Use Tax Facility “R&D Double Deduction” for Research and Development in Serbia

If you are doing research and development in the Republic of Serbia, there’s the possibility of using the “R&D Double Deduction” incentive. This tax incentive provides the possibility of a tax payer citing a double amount of the costs directly related to the research and development activities done in the Republic of Serbia as an expenditure in the tax balance sheet.

Research refers to original or planned research whose aim is to acquire new knowledge, and development refers to the implementation of the results of the research or other learned content.

What do research and development costs entail concretely?

The costs that are recognized as eligible for the tax facility “R&D Double Deduction” are all direct costs related to research and development.

Concretely, these are the costs of the employees’ salaries, materials, procurement of non-material resources, procurement and lease of standing resources, procurement of expert opinions, consulting services and transfer of necessary knowledge, costs incurred for the purposes of legal protection, borrowing monetary resources and costs of production services, however, it all has to be directly connected with research and development.

There are also exceptions, that is, costs which are not recognized, namely, sales costs, such as advertising and promoting a new product or a service, administrative and other general overhead costs, costs of employee training, as well as the costs of the current maintenance of standing resources.

Conditions for realizing the right to tax facilities

You can realize the right to the incentive exclusively based on a R&D project done in the Republic of Serbia. Concretely, at least 90% of all employees hired for R&D jobs need to carry out their activities in the territory of the Republic of Serbia.

The exception are R&D activities done outside the territory of the Republic of Serbia if their relocation is caused by special physical, geographic, that is, natural factors which could not be secured in the territory of the Republic of Serbia.

Also, it is necessary for R&D to be done for own needs, so if you are carrying out a project as a service, for the parent company or some other company, you will not have the right to use this incentive. So, if you intend to implement the tax incentive “R&D Double Deduction”, the result of the R&D project needs to belong to you.

The required documentation

In order to exercise the right to the facility “R&D Double Deduction”, it is necessary to submit, in paper form, in addition to the tax balance sheet, the following documentation: a description of the project with specially highlighted goals, phases and planned activities, the records of the time spent by the employees working on the project and a conclusion. We emphasize that it is necessary for the conclusion to contain all the data on all the R&D costs, as well as their total amount.

What do experts say about this tax exemption?

The experts of Confida from Serbia – an international tax advisory, consulting and accounting company, talk about the tax facility “R&D Double Deduction”.

They note that this tax facility can be realized regardless of whether the project was finalized successfully or not, which is certainly an advantage.

Furthermore, they point out that, from March 1, 2022, a new tax exemption, complementary to the incentive “R&D Double Deduction” is available, which, if you carry out R&D activities, provides you with the possibility of freeing yourself from the payment of 70% of the calculated and withheld wage tax and 100% of the contributions for the Pension and Disability Insurance Fund based on the wages of the employees directly hired for R&D jobs.

In order to realize the right to exemption proscribed by this new facility, you need to possess the necessary records of the time that the employees hired for R&D jobs spend on activities directly related to the project relative to the total work hours.

Also, the experts from Confida believe that such incentives certainly have a great impact on a greater integration of research and business development in the Republic of Serbia.

The use of such incentives is certainly an advantage – both for companies which carry out the research and the entire society on which that research has a positive, developmental impact.

Confida Serbia, as an expert for tax-legal, audit and accounting regulations, offers an overview of the specific needs of the clients.

The big international experience is reflected in the flexibility, the cross-border communication and cooperation with their offices: The key to our success in Serbia lies in the high level of services and the remarkable technical skills and knowledge of our team – they emphasize.

Their clients get the best answers to the posed questions. Client trust is what’s most important to them, and it is also the key to their success. They offer services in the field of tax advisory, accounting, outsourcing of salary calculation, business consulting and auditing, support in launching a business and financial consulting.

Confida Consulting d.o.o. Beograd

Confida Srbija

RD double deduction incentives

research and development

tax facilities

expenditures

double amount of costs

how to realize RD double deduction

exemptions

required documentation

calculated and withheld wage tax

contributions for the Pension and Disability Insurance Fund