At the end of 2024, numerous amendments to tax laws were adopted, such as the Law on Corporate Income Tax, the Value Added Tax Law, the Law on Tax Procedure and Administration, the Personal Income Tax Law, and other laws. The application of these laws commenced on 1 January 2025. The new amendments to tax regulations introduce important obligations for companies that cease to exist in liquidation and bankruptcy proceedings, as well as for legal successors in cases of status changes that result in the termination of a company.
Namely, the following significant changes have been introduced regarding tax obligations in the context of corporate status changes:
1. In the case of a merger, merger by acquisition, or division, the obligation to file a tax return lies with the legal successor of the company that ceases to exist (whereas previously, this obligation was on the company that was ceasing to exist).
2. In the case of a division or spin-off, in addition to the aforementioned obligation, the legal successors are also required to submit to the Tax Administration a report on the realization of the division of rights and obligations of the legal predecessor.
3. If the result of a status change is the termination of a VAT payer, the legal successor of that taxpayer is obliged to notify the Tax Administration within 15 days from the date the status change was carried out. Additionally, the VAT treatment of asset transfers carried out in the course of a corporate status change is regulated in a much more precise manner.
The purpose of these amendments is to facilitate the fulfillment of tax obligations and the exercise of rights arising from the legal relationships of the predecessor, as well as to make all necessary changes in tax accounting that reflect the new structure of taxpayers.
Additionally, at the beginning of the year, the Companies Act was amended under an urgent procedure in the part relating to provisions on cross-border status changes and European company forms (Societas Europaea – SE and European Economic Interest Grouping – EEIG). Their application has been postponed to 1 January 2027.
Who files the tax return in a status-change procedure?
Until now, practice was plagued by uncertainty whenever a tax return had to be filed for a legal entity that no longer existed, while the filing deadline fell after the company had been struck from the register. Such situations created a clash between tax rules and company-law norms: formally there was no longer an entity capable of submitting the return, yet the tax liability remained in force.
This issue has been resolved through amendments to the Law on Tax Procedure and Administration (LTPTA), whereby the tax return should now be filed by the legal representative of the legal successor or another person authorized by law, whenever the deadline for filing is due after the taxpayer has ceased to exist by virtue of a status change.
Further harmonization has been achieved by amending the Law on Corporate Income Tax, which now stipulates that:
- the tax return for a legal entity that has ceased to exist in a status change is filed by its legal successor;
- the filing deadline is 60 days from the date on which the status change is officially registered with the Serbian Business Registers Agency (SBRA) register;
- if there is more than one legal successor, the return is filed by the representative of the company that ceased to exist by virtue of the status change, with the aim of ensuring uniform action and avoiding inconsistencies among successors.
These solutions deliver some administrative relief and allow tax obligations to be met on time without extra formalities or requests for special authorization. They also enable legal successors to exercise the tax-related rights of their predecessors, including the right to a refund of overpaid tax, the use of tax credits, and the carry-forward of tax losses.
Is there an obligation to prepare a Report on the Realization of the Division of Rights and Obligations, and when does it arise?
As part of the new statutory obligations, the submission of a Report on the Realization of the Division of Rights and Obligations of the Legal Predecessor has been introduced in the case of status changes involving division and spin-off. This report must be filed within 60 days from the date of registration of the status change with the SBRA, and the Tax Administration has prescribed a form that must be completed and submitted together with the supporting documentation.
The report contains:
- A tabular overview of all public revenues, indicating the type of public revenue, payment account, amount of principal debt, amount of interest, amount of any overpayment and the reference number;
- A presentation of the tax incentives transferred to the legal successor as a result of the status change (e.g. entitlement to a tax credit, carried-forward tax losses, etc.);
- An inventory of the assets and liabilities transferred to the successor, recorded in its accounting books (most often on the balance-sheet form that is attached to the report).
The purpose of the report is to provide a clear record of the allocation of tax obligations and rights and to ensure transparency in the subsequent actions of both the Tax Administration and the legal successors. The report also enables precise control of the transfer of tax positions and secures continuity in tax records.
Amendments to the VAT Law concerning status changes: new rules on deregistration of taxpayers and the VAT treatment of asset transfers
One of the significant and practically very important amendments that entered into force on 1 January 2025 relates to the abolition of the obligation for a taxpayer that ceases to exist through a status change to file a request for deletion from the VAT register, as well as to the more precise regulation of the VAT treatment of asset transfers in those cases.
1. Deregistration from the VAT register in the case of a status change – the new rule
Before the amendments to the Value Added Tax Law, the general rule was that a VAT taxpayer that ceased to carry out its activity had to submit a request for deletion from the VAT register at least 15 days before the date of cessation. This rule proved difficult to apply in status changes, because a legal entity that is to be deregistered as a consequence of the status change ceases to exist only on the date on which that change is carried out, and until that moment, it formally continues to operate as a VAT taxpayer.
The VAT amendments, therefore, introduce an exception for status changes:
Where a VAT taxpayer ceases to exist as a result of a status change, the taxpayer’s legal successor is obliged to notify the Tax Administration of this within 15 days of the date on which the status change is carried out. In this way:
- the obligation for the taxpayer that is extinguished to submit a separate request for deletion from the VAT register is abolished;
- more efficient updating of the VAT register is enabled without formalistic obstacles;
- the responsibility for informing the Tax Administration of the cessation of the VAT taxpayer passes to its successor.
This represents an important administrative relief and a practical mechanism that reflects actual business practice in cases of mergers, absorptions and similar changes.
2. The new VAT regime for asset transfers within a status change
Particular attention should be paid to the amendment to the VAT Law that clarifies how VAT is calculated on the transfer of the whole or part of assets within a status change.
