be increased proportionally to the arranged percentage of their hiring compared to full-time work. This will be determined according to the data submitted in the PPP-PD form.
If you need any assistance in payroll services and tax optimization, the accounting firm from Belgrade, HLB T&M Consulting can help you with filling the tax application as well with the accounting taxes and contributions.
4.3 Direct giving related to the large legal entities
The legal entities, who are according to the Accounting law, considered as large legal entities can also have right on payment of irretrievable money funds for the employees. The measures meant to help the economy and the large legal entities are related to the amount of irretrievable money funds for the employees in the amount of 50% net minimal salaries for March.
Additionally, the irretrievable money funds can be paid for these employees:
- For full-time workers for who termination decision is brought starting from 15.03.2020 and for who the employer submitted the appropriate form,
- For full-time workers who got their leaver forms starting from the 15.03.2020. based on the decision of the authorities in relation with the COVID-19 and for who the employer submitted the appropriate form,
The number of employees will be increased for the number of part-time workers who received their leaver forms. The increase is fulfilled proportionally to the percentage of engagement of part-time workers.
The irretrievable money funds will be paid in May, June and July 2020. The amount that will be paid every month is equal to the product of number of employees in the month for which the tax application PPP-PD (April, May and June) is submitted and the 50% of basic minimal salary for March 2020.
The large legal entities that don’t have right on irretrievable money funds are:
- Banks,
- Insurance and reinsurance companies,
- Companies for managing voluntary pension funds,
- The givers of financial leasing,
- Paying institutions and the institutions of electronic money.
To receive the irretrievable money funds, the large legal entities must deliver the list of all persons from the account. The list is submitted before the 20th every month to the adequate organisational unit of Tax administration and the authorized organisational unit of the Treasury administration.
5. Accepting the measures and losing the rights on them
The companies from the private sector accept the use of fiscal conveniences and direct giving when they submit the PPP-PD form with 04.01.2021 as the date of payment. They can use the conveniences in this way
- For all three months, if they submit the form until the end of April 2020,
- For two months, if they submit the form until the end of May 2020,
- For one month if they submit the form for the first time before the end of June 2020.
The companies from the private sector that not submit this form, that don’t have employees and are not considered as the entrepreneurs and the agricultural entrepreneurs who chose to pay personal salary, will use fiscal conveniences and giving according to the acts of the Regulation.
The employers can lose their rights on using the fiscal conveniences and giving in case that they in the period from March 15 till the end of the three-month deadline from the last payment of direct giving decrease the number of employees for more than 10%. Those employees who concluded their fixed-term contracts before 15.03 for the period that ends from 15.03. until the end of the deadline of three months from the last payment of direct giving.
Meeting conditions for losing the right on the help will be checked every last day of the month starting from April 2020 and in conclusion with October 31st 2020.
The companies that lose their right to use the conveniences will be obliged to:
- Pay all the contributions for which the postponement is accepted together with the interest,
- Make the return of direct giving with the interest
5.1 The payment of direct giving to companies from the private sector
The payment of direct giving will be done from the specific purpose account opened for this purpose with the Ministry of Finance – Treasury administration. This account will be opened based on the electronically submitted data to the Tax administration.
The direct giving is paid from the specific purpose account – The payment od direct giving COVID 19. This is a specific purpose account opened in the same bank where this company has a regular account or the entrepreneur or the legal entity bank. Also, the companies are obliged to submit the data about their business bank to the Tax administration at the latest until 25.04.2020. so that they can open the specific purpose account in the same bank. The data is sent through the electronic services of the Tax administration. The specific purpose account must be opened at latest until 30.04.2020
5.2 The veto on paying dividends
The companies from the private sector, that have the right to use these measures and chose to use fiscal conveniences and direct giving can’t pay the dividends. If they use the conveniences from the Regulation, they can’t pay the dividends until the end of 2020.
If they pay dividends and act opposite from the Regulation, they lose their right on using the conveniences and giving. The veto on paying dividends is not related to paying dividends in stocks and the percentage of dividend payers.
5.3 Penalties
In the end, we will mention that the penalties are harsh if these funds are not used in the right way, if companies lose their rights on direct giving or if they lose their right on postponement on income payment. The penalties are:
- The company that doesn’t use these funds in the right way or loses its rights on direct giving and doesn’t return this amount together with the interest, can be punished for this with the monetary penalty in the amount of 30%-70% received direct giving; in terms of money, it can’t be less than 500 000,00 RSD for the legal entity and 100 000,00 RSD for the entrepreneur,
- If the company doesn’t use the funds in the right way or if he loses the right of postponement on paying income and doesn’t pay the total amount together with the complete interest until the control day, will be punished with the monetary penalty in the amount of 20%-50% of postponed public income; in terms of money, it can’t be less than 250 000, 00 RSD for the legal entity and 50 000,00 RSD for the entrepreneur.
Accounting firm from Belgrade, HLB T&M Consulting, supports clients with wide spectre of financial services that includes company registration in Serbia, accounting services, payroll services, financial reporting and tax consultancy.Feel free to send us your questions and you can expect the answer from our accountants in the shortest possible deadline.
