Content overview (newest to oldest):
- Decree on postponing deadlines for submission of financial statements, tax balance, general meeting
- Decree on Guarantee Scheme
- Financial Aid Program of the Serbian Development Fund (“Program”)
- Reduced key policy rate
- Decree on Fiscal Benefits and Direct Payments to Commercial Entities and Monetary Support to the Citizens
- Who is targeted by the Decree?
- Which fiscal benefits are adopted?
- Who are entities entitled to fiscal benefits and direct payments?
- How to exercise fiscal benefits and direct payment right?
- Is it possible to abort the utilization or to lose the right to use fiscal benefits and direct payments?
- What are the consequences of losing the right for fiscal benefits and direct payments?
- Other measures stipulated by Decree
- Decree on Application of Deadlines in Administrative Procedures during the State of Emergency
- National Bank of Serbia Introduces Moratorium on Loan and Leasing Repayments
Decree on postponing deadlines for submission of financial statements, tax balance, general meeting
The Government of the Republic of Serbia has rendered Decree on shifting deadlines for holding regular sessions of company assemblies and adopting annual and consolidated financial statements of companies, cooperatives, other legal entities and entrepreneurs, as well as deadlines for filing income tax and self-employment income tax, important authorization licenses auditor and licenses for estimating the value of real estate that expire during the emergency of the use of COVID-19 caused by the SARS-CoV-2 virus (“Decree”), which came into force as of 16 April 2020.
Decree defines the postponement of deadlines during the state of emergency as follows:
- regular shareholder general meeting session,
- submission of annual and consolidated financial statements of companies, cooperatives, other legal entities and entrepreneurs for FY2019,
- Submission of corporate income tax and entrepreneurial income tax returns, as well as
- Validity of licenses of certified auditors and licenses for real estate valuation.
The deadline for regular shareholder general meeting session as per Article 364 of the Companies Law is set to expire 90 days as of the date of termination of the state of emergency.
The deadline for submission of annual reports, ie annual financial statements with the auditor’s report of all taxpayers whose reporting is regulated by the Law on Capital Markets, Law on Investment Funds or the Law on Open Investment Funds with a Public Offering, is postponed to expire 60 days as of the date of termination of the state of emergency.
The deadlines from the (old) Accounting Law are postponed as follows:
- The deadline for submission of the regular annual financial statements is 90 days from the date of termination of the state of emergency,
- The deadline for submission of the consolidated financial statements is postponed to 120 days from the date of termination of the state of emergency,
- The deadline for submission of the financial statements is postponed to 30 days from the date of termination of the state of emergency, provided that the deadline for the submission of the financial statements expires during the state of emergency.
Above designated deadlines shall accordingly apply to legal entities having a business year other than the calendar year, provided that the deadline for submission of the financial statements of those legal entities expires during a state of emergency.
The deadlines for submission of corporate income tax return are as follows:
- corporate taxpayers with a tax period equal to the calendar year – within the deadline for submission of the annual financial statement, which means within 90 days from the date of termination of the state of emergency,
- corporate taxpayers with a different tax period than the calendar year – within the deadline for submission of the annual financial statement.
Decree also stipulates that the deadline for filing the tax return for the tax on income from the entrepreneurial activity of the entrepreneur be moved, to a period of 90 days from the date of termination of the state of emergency.
The time limits referred to in Article 7 of the Audit Law that expire during a state of emergency shall be deemed to have expired upon expiry of 30 days from the date of termination of the state of emergency. Until the expiration of 30 days from the date of termination of the state of emergency, all licenses issued for carrying out the audit shall continue to be valid.
Decree on Guarantee Scheme
The Government of the Republic of Serbia has issued a Decree on Establishment of a Guarantee Scheme as a Measure of Support to the Economy to Mitigate the Impact of the Covid-19 Disease Pandemic Caused by the Sars-Cov-2 Cirus, which entered into force on 16 April 2020 (the “Decree”).
The Decree stipulates:
- Conditions, procedure, amount and manner of providing funds for issuing guarantees of the Republic of Serbia in accordance with the guarantee scheme defined by the Decree,
- criteria, conditions and manner of granting loans by banks,
- as well as other issues of relevance to the guarantee scheme as a measure of economic support, to mitigate the economic consequences of the SARS-CoV-2 virus COVID-19 pandemic, with the aim of increasing the liquidity of business entities.
