Are consulting services provided by foreigners in Serbia taxed?

Domestic companies often hire consultants from abroad, which entails paying a certain fee for the services rendered. A problem can arise when a tax on rendering those services is not paid.

Tax adviser Marija Đorđić from the Experta agency says that is common in our tax system tax needs to be paid every time and everywhere where income is generated. For this reason, most business people are surprised at the mention of paying taxes when paying for services provided to them by a foreign person or company.

“If you have hired a foreign person to provide the services of a consultant, engineer, lawyer, auditor, translator, etc., you need to know that these services are eligible for tax. Depending on whether the service is provided by a legal entity or a natural person, different tax obligations may arise”, explains Đorđić.

She points out that taxation will primarily depend on the country of residence of the partner – the service provider, the type of service (whether the service can be considered to be provided or used on the territory of the Republic of Serbia) and the fact whether the foreign partner is a legal or natural person.

If the foreign partner is registered as a legal entity, it is possible that when paying for the service, the obligation to calculate and pay withholding tax at the rate of 20 percent appears.

“If the Republic of Serbia has signed an international agreement on the double taxation with the country where your partner is registered and has proper documentation (certificate of residency), you can be released from the obligation to pay this tax,” says Đorđić.

In the event that your partner is a natural person or a small business owner, the transaction between you is not subject to withholding tax, but may be subject to personal income tax, as well as contributions for mandatory social insurance. In each specific case, you should check whether the company that pays for the foreign service is obliged to calculate and pay taxes and contributions to the foreigner or not,” Đorđić concludes.

(, 12.09.2023)

This post is also available in: Italiano

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