15. February, 2024

Published Act Amending the Corporate Income Tax (ZDDPO-2T)

In the Official Gazette of the RS no. 12/2024 of February 9, 2024, the Act Amending the Corporate Income Tax (ZDDPO-2T) was published. The amendments to the law refer to the provisions related to the determination of the non-resident’s business unit (Article 6 ZDDPO-2T) and the place of business that is not a business unit (Article 7 ZDDPO-2T). The new Article 54.c also changes the taxation of interest and business units and establishes a new rule for dealing with the tax recognition of interest, which is included in the new Chapter VII.b entitled Rule on limitation of recognition of interest.

The new rules on the limitation of recognition of interest apply only to companies that are part of an international group, or it only applies to associated enterprises. The new rule does not apply at the international group level but to each individual taxpayer within the group. A taxpayer who has no associated enterprises is excluded from the scope of the new rule.

In the tax period in which they arise, excess borrowing costs up to a higher amount are recognized as an expense to a taxpayer who has an associated enterprise, namely:

a.       30% of the taxpayer’s profit before interest, taxes, and depreciation (EBITDA), or

b.       1,000,000 EUR.

The new rules in Article 54.c of the ZDDPO-2T do not apply to banks, insurance companies, and independent taxpayers.

The adopted Act Amending the Corporate Income Tax applies to tax periods beginning on or after January 1, 2024.