Does a Foreign Individual with Residence in Serbia Need a Tax ID for Non-Residents for the Absolute Rights Transfer Tax Decision?
When a foreign individual with permanent residence in the Republic of Serbia, holding an ID card for foreigners and registered residence in Serbia, concludes a real estate purchase agreement, the question arises whether it is necessary to possess a Tax Identification Number (PIB) for non-residents in order to be issued a decision on the absolute rights transfer tax. This situation can be confusing due to different interpretations of the law by various branches of the Tax Administration.
Legal Basis
According to Article 14 of the Law on Tax Procedure and Tax Administration, a tax representative is a natural or legal person who is a resident of the Republic of Serbia, acting within the limits of the given power of attorney, on behalf and for the account of the taxpayer, performing tasks related to the taxpayer’s tax obligations. This includes receiving tax documents, submitting tax returns, paying taxes, and other related activities.
Obligations of Non-Residents
A taxpayer who is a non-resident natural or legal person of the Republic of Serbia, who does not have a permanent business unit in the territory of the Republic, or who generates income or acquires property in the territory of the Republic outside the operations of their permanent business unit, is obliged to notify the Tax Administration headquarters of the person who is their tax representative within ten days from the start of income generation or property acquisition subject to taxation in the territory of the Republic.
If a non-resident generates income that is taxed by withholding, for which the taxpayer is not obliged to submit a tax return, there will be no obligation to appoint a representative. This condition often causes confusion among non-residents who are unsure whether they are required to obtain a Tax Identification Number (PIB) for non-residents.
Resident Status and Obligation to Obtain a PIB
According to Article 7 of the Law on Personal Income Tax, a resident of the Republic of Serbia is a natural person who has a residence or center of business and life interests in the Republic, or who resides in the Republic continuously or intermittently for 183 or more days within a 12-month period that begins or ends in the relevant tax year. These provisions clearly define the conditions under which a natural person is considered a resident.
Implications for a Foreign Individual with Residence in Serbia
If a foreign individual has registered residence in Serbia and holds an ID card for foreigners, they can be considered a resident of the Republic of Serbia. In such a case, it is not necessary to obtain a PIB for non-residents. This means that a foreign individual who meets the conditions of Article 7 of the Law can be considered a resident and, therefore, does not have the obligation to obtain a PIB for non-residents.
Recommendations for Further Action
In this specific case, where the notary public, after certifying the real estate purchase agreement, submitted a tax return for determining the absolute rights transfer tax, and a decision has not been issued for more than two years, we recommend the following steps:
- Contact the Competent Tax Authority: We recommend directly contacting the competent tax authority to obtain additional clarifications on the reasons why the decision on the absolute rights transfer tax has not been issued.
- Verify Resident Status: It is necessary to confirm whether the individual meets the conditions for resident status according to Article 7 of the Law on Personal Income Tax. If the person is considered a resident, there is no need to obtain a PIB for non-residents.
- Consult with Legal Experts: In case of uncertainties or disputes, consulting with legal experts can be beneficial for further clarification and interpretation of legal provisions.
Legal Basis Used for the Response
- Law on Tax Procedure and Tax Administration, Article 14: Defines the obligations of the tax representative and the non-resident.
- Law on Personal Income Tax, Article 7: Establishes the conditions for resident status of a natural person in the Republic of Serbia.
These legal bases provide guidelines and explanations regarding the obligations of foreign individuals who acquire property in the territory of the Republic of Serbia, as well as the conditions under which they are considered residents and the obligations arising from that status. For further clarification and interpretation of legal provisions, CLICK HERE.