What are the key elements of a loan supported by a guarantee under the Decree?
- The purpose of loans secured by a guarantee under the Regulation is to finance liquidity and working capital.
- The maturity of the loan is limited to a period of 36 months.
- The maximum loan amount is less than two amounts:
- 25% of the income of the loan beneficiary according to the financial statements submitted by the loan beneficiary to the Business Registers Agency for statistical purposes for 2019, or
- EUR 3,000,000
- Loans are approved in RSD or EUR
Loans cannot be used for refinancing and early repayment of outstanding installments of existing loans in a bank’s portfolio, or for refinancing loans with other banks.
Who is eligible for these loans?
- Entities incorporated in the Republic of Serbia, including farms, which are registered with the Serbian Business Registers Agency and classified as an entrepreneur, or a micro, small and medium-sized enterprise in accordance with accounting legislation;
- a person who has been granted a new loan or renewal of an existing loan in accordance with the bank’s credit policy, for which the Republic of Serbia may guarantee the bank in accordance with the Decree.
Having said above, it can be concluded that large legal enterprizes do not have the possibility to be beneficiaries of these loans.
Who does not have the right to be a loan beneficiary?
- entities in difficulties as of 31 December 2019 and entiteis who are in default status according to the regulations of the National Bank of Serbia as of 29 February 2020;
- entities who are in tax default in the Republic of Serbia;
- entities in which the Republic of Serbia, autonomous province or local self-government unit holds more than 50% of ownership;
- beneficiaries whose debts were in default or under which the bank undertook restructuring measures in the 12 months prior to 29 February 2020, in accordance with the definition of default status according to the regulations of the National Bank of Serbia, ie restructured claims under regulations The National Bank of Serbia governing the classification of banks’ balance sheet assets and off-balance sheet items;
- entities subject to consensual financial restructuring, bankruptcy proceedings and compulsory liquidation proceedings;
- entities who are already beneficiaries of the loan secured by the guarantee scheme in accordance with the Decree.
Under what conditions are loans secured by a guarantee scheme approved?
Loans secured by the guarantor scheme are approved provided that:
- the loan was released no later than 31 January 2021;
- the repayment period of the loan is up to 36 months from the date of the loan, in which the grace period is from 9 to 12 months from the date of the loan release;
- the loan is approved in dinars (RSD) or euros (EUR);
- the method of repayment of the loan is in monthly annuities;
- the interest rate is set by the bank in accordance with its credit policy, in the amount not exceeding 1M BELIBOR rate increased for 2.50% (1M BELIBOR + 2.5 p.p.) for loans approved in dinars (RSD);
- the interest rate is determined by the bank in accordance with its credit policy, in the amount not exceeding the 3M EURIBOR rate increased 3.00% (3M EURIBOR + 3.0 p.p.) for loans approved in euro (EUR);
- at least bills of exchange of beneficiaries and majority owners of beneficiaries have been provided as a loan security instrument, where majority ownership implies direct ownership equal to or greater than 25%;
- that the borrower will not pay the share in the profit (dividends) or the repayment of the founder’s loan within the first year after the conclusion of the loan agreement;
- that the borrower will not repay existing loans for the same purpose with any other bank not included in the secured portfolio during the grace period of the loan.
Funds under the Decree will be available starting from 21 April 2020. The procedure for obtaining these loans is conducted before a commercial bank where the loan beneficiaries have a bank account.
Financial Aid Program of the Serbian Development Fund (“Program”)
Serbian Government has rendered a Program of Financial Aid to Commercial Entities for Maintenance of Liquidity and Current Assets Stemming from Covid 19 Pandemic which will be implemented in cooperation with Development Fund of Serbia (“Program”).
Main goals of the Program are to support financing of current assets and maintaining of liquidity for the purpose of settlement of liabilities towards business partners, employees and the state.
Who is entitled to use Program funds?
Funds from the Program may be utilized by:
- Cooperatives (which have aligned their operations with the Law on Cooperatives, and which have been subject to cooperative audit in the last two years),
- Micro, small and medium enterprises based on last submitted financial reports which are in majority private or cooperative ownership and which perform production, service, trade and agricultural activities.
