Serbian President Vucic threatens to enforce its Citizen-Based-Taxation, using a method of credits and exemptions similar to USA’s tax regime.
The articles are translated below, describing a system similar to the US system. The article describes that the ability to tax extra-territorially exists according standing laws. It highlights the usage of “or” in their language mentioning a significant connection such as property or bank account back in the Serbian expat’s homeland.
Southern Europe (both in and outside of EU) is well known for having a large net loss of young workers due to economic migration to high-wage countries. Serbia has a long history of high education and skilled craftsman which are under high demand in high-wage countries. With a rich culture and strong Christian family ties, most Serbs have a strong connection to their families, church, and family properties in their homeland.
The exemption is proportionally lower than the US exemption, however the tax level appears lower. The details would be difficult to fully understand, as the Serbian system has a very high (50%?) employer-contribution social fee (that paid prior to the employee receiving his salary). The social fee appears to potentially be charged to expats. As salaries inside Serbia are very low (typical white-collar worker might have a salary under 500 Euros per month), it seems that most locally-employed persons have an income tax of about 10%. However, the salaries of an expat would be many times greater, and the credit amounts would become more complicated as the local Serbian tax rates raise above 10% at the level of the salaries of Europe or North America.
There is also talk of recent tax treaties which might allow this CBT (likely those conforming to the OECD modern model) and old tax treaties which might not allow it.
The reader could imagine many scenarios amongst the pressure of US, Éuropean, OECD or other global leaders. Will this idea meet similar resistance to that of Eritrea, or will it be welcomed as a trend-breaker? Will the idea be ignored by Serbian parliament? Will all countries begin taxing up their citizens to the US model?
Same as all countries, Serbia needs more and more money to support the state. Serbia especially has a huge burden of EU-model regulations which have been forced upon it as it is being enticed into the European Union. Those regulations are affordable for countries with the benefit of EU salary levels, but not affordable in this country with white-collar salaries typical at 300 Euros per month.
Serbia is controlled by the outside global forces (such as OECD) controlling the EU and North America. Although Washington always complains about Serbian relationships with Russia and China, President Vucic is a fully-approved (read: “installed”) patsy of the western and middle-eastern global cabal. Also note that Vucic has no political opposition to his personal power, nor does his party have any numerically-significant or culturally-significant opposition. If the global organizations want it to happen, and Vucic wants it to happen, then it certainly could happen. And the entire compliance mafia is well-established here, so there would be no shortage of overpriced accounting help to setup the taxation paperwork for him.
(With help from neoliberal regime-changers, Serbia had already entered itself into the global FATCA compliance mafia, as was described in a previous article. )
What will be interesting to watch is IF this goes through and what other countries might follow.
Worse to see is that the expectant Congress and the regime-elect are already ramping up talks of again using NATO military force in the region, primarily due to continuation of the rein of old US administration actors in the Washington regime-elect. Is it possible that the regime-elect could get a war re-started prior to the enaction of Serbian CBT? Would the new war delay the global CBT implementation?
Something deserving of further investigation is the time-limited extra-territorial taxation policies of Norway and other Scandinavian countries. Norway is said to have a 5 year taxation lock on its citizens and also to prohibit its citizens to move their tax residence during their retirement. The other Scandinavian countries have some similar policies brewing. As the field of taxpayers shrinks percentage-wise, these governments will likely be hungry for expat money.
Will the EU & Washington regimes welcome the beginning of a global CBT spiderweb or will they stop this and ensure that only US is able to tax outside its borders?
(Serbian President) VUCIC SAVES TAX FOR PAYMENTS OF GUEST WORKERS: At 1,000 euros, the state will take 400 euros! , December 2, 2020
The Association of Freelancers and Entrepreneurs of Serbia states on its website that, according to the valid Law on Personal Income Tax, Serbia can demand taxes and contributions for pension and health insurance not only from freelancers, but also from citizens who work and live abroad.
Namely, Article 7 of this Law prescribes that a taxpayer of personal income tax is a resident of the Republic of Serbia, for income earned on the territory of the Republic of Serbia and in another state. Namely, all citizens of Serbia who fall under the definition of a resident are obliged to pay taxes and contributions.
And the law says that a resident is a natural person who has a residence or center of business and life interests in the territory of the Republic of Serbia, or in the territory of Serbia, continuously or intermittently, stays 183 or more days in a 12-month period beginning or ending in the relevant tax years.
As the Association of Freelancers and Entrepreneurs of Serbia explains, the wording “or” means that it is enough to meet one of the above criteria, in order to be treated by law as a resident who must pay taxes and contributions. For example, if you moved to Germany ten years ago and worked there, but did not deregister your residence from Serbia. Or you went to work temporarily in a country of the European Union for 90 days, returned to Serbia, and then went to work again.
