Serbia published in the Official Gazette on 10 April 2020 the Regulation on benefits to private sector entities and financial assistance to citizens to mitigate the economic impact of