Funds may not be used for:
- organizing games of chance, lotteries and similar activities,
- trade of oil and oil products,
- the production and marketing of any product or activity that is considered prohibited under domestic regulations or international conventions and agreements.
Note that a loan can be granted even if the official financial statements of a business entity have shown a net loss for one of the last two years, but if operating profit has been achieved.
What are the requirements that applicants must fulfill?
The basic condition for the realization of these loans is the retention of the number of employees, in accordance with the report of the Central Registry of Compulsory Social Security on the number of temporary and permanent workers on 16 March 2020.
Up to 10% deviation from the stated number of employees is accepted until the date of application and during the use of the loan.
Additional requirements that applicants must fulfill are:
- that they are not in difficulty,
- bankruptcy proceedings have not been initiated against them,
- that they are not subject to the procedure for the pre-prepared reorganization plan or that measures from the pre-prepared reorganization plan (UPPR) are not in force,
- that it is not subject to a reorganization plan or that no measures from the reorganization plan, financial restructuring or liquidation procedure are in force.
Under what conditions are funds from the Program approved?
- the annual interest rate is 1%,
- Repayment period of up to 36 months (which includes a grace period of up to twelve months),
- Loans are approved and repaid in dinars,
- Repayment of the loan will be made in monthly annuities,
- Within the grace period, interest is calculated and credited to the principal debt.
The minimum loan amount
Commercial entities – RSD 1,000,000
Entrepreneurs, cooperatives and entities registered in the relevant register – RSD 200,000
The maximum loan amount
Entrepreneurs and micro-legal entities – RSD 10,000,000
Small legal entities – RSD 40,000,000
Medium-sized legal entities – RSD 120,000,000
Which collateral should be provided (depending on the loan amount)?
- Bills of exchange of the loan beneficiaries and bills of exchange of the founder – up to RSD 1,000,000
- Bills of exchange of the loan beneficiaries, bills of exchange of the founder and indefinite term employee guarantee – up to RSD 2,000,000
- Bills of exchange of the loan beneficiaries, bills of exchange of the founders and guarantee of a related legal entity – up to RSD 10,000,000
- Bills of exchange of the loan beneficiaries, bills of exchange of the founders and guarantee of a prudent legal entity not related to the beneficiary – Up to RSD 25,000,000
- Bill of exchange for loan beneficiaries, pledge on equipment and / or first order mortgage – From RSD 25,000,000
For clients in the Development Fund’s portfolio who already have established real/appropriate collateral, the loans will be approved with higher order collateral.
The real estate or the equipment that serves as security for the loans under this program does not have to be insured and the policy does not have to be in favor of the Development Fund.
A bank guarantee, a pledge and a mortgage can be the collateral for all loaned amounts, while the guarantee of a credit rating company (not a related party) can be the collateral for all loan amounts up to RSD 25,000,000.
Please note that if the founders are persons who are foreign nationals or companies registered abroad, in this case no bills of exchange of the founder are submitted.
What are the criteria for loan approval?
- for business entities, the maximum amount of credit granted may be up to 50% of operating income earned on the last submitted financial report,
- for lump sum taxed entrepreneurs, the maximum amount of credit granted may be up to 50% of turnover with commercial banks in 2019,
- the applicant for the loan does not have a blocked account for more than 30 days continuously in the previous year, or a total of 90 days with interruptions in the last year,
- the guarantor and the related legal entity are an acceptable security instrument if:
- they are not in difficulty or bankruptcy proceedings have been initiated against them,
- they are not subject to the procedure for a pre-prepared reorganization plan or they are not in force from the pre-prepared reorganization plan (UPPR),
- it is not subject to a reorganization plan or no reorganization plan measures, financial restructuring or winding-up procedure;
- have no blockage longer than 30 days continuously in the previous year, or a total of 90 days with interruptions in the last year;
- generate operating income at least in the amount of the loan demanded, as guaranteed by the most recently submitted financial statement;
- a lump sum taxpayer should have bank turnover in 2019 at least in the amount of the loan amount he or she is seeking.
- The mortgagee is eligible if:
- is not in difficulty or bankruptcy proceedings have been initiated,
- it is not subject to the procedure for a pre-prepared reorganization plan or that measures from the pre-prepared reorganization plan (UPPR) are not in force,
- it is not subject to a reorganization plan or that no measures under the reorganization plan, financial restructuring or winding-up procedure are in force, and
- no account lockout at the time of applying for a loan.
- related companies may use only one loan secured by a related party guarantee, while other loans must be secured by other collateral.
- the minimum individual value of the equipment required by the Development Fund is RSD 50,000.
- the guarantor-individual cannot be employed in the commercial entity which is the applicant or in its related parties;
- the amount of the approved loan should be correlated with the number of employees, in such a way that the maximum amount of the loan (with the fulfillment of other criteria) can be up to RSD 4,000,000 if the business entity has an employee of one worker (including the founder).
How to apply?
Requests must be submitted electronically to the following e-mail address: email@example.com
The Board of Directors of the Fund will render decisions on the received requests no later than 31 December 2020, up to the amount of currently available funds for the implementation of this program.
The deadline for the implementation of appropriations under this program and the decisions of the Fund’s Board of Directors is 31 March 2021.
The receipt of the request shall be made until the funds of the Program have been spent, and no later than 10 December 2020.
Only one application may be submitted under this program. A repeated request may be made during the period of receipt of the request, only after receiving notification that the Board of Directors has rejected the initial request of the client or if the client withdraws from the use of the approved request before the funds are put into use, with appropriate justification.
The list of documentation is published on the website of the Development Fund.
Please note that the original documentation must be submitted to the Development Fund when concluding the contract.
Reduced key policy rate
After held meeting on 09 April 2020 the Executive Board of National Bank of Serbia decide to cut the key policy rate further from 1.75% to 1.5% in order to alleviate the negative effects of the coronavirus (Covid-19) on economic activity, while at the same time ensuring that inflation remains within the bounds of the target in the medium term.
Having in mind that reference interest rate is used to calculate the default interest rate and the interest rate on delay public revenue payment, these two rates are reduced by 0.25%:
- Default interest as of 10 April 2020 is 9.50%
- Interest on delay of public revenue pamyment as of 09 April 2020 year is 1.50%.
Accordingly, interest on the amount of more or less tax paid and incidental charges, except interest, is calculated and paid during the state of emergency emergency at a rate equal to the National Bank of Serbia’s annual reference rate of 1.5%.
Decree on Fiscal Benefits and Direct Payments to Commercial Entities and Monetary Support to the Citizens
The Government of the Republic of Serbia has rendered a Decree on Fiscal Benefits and Direct Payments to Commercial Entities in Private Sector and Monetary Support to the Citizens for the Purpose of Mitigating the Economic Consequences Stemming from Covid 19, published in the Official Herald of the Republic of Serbia no. 54/2020 as of 10 April 2020 which came into force as of the day of publishing (“Decree”).
Decree governs the following:
- Fiscal benefits,
- Direct non-refundable monetary payments to private commercial entities,
- VAT treatment of non-chargeable supplies of goods and services for health purposes,
- One-time payment of monetary support to all adult citizens of Serbia,
- Moratorium on payment of dividends applicable to private commercial entities which decide to utilize fiscal benefits and direct payments from the state.
Decree envisages that the Ministry of Finance will determine the procedure and manner of implementation of adopted measures, primarily deferral of payments of taxes and contributions in installments and utilization of direct payments.
Who is targeted by the Decree?
Private commercial entity (“Private entity”) which may utilize the right for fiscal benefits and direct payments is defined as each private entity which is not included within the List of users of public funds determined in line with a Regulation on the List of Users of Public Funds (“Official Herald of RoS”) no. 93/19) and encompasses the following:
- Resident legal entities within the meaning of the Corporate Income Tax (“CIT”) Law,
- Resident entrepreneurs within the meaning of the Personal Income Tax Law and
- Branched and Representative offices of foreign legal entities).
We emphasize that fiscal benefits and direct payments may be utilized by micro, small, medium and large enterprises, entrepreneurs, farmers as well as branches and representative offices of foreign legal entities.
Which fiscal benefits are adopted?
- Deferral of payment of salary tax and contributions
The possibility of deferral of payment is introduced for:
- Salary tax and contributions for March, April and May 2020, i.e. for April, May and June based on the choice of taxpayers,
- Advance CIT payments due on 15 April, 15 May and 15 June 2020 until submission of final CIT return for FY 2020,
- Advance payment of tax and contributions for entrepreneurs’ profit tax in a same manner as for CIT payments.
Deferred taxes and contributions are due for payment as of 4 January 2021 in 24 monthly installments without calculation of interest.
- Direct payments
Direct payments represent non-refundable monetary payments to Private entities aimed exclusively for payment of salaries and salary compensation to employees whereby the amount of these payments depends from the number of employees and the size of Private entity.
It should be noted that classification of size of entities is performed based on financial statements for FY 2018, whereby entities incorporated in 2019 and 2020 are classified as small enterprises within the meaning of Decree.
- Micro, small and medium enteprises
Private entities classified as micro, small or medium enterprises may exercise the right for monthly non-refundable monetary payment in the amount of minimal net salary for March 2020 (RSD 30,367.04) per full time employee, starting from May until July.
Number of employees inserted in PPP PD tax returns submitted in line with Decree pertaining to March, April and May 2020 is used as multiplier, decreased for the number of employees whose employment has been terminated in the period 10 April – 30 April and 1 May – 31 May 2020.
For part-time employees, direct payment is made pro rata to contracted percentage of employment of said employee in comparison with full-time employment.
As for entrepreneurs, the number of employees is increased for one, unless entrepreneur is a user of pension or is employed.
- Large enterprises
Direct payments are made exclusively for employees for which the employers has rendered a decision on seizure of work in line with Articles 116 and 117 of the Labour Law, starting from 15 March 2020 and whose seizure of work lasted at least 15 working days in April or May 2020. For part-time employees, direct payment is made pro rata to contracted percentage of employment of said employee in comparison with full-time employment.
Number of employees inserted in PPP PD tax returns submitted in line with Decree pertaining to March, April and May 2020 is used as multiplier and the amount of direct payment is 50% of minimal net salary for March 2020, i.e. RSD 15,183.52.
Note that large enterprises are obliged to submit to the competent Tax Authority and Treasury Department the list of employees from the above stated categories in paper form until 20th in the month for the payment which is made on the following month.
Direct payment shall be made on special bank account. Private entities having accounts in multiple banks are obliged to notify Tax Authorities through electronic portal tax no later than April 25, 2020, in which of those banks they opt to open a special bank account. Costs of maintenance of this account as well as the costs of payment orders shall not be charged to Private entities and the account shall be terminated upon completion of this program.
Who are entities entitled to fiscal benefits and direct payments?
The right for fiscal benefits and direct payments may be exercised by Private entities:
- Founded and registered prior state of emergency, i.e. registered as VAT payers prior 15 March 2020,
- Which have not reduced the number of employees for more than 10% in the period between 15 March 2020 and 10 April 2020 (excluding definite term employees contracted prior 15 March 2020 for a period ending between 15 March 202 and 10 April 2020)
- Entrepreneurs and farmers who have registered temporary seizure of activities on 15 March 2020 or later.
Private entities which determine to utilize fiscal benefits and direct payments are not allowed to make dividend payment by the end of 2020.
The following large enterprises are not entitled for fiscal benefits and direct payment:
- Business banks,
- Insurance and reinsurance companies,
- Voluntary Pension Funds companies,
- Financial leasing companies, as well as
- Payment institutions and electronic funds institutions.
How to exercise fiscal benefits and direct payment right?
Fiscal benefits right is exercised via submission of PPP PD form with inserted date of payment as 4 January 2021 in the field 1.4 of said form.
Private entities have the right to elect if they will utilize fiscal benefits and direct payments up to three months in a following manner:
- For three months if PPP PD form is submitted with date of payment 4 January 2021 in the field 1.4 of said form by the end of April 2020,
- For two months if PPP PD form is submitted with date of payment 4 January 2021 in the field 1.4 of said form by the end of May 2020,
- For one month if PPP PD form is submitted with date of payment 4 January 2021 in the field 1.4 of said form by the end of June 2020.
Is it possible to abort the utilization or to lose the right to use fiscal benefits and direct payments?
Since fiscal benefits and direct payment are the right of Private entities, they are not obliged to utilize them, i.e. if they opt to abort their usage, they may do so by settlement of their tax liabilities or by repayment of received direct payments.
On the other side, the right for fiscal benefits and direct payment is lost if Private entity:
- Decreases the number of employees for more than 10% compared to 15 March 2020 until 31 October 2020. Fulfilment of this condition is reviewed each last day in month until 31 October, with the possibility that such condition is reviewed until the statute of limitation for tax liabilities arises,
- Makes dividend payment (which is not in shares or stakes) by the end of 2020.
What are the consequences of losing the right for fiscal benefits and direct payments?
Private entities that lose the right for fiscal benefits and direct payments stipulated in Decree are obliged to:
- Settle all deferred liabilities and
- Repay direct payments
Increased for late payment tax interest within five days as of the day of losing right for fiscal benefits and direct payments.
Decree also envisages penalties and depending from the type of misdemeanor Private entities may be subject to monetary penalty in the range of:
- 30% to 70% of received direct payment, but no less than RSD 500,000, i.e.
- 20% to 50% of the amount of deferred public revenues, but no less than RSD 250,000
while responsible person may be subject to monetary penalties in the range of RSD 50,000 and RSD 100,000 or RSD 25,000 and RSD 50,000 depending from the type of misdemeanor.
Other measures stipulated by Decree
Decree also defines:
- VAT exemption with the right for input VAT deduction for non-chargeable supplies for goods and services to the Ministry of Health, Republic Fund for Health Insurance or state health institutions during the period of state of emergency,
- One-time payment of monetary support to adults in the amount of EUR 100 in RSD countervalue upon expiration of state of emergency.
Decree on Application of Deadlines in Administrative Procedures during the State of Emergency
On 24 March 2020, Decree on Application of Deadlines in Administrative Procedures during the State of Emergency („Decree“) has been published and has entered into force.
The decree regulates the application of deadlines in administrative and tax procedures during the state of emergency. In this respect, Decree regulates that during the state of emergency in Serbia, parties may not be affected due to the absence of their actions within prescribed deadlines in general and special administrative procedures.
Therefore, it has been prescribed that delivered documents and notifications in administrative procedures for which deadlines cannot be extended are deemed delivered upon expiration of 15 days as of the termination of a state of emergency.
In other words, if a decision from Tax Authorities has been delivered to the taxpayer upon declaration of a state of emergency (after 15 March 2020), the deadline for appeal commences upon expiration of 15 days as of the termination of a state of emergency. Hence, taxpayers will have at disposal 30 days upon termination of a state of emergency to file an appeal.
Deadlines that are expiring during a state of emergency and which pertain to administrative actions, finalization of administrative procedures and decision-making based on legal remedies shall be deemed expired 30 days as of the termination of a state of emergency.
National Bank of Serbia Introduces Moratorium on Loan and Leasing Repayments
In order to maintain achieved level and to further strengthen the stability of the financial system in conditions of potential risks caused by emergency health situation in Serbia, the National bank of Serbia has on 17 March 2020 adopted decisions based on which the moratorium on loan and leasing repayments is introduced:
- Decision on Temporary Measures for Maintenance of Stability of Financial System and
- Decision on Temporary Measures for Leasing Providers for the Purpose of Maintenance of Stability of Financial System.
The moratorium is introduced for all debtors who wish so (individuals and legal entities, as well as entrepreneurs) and entails moratorium in payment of liabilities which cannot be shorter than 90 days or term of state of emergency introduced due to a pandemic of Covid-19 virus. In this period, the debtor is not obliged to settle its liabilities stemming from the loan or leasing but is free to do so if it is able and willing to honor the original agreement.
During the term of state of emergency, the bank or leasing company shall not calculate default interest on due but unsettled liabilities and shall not initiate enforcement collection procedure, nor they will conduct any other legal measure for the purpose of collection of receivables from the clients. Besides, banks and leasing companies shall not be able to claim any compensation related to the costs stemming from adopted regulations.
For transparency and information purposes, in line with stated regulations, banks and financial leasing companies are required to publish the notification of offering of a moratorium on their internet pages upon which it will be considered that the notification has been sent to all clients (debtors). If the client within 10 days as of the publishing of such notification does not reject such a proposal it shall be considered that he has accepted the proposal without any obligation to visit the bank or financial leasing company.
Upon expiration of the above-mentioned deadline moratorium will have a legally binding effect but debtors will be allowed to repay their liabilities.