Maximize Your Benefits: R&D Tax Incentives in Serbia for 2024

Unlocking R&D Tax Incentives in Serbia for Businesses in 2024

R&D Tax Incentives in Serbia are vital for fostering innovation and boosting business growth. These incentives help companies reduce their tax liabilities and reinvest those savings into technological advancements. By taking advantage of the available tax benefits, businesses can increase their financial efficiency while focusing on further innovation. This article will explore the key R&D tax incentives in Serbia for 2024, including tax breaks for employee salaries, recognition of R&D costs, and the IP Box tax incentive.

1. Tax Incentive for Employee Salaries in R&D Projects

One of the most valuable R&D tax incentives in Serbia is the salary exemption for employees directly involved in R&D projects. This incentive helps businesses reduce their tax obligations by:

• Exempting 70% of income tax on employee salaries (the standard salary tax rate is 10%).
• Exempting 100% of pension and disability insurance contributions for employees working on R&D projects. This exemption is proportional to the time spent on R&D activities.

Conditions for Using This Incentive

To qualify for this incentive, businesses must meet the following conditions:

• The R&D project must be conducted within Serbia.
• At least 90% of employees engaged in R&D must be based in Serbia, although some exceptions may apply.
• The legal entity must conduct R&D for its own benefit and account (not for third parties).
• The company does not need to commercialize the R&D for it to qualify for the incentive.

What Activities Qualify as R&D?

Research involves original investigations aimed at acquiring new scientific or technical knowledge. Development applies these findings to create improved products, processes, or systems, before commercial production. Employees directly involved in solving technical or process-related problems in R&D projects qualify for this incentive. However, supervisors and support staff do not qualify.

Required Documentation

Companies must maintain records for each employee involved in R&D, including working hours, earnings, and time spent on R&D activities. Additionally, project documentation, such as project descriptions, annual budgets, and employee reports, must be kept.

2. Recognition of R&D Costs at Double the Amount

Serbia’s tax law allows businesses to recognize R&D-related expenses at double the amount, further reducing corporate income tax obligations. This double recognition helps companies lower their taxable income.

Eligible Costs for Double Recognition

The following R&D-related costs can be recognized at double the amount:

• Salaries of employees working on R&D.
• Material costs directly related to R&D.
• Expenses for acquiring intangible assets like patents and copyrights.
• Costs for real estate, plants, and equipment used directly for R&D.
• Professional consulting services, including advisory services for R&D needs.
• Legal protection costs for intellectual property rights.

These expenses can be claimed regardless of whether the R&D project is successful or not. The costs are recognized in the period they were incurred and must be reported in the company’s tax balance.

3. IP Box Tax Incentive: Lower Corporate Income Tax on IP Income

The IP Box tax incentive offers businesses significant tax savings on income generated from intellectual property (IP) rights. This incentive, introduced by Article 25b of Serbia’s Corporate Income Tax Law, allows businesses to exclude 80% of income generated from IP from their taxable profit.

How the IP Box Works

The IP Box incentive applies to income derived from the commercialization of IP developed through R&D activities in Serbia. Eligible businesses can reduce the corporate income tax rate from 15% to 3% on the portion of income generated by their IP.

How to Maximize R&D Tax Incentives in Serbia

To maximize the benefits of Serbia’s R&D tax incentives, businesses must understand the specific conditions for each incentive. By ensuring compliance with the requirements, companies can significantly reduce their tax liabilities, enabling them to reinvest more in innovation and growth.

Conclusion: Maximize Your R&D Investment

Serbia’s R&D tax incentives provide powerful tools for businesses to reduce tax liabilities and support further innovation. By leveraging these incentives, companies can enhance their financial efficiency, fund new technological advancements, and strengthen their competitive position. For expert assistance navigating these incentives and ensuring compliance, contact Stojković Attorneys (AK STATT). Our team of professionals can help you maximize your R&D benefits and guide you through the legal requirements to ensure your business stays ahead in innovation.