Regardless of the fact that you earned your salary abroad, Serbia obliges you to pay taxes and contributions for PIO and health fund.
According to the UFPS, the tax is 10% of the tax base, and the contribution for PIO and health fund is 25.5%, ie 10.3% of the total salary.
The tax base is obtained by deducting a monthly non-taxable amount from the salary. That amount amounted to 16,500 dinars (141 euros) during 2020, which means that you pay 10% of 1,000 – 141 = 859 euros, or 85.9 euros, on a salary of 1,000 euros for taxes. If you received that salary in 2019, your tax is higher because the monthly non-taxable amount was lower. Regardless of the non-taxable amount, you pay 25.5% of the salary to the Pension Fund, which amounts to 255 euros, and to the Health Fund 103 euros.
This calculation shows that Serbia in total could demand that you pay it 443.9 euros out of 1,000 that you earned outside of Serbia. In twelve months of working abroad, your debt to Serbia would rise to 5,326 euros! If you used a foreign currency account from a bank registered in Serbia to receive that salary, you are in the register that the Tax Administration received from those banks. In that case, you can be subject to the tax control that was announced in October.
If you have used a foreign currency account, Serbia may request information from foreign banks about the accounts of its residents. The intention of the state of Serbia is to collect taxes and contributions for several years back with interest, which amounts to just over 10% per year.
UFPS explains that if the tax on your salary was paid in another country, you can be exempted from the tax in Serbia, and there are two conditions for that. The first is that Serbia has an agreement with that country on avoiding double taxation, and the second is that you have proof that the tax for your salary has already been paid abroad.
For example, if your employer paid 50 euros in taxes in another country, and Serbia demands 85.9 euros from you, then you pay the difference (35.9 euros) to Serbia.
“There is no mention of exemption from contributions in the law on contributions and the law on taxes. So, the fact that you paid your pension insurance to a foreign fund does not necessarily release you from your obligations towards Serbia. You may still be required to pay a contribution to the Pension and Disability Insurance Fund of Serbia. As a tax resident, wherever you are and wherever you work, Serbia can demand contributions from you. You would have to pay a total of 35.8% of every salary to Serbia in that name. You don’t have to pay taxes only if a higher tax was paid abroad than it would be in Serbia, but you have to contribute “, states the UFPS.
Do guest workers have to pay taxes: The official explanation of the Ministry of Finance has arrived
Residents of Serbia, whether they earn in the country or abroad, pay taxes at home, according to the Ministry of Finance.
Source: News Friday, Dec 4, 2020 | 10:05
They do not have to pay contributions
Guest workers who pay social security contributions, which are pension, health and unemployment, are amnestied by the laws governing this area.
“Citizens of Serbia employed abroad with a foreign employer are not insured for compulsory social insurance on the basis of earnings from that foreign employer. For persons who are not insured according to domestic regulations, there is no obligation to calculate and pay contributions for compulsory social insurance. citizens employed by foreign employers abroad are not obliged to pay contributions “, they say in the Ministry of Finance
Given that employees working temporarily outside the home country are entitled to a tax credit, and Serbia also has numerous agreements on avoiding double taxation, in practice there are few who are also indebted to Serbian finances.
The right to a tax credit based on the tax paid on the salary he earned in practice means that the tax in Serbia must be paid only by a worker employed in a country that taxes salaries at a lower rate than Serbia. Our regulations specify that the amount of this fee is 10 percent. This means that those where this rate is lower are obliged to pay a part of the tax in Serbia. The law also envisages an upper limit, such a loan cannot be higher than the tax that would be paid on such earnings in Serbia. Guest workers at work in all countries are entitled to a tax credit.
“Residents of the Republic of Serbia are liable for income tax on the basis of income they earn in Serbia and abroad, which is a solution that is applied in most modern countries,” the Ministry of Finance explains, Novosti reports.
Accordingly, they add – the salaries earned by residents of Serbia on the basis of work with foreign employers abroad, are taxed in Serbia.
“Regardless of whether Serbia applies a double taxation agreement with the country in which our resident is employed by a foreign employer, our resident is entitled to a tax credit based on the tax paid on the earnings he earned, provided that such a loan it cannot be higher than the tax that would be paid on such earnings in the Republic of Serbia “, they state.
When it comes to double taxation agreements, there are two models. Those signed in recent years generally provide for a tax credit, a solution from our law as well, while some older ones guarantee an exemption.
“There are also agreements on the avoidance of double taxation which provide for the application of the exemption method. According to these agreements, our residents are not obliged to pay income tax in Serbia on the basis of salaries earned by foreign employers in countries with which such agreements are concluded,” they point out. Ministry of Finance.