DTT between Serbia and Israel

The Contracting States notified each other in writing, through diplomatic channels, that the procedures required by their domestic laws for the DTT’s entry into force have been complied with.  DTT agreement between Serbia and Israel was adopted by the Serbian Parliament in February 2019 and shall apply as of 1 January 2020.

The DTT between Serbia and Israel provides the following benefits:

Article 10 -  Dividends

• 5% withholding tax rate will apply to the gross amount of the dividends if the beneficial owner (other than a partnership) directly holds at least 25% of the capital of the company paying the dividends during the period of 365 days, dividend payment date included
• 15% withholding tax rate will apply to the gross amount of the dividends in all other cases.

Article 11 – Interest

• Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State;
• Such interest may also be taxed in the Contracting State in which it arises and in accordance with the laws of that Contracting State, however if the beneficial owner of the interest is a resident of the other Contracting State, the tax charged in that way shall not exceed 10% of the gross amount of the interest;
• Interest that arises in Serbia and that will be paid to the resident of Israel will be taxed only in Israel, if the real owner of the income is government, its’ political unit, a local government unit or the Central Bank.

Investors from Israel who intend to exercise DTT favorable rates are obliged to provide a Certificate of Tax Residency issued for the current year.

Impact on investors: DTT between Serbia and Israel is expected to create a more favorable tax environment for eligible investors.