Digital assets becoming part of Serbia’s tax reporting obligations to EU

In the process of adapting to the legislation of the European Union, Serbia is currently in the process of adopting new legal provisions in the field of administrative cooperation concerning taxation, which will incorporate a dozen EU Directives. The draft law on administrative cooperation in the field of taxation prescribes the exchange of information upon request, spontaneous exchange of information, mandatory automatic exchange of information, as well as other forms of administrative cooperation and mutual assistance in the collection of claims arising from taxes and other public revenues. The state authorities responsible for administrative cooperation are the Ministry of Finance, namely the Tax Administration and the Customs Administration.

This legislative proposal stipulates that Serbia shall notify the European Commission without delay of the authority or authorities responsible for implementing administrative cooperation, while the Tax Administration shall establish a central contact office whose primary responsibility is communication with the competent authorities of other Member States in matters of administrative cooperation. The provisions of this law apply to all types of taxes imposed by EU Member States, except for value added tax, customs duties and excise duties which are the subject of other EU acts on administrative cooperation between Member States. They also do not apply to contributions for compulsory social security paid to a Member State, its administrative-territorial unit or a social security institution established by a Member State.

The Tax Administration is not obliged to provide information if this would be contrary to Serbian regulations, and may refuse to forward the requested information if there are legal obstacles to obtaining similar information in the Member State that requested the information or if this would lead to the disclosure of a business or professional secret. The law also prescribes several cases when the Tax Administration cannot refuse to provide information at the request of the competent authority of another Member State, so it must provide it even when it is not relevant for its domestic tax purposes or when it is in the possession of a bank or other financial institution.

The draft law on administrative cooperation in the field of taxation also provides for the automatic exchange of information reported by providers of services related to digital assets. They are subject to numerous additional obligations to collect, submit and store a large amount of information in addition to basic user data, type of digital asset, total gross amount received and total fair market value of digital asset. The obligation is to submit the information collected in this way to the Tax Administration no later than June 30 of the current year for the previous calendar year.

Tax advisor Milos Praštalo assesses that this legal proposal is part of the harmonization with the EU tax system in the part concerning digital asset regulations.

– Through the adoption of the new Draft Law on Administrative Cooperation in the Field of Taxation, our country is seriously entering the system of international tax transparency regarding digital assets – Prastalo told Biznis.rs.

This means, he adds, that providers of services related to digital assets will have to collect data on users and certain crypto transactions, submit this data to the Tax Administration, and the Tax Administration will then automatically exchange it with other countries or jurisdictions.

– This is part of the harmonization specifically with the DAC8 rules, with which the EU is trying to introduce much greater tax transparency into the crypto sector. In practice, this means that crypto platforms and service providers will no longer be just technical infrastructure for buying, selling and exchanging digital assets, but will also become part of the tax reporting system – says Prastalo.

In addition to collecting data, crypto exchanges and platforms will have to request tax residency statements, keep records, store documentation and send information to the Tax Administration within the prescribed deadlines. All this means that tax control of digital asset flows will be increasingly stricter and that it will be increasingly difficult to carry out crypto transactions with the attitude that it will remain beyond the reach of tax authorities. Prastalo believes that this is a logical sequence of events and contributes to the professionalization of the entire market and the reduction of the gray area, as crypto assets will be treated less and less as some exotic and incidental phenomenon.

Although the implementation of this law may seem far away, Prastalo advises all those who do business with digital assets to sort out their documentation, tax residency, records and the way they prove transactions. The draft law stipulates that service providers associated with digital assets are obliged to prevent users of digital assets from carrying out transactions that they are obliged to report if they do not submit the requested information within 60 days.

A special novelty introduced by these regulations concerns the obligation for the competent authorities of Serbia to treat claims of other member states as if they were their own claims in accordance with the authorizations and procedures provided for by domestic regulations, which apply to claims for the same or similar taxes and other public revenues.

In this sense, the law also recognizes requests in the other direction, i.e. that domestic competent authorities may send requests to other member states for the collection of claims, but it is necessary that all other possibilities for their collection in the country have been exhausted before that.

The envisaged fines for legal entities amount to 100,000 to two million dinars, depending on the severity of the offense, while responsible persons may be fined up to 100,000 dinars.

The law enters into force on the eighth day from the date of its publication in the Official Gazette, and will be applied from the date of Serbia’s accession to the European Union. By-laws will be adopted within one year of its entry into force.

Ministarstvo finansija Republike Srbije

Poreska uprava Srbije

Uprava Carina Beograd

Miloš Praštalo

digital property

tax reporting

accession of Serbia to EU