Tax on Digital Assets: Calculations and Exemptions

How to Calculate Tax on Digital Assets in Serbia?

Serbia’s Law on Digital Assets came into effect on June 29, 2021, after being passed on December 29, 2020. The law regulates the issuance and secondary trading of digital assets, services related to digital assets, pledges and fiduciary rights relating to digital assets, and the competencies of the Securities Commission and the National Bank of Serbia. Amendments were made to the corporate and personal income tax laws, property tax law, and VAT law to clarify certain areas and regulate the tax treatment of digital assets transactions. The law recognizes two types of digital assets: virtual currency and digital tokens.

The Law on Digital Assets has made the tax treatment of digital property more favorable than before, particularly for individuals. Digital assets are taxed with capital gains tax, which is 15% for individuals, but social security contributions are not calculated on the income from capital gains. Profits from the transfer of digital property are not subject to annual personal income tax, but there are tax reliefs, such as a 50% exemption for those who invest the funds generated by the sale of digital assets within 90 days in a resident company or investment fund. Legal entities are subject to capital gains tax at the same rate of 15% for every transfer of digital assets except for those who deal with mediation in the transfer. The transfer of digital assets is treated as a capital gain, and the purchase price represents the price that the taxpayer documents as actually paid. Tax exemption is available if the capital gain is invested in another legal entity or investment fund that is a resident of Serbia and if the investment is made in the same year.

The Law on Value Added Tax provides a VAT exemption for the transfer and exchange of virtual currencies for cash or funds under the Law on Digital Assets. The tax base’s biggest problem is determining the purchase price because the Tax Administration does not accept screenshots from foreign exchanges, making local stock exchanges a safer zone. Taxes applicable to digital assets in Serbia include capital gains tax for legal entities and individuals, tax incentives such as tax refund and exclusion of gains in the tax base, and inheritance and gift tax for inherited and gifted digital assets at a tax rate from 0% to 2.5%.

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