Accordingly, the agreement or division plan on the status change may provide that VAT will be calculated on the supply of goods and services constituting the asset transfer, in accordance with the standard rules of the VAT Law. This represents an exception to the so-called “transfer of a business as a going concern,” which previously applied automatically and meant that VAT was not charged.
In other words, the law now allows flexibility: the parties to the status change may agree that the asset transfer will be treated as a taxable supply. This is particularly important where goods and services with different VAT treatments are transferred – for example, some may be VAT-exempt, while others are subject to the general or a special rate.
In that case, for each individual good or service transferred within the asset transfer, it will be necessary to determine specifically:
- whether the supply is taxable or exempt from VAT;
- which VAT rate applies;
- whether the recipient of the transfer is entitled to deduct input VAT.
This amendment has practical consequences for tax planning, especially in situations where assets carrying significant amounts of input VAT are being transferred.
Do the Amendments to the Companies Act Introduce Any Key Changes?
The most recent amendments to the Companies Act further specify and broaden the legal framework for carrying out cross-border status changes as well as for establishing European business forms, with the aim of aligning domestic legislation with the acquis communautaire of the European Union. These provisions were originally incorporated into domestic law back in 2018, with a scheduled start of application on 1 January 2025. However, they did not enter into force as planned. Instead, at the beginning of this year, amendments and supplements to the Act were adopted that regulate these matters in far greater detail and more comprehensively, so as to achieve full harmonisation of domestic law with the EU legal framework. At the same time, the new date for the start of application of these provisions has been moved to 1 January 2027.
1. Cross-border Merger by Acquisition and Cross-border Merger
For the first time, the Act precisely defines the concepts of a cross-border merger by acquisition (prekogranično pripajanje) and a cross-border merger (prekogranično spajanje).
- A cross-border merger by acquisition is a status change involving at least two companies, one of which is registered in the territory of the Republic of Serbia and the other in the territory of a Member State of the European Union or a State that is a signatory to the Agreement on the European Economic Area (EEA).
- In a cross-border merger, two or more companies combine by incorporating a new company to which all assets and liabilities are transferred, while the transferring companies cease to exist without undergoing liquidation.
The Act also lays down exceptions: cooperatives (even if organized under the law of another Member State as capital companies) and companies for the management of investment funds, and the investment funds themselves may not participate in cross-border status changes.
To ensure legal certainty and transparency, the process of a cross-border merger by acquisition and merger requires the preparation of a common draft terms of merger, which must be made available to the public at least thirty days prior to the adoption of the decision on its approval. The competent bodies of the companies participating in the cross-border status change draw up reports on the legal and economic effects of the merger, while independent auditors assess the fairness of the share-exchange ratio.
A notarial deed constitutes the key document confirming that the entire process has been carried out in accordance with the law. If the acquiring entity has its seat in Serbia, the registration filing must be accompanied by a certificate issued by the competent authority of the other State attesting to the lawfulness of the procedure on its part. Deletion of the merged company from the Serbian register is possible only after proof is provided that the change has been entered in the register of the other State.
2. Establishment of a European Joint Stock Company (Societas Europaea – SE)
The Act specifically regulates the procedure for establishing a European joint stock company (SE). An SE may be established by a cross-border merger by acquisition or merger of joint-stock companies, at least one of which is registered in Serbia. Alternatively, it may also be formed as a holding SE or a subsidiary SE. The minimum share capital of an SE is EUR 120,000, and all financial amounts are expressed in euros, while payments are made in dinars at the official exchange rate of the National Bank of Serbia.
The Act also prescribes a series of procedural steps, including the obligation to draw up a common draft term of formation, the preparation of reports on the effects of the transaction, an auditor’s assessment of the fairness of the share-exchange ratio, and the obligation to publish the relevant documents not less than one month before the decision is taken.
After registration of the European joint stock company, the Business Registers Agency must, within 30 days, transmit data on the formation, deletion, or transfer of the seat to the Office for Official Publications of the European Communities for publication in the Official Journal of the European Union.
3. European Economic Interest Groupings (EEIG)
The Act also introduces the possibility of establishing a European Economic Interest Grouping as a special legal form whose purpose is to facilitate and coordinate the economic activities of its members. A Grouping may be formed by at least two legal or natural persons, of which at least one is registered in Serbia and another in a different EU or EEA State.
An EEIG may not carry out its own economic activity for the purpose of making a profit; it may perform only activities that are auxiliary and ancillary to the business of its members. The Grouping is likewise prohibited from directing or supervising its members’ activities in respect of employees, finances, or investment decisions.
What Are the Practical Consequences of the Amended Regulations?
The amendments to the tax regulations that entered into force at the beginning of 2025 represent a significant step towards modernizing and more precisely regulating the tax treatment of status changes. Issues such as deletion from the VAT register, standing to file tax returns, and the allocation of tax rights and obligations are now defined in legislation in a manner that allows more efficient application in practice.
Legal successors of companies must assume an active role in fulfilling the tax obligations arising from the former legal personality. In this context, it is advisable to engage legal and tax advisers when planning and implementing status changes, so that all tax obligations are identified, properly allocated, and timely discharged.
As an additional recommendation, all resolutions and agreements accompanying status changes should contain clear clauses on the tax treatment of asset transfers, including explicit provisions on VAT liabilities and the allocation of tax rights and obligations. Transparency and precision at this stage directly reduce risk and enhance legal certainty in the future operations of legal successors.
Conversely, the amended provisions of the Companies Act, once they enter into force, will simplify the operations of domestic companies on the European market and provide legal certainty for foreign investors wishing to operate in Serbia through European business forms. This further contributes to harmonization with EU law and enhances the competitiveness of the domestic economy in the single European market – an objective toward which efforts should undoubtedly be directed.
