Tax exemption for investment in Startup

Serbian laws prescribe various incentives for investment and development of startup companies. We wrote about startup and tax incentives in Serbia. As for companies that do not count as start-ups, the Law on Corporate Income Tax prescribes a tax exemption for investing in the capital of a startup company. Thus, the right to a tax exemption in the amount of 30% of the investment is recognized for such an investment, which means that it can reduce its tax liability in that amount.

In order to avoid abuses of the exercise of this right, the law also prescribes certain conditions. The right to a tax exemption belongs to a company that before the investment, independently or together with related parties, did not own more than 25% of shares or stakes, i.e. votes in the management bodies of the start-up company in which it invests.

In addition, the right to a tax exemption can be exercised only on the basis of fully paid cash contributions which increase the capital of the startup company and provided that there is no reduction in investment continuously for a period of three years from the date of investment.

The highest amount of tax exemption that can be recognized to an individual taxpayer on the basis of this investment is RSD 100,000,000, and a maximum of RSD 50,000,000 on account of income tax in one tax year. The unused part of the tax exemption can be transferred to the income tax account from future accounting periods, not longer than five years.