On 30 July 2020, The Government of the Republic of Serbia adopted a Conclusion on new measures of economic assistance to private sector companies, which consist of direct payments and certain fiscal benefits (Conclusion).
The right to direct payments and fiscal benefits may be exercised only by companies in the private sector, namely: (i) resident legal entities within the meaning of the law governing the taxation of corporate profits; (ii) resident entrepreneurs; and (iii) branches and representative offices of foreign legal entities.
However, the right to direct payments and fiscal benefits can be used by wider group entities, compared to the group entities which was eligible for use of similar measures under the Regulation on fiscal benefits and direct payments to private sector companies and financial assistance to citizens mitigating economic consequences caused by the disease COVID-19 (“Official Gazette of RS”, No. 54/2020 and 60/2020 – Regulation).
The right to new direct payments and fiscal benefits under the Conclusion can be used by:
The rule is that all direct payments can be used exclusively for the payment of salaries, i.e. compensation of salaries to employees.
Commercial entities can use the funds received on the basis of direct payments no later than 31 October 2020. Upon expiration of the deadline, the special purpose accounts – COVID 19 will be closed, and unused funds from those accounts will be transferred to a special budget account.
The fiscal benefits prescribed by the Conclusion consist of:
However, the Conclusion does not apply to advance payments of profit tax due to be paid by legal entities.
Commercial entities will lose the right to direct payments from the budget of the Republic of Serbia and fiscal benefits if, in the period from 3 March 2020 until the expiration of three months from the last installment of direct payments, it reduces the number of employees by more than 10% not counting employees who have concluded a fixed-term employment contract with the commercial entity prior to 15 March 2020 with the term ending within the period from 15 March 2020 until the expiration of three months from the payment of the last installment of direct payments. As the last installment of direct payments will be due in September 2020, the three month period is calculated from the actual date of payment in September 2020. This practically means that the commercial entity will not be allowed to reduce the number of employees until a certain date in December 2020.
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