Malta signs treaty with Serbia

Malta and the Republic of Serbia have signed an agreement on the avoidance of double taxation. The double tax treaty was signed in Valletta, Malta on the 9th of September 2009 by Malta’s Minister of Finance and Serbia’s Foreign Minister, Vuk Jeremić.

The treaty which is now awaiting ratification by both Contracting States is expected to remove any tax barriers between these two countries and to encourage more investment between these two States. It has been reported that in 2008, Malta-Serbia trade amounted to EUR 1.2 million.

The Malta-Serbia Treaty is the fourth treaty with the States forming part of the former Yugoslavia. Malta already has double tax treaties with Croatia, Slovenia and Montenegro. The Malta-Serbia treaty is specifically relevant in view of the fact that Serbia currently does not form part of the European Union. Moreover, it could be relevant to provide an indirect link particularly between Malta and the States of Macedonia and Bosnia and Herzegovina.

The treaty will reduce and in certain cases, eliminate the statutory withholding tax applied by Serbia on certain types of passive income paid to non-resident entities. In the absence of a bilateral tax treaty, dividends, interest, royalties, capital gains, leasing and rental fees are subject to a withholding tax of 20%.  

Currently, Serbia levies a corporate income tax rate of 10%. Serbian tax resident entities are subject to tax on a worldwide basis. An entity is considered resident for tax purposes in Serbia if it is established or has its place of effective management and control in the territory of the Republic.  

 

More details on the treaty shall be reported in due course.  

For more information, please contact: 

Franco Falzon