IP Box regime in Serbia

The Law on Corporate Income Tax prescribes significant tax relief for legal entities that, among other things, earn income on the basis of copyright or related rights. Pursuant to this Law and the Rulebook on Conditions and Manner of Exclusion of Qualified Revenues from the Corporate Income Tax Base, it is possible to exempt up to 80% of revenues from intellectual property from the tax base. Thus, the Law on Corporate Income Tax stipulates that qualified income generated by the copyright or related rights holder, based on the fee for the use of the deposited copyright work or subject of related law, except for the fee for the transfer of copyright or related rights as a whole, may be exempt from tax bases in the amount of 80% of the income thus generated, which means that a income tax of 3% can be effectively paid.

It follows from the above that the said incentive is not applied in the case of income based on the transfer of the entire intellectual property right to another person, which leads to the conclusion that a taxpayer who decides to use this tax relief must remain copyright or related. In addition, in order to realize this tax relief, the holder of copyright or related rights is obliged to deposit the subject of copyright or related rights with the competent authority.

Also, when calculating, and for the purposes of using this tax relief, qualifying income is reduced by the amount of total historical or current tax-deductible expenses related to research and development activities that resulted in the creation of that copyright work or subject matter. Thus, qualified income is calculated as follows: qualified income = (total income from the subject copyright or related rights in the current year – qualified expenses) * (percentage share of qualified expenses in total expenses related to copyright or related rights). The obtained amount is multiplied by 80% and that amount is deducted from the tax base. The holder of copyright or related rights, in order to realize these tax reliefs, is obliged to state the qualified income in the tax balance.