On 18 July 2025, Protocol between the Government of the Republic of Serbia and the Swiss Federal Council amending the Convention between the Council of Ministers of Serbia and Montenegro and the Swiss Federal Council for the avoidance of double taxation with respect to taxes on income and on capital (2005) has entered into force.
Protocol has been signed in duplicate at Belgrade on 19 September 2023, in Serbian, French and English languages, all texts being equally authentic. In case there is any divergence of interpretation between the Serbian and French texts, the English text shall prevail.
The ratification law was published in Official Gazette – International Treaties No. 6/2023 of 31 October, 2023.
With a few exceptions (which primarily relate to the exchange of information) most of the changes will apply from 1 January 2026.
The protocol implements the BEPS minimum standards for double taxation agreements. In particular, it contains an abuse clause which refers to the main purpose of an arrangement or transaction and thus ensures that the DTA is not abused. It contains also an administrative assistance clause in accordance with the international standard for the exchange of information upon request.
We would like to point out in particular that, pursuant to Article 5 of the Protocol, Article 13 (Capital Gains), paragraph 4 of the Basic Agreement, has been replaced by a new paragraph 4 which reads as follows:
„Gains derived by a resident of a Contracting State from the alienation of shares or comparable interests of any kind deriving more than 50 per cent of their value directly or indirectly from immovable property, as defined in Article 6, situated in the other Contracting State may be taxed in that other State.”
With the note, in Article 10, paragraph 1, of the Protocol, that:
„It is understood that the term „comparable interestsˮ includes interests in limited liability companies which are established under the laws of Serbia.”
The above is of great practical importance for the interested professional public in the Republic of Serbia (as well as the competent authorities of the Tax Administration), because (unlike the previous solution contained in Article 13 paragraph 5 of the Basic Agreement) gains from the alienation of any property other than shares … (for ex. stakes in LLC) derived by a Swiss resident may be taxed in Serbia (in all respects, according to the provisions of domestic tax legislation) – it is also implied, vice versa.
In addition to the above, in the relevant provisions of the Protocol, solutions relating to the taxation of business profits as well as the taxation of associated enterprises have been improved and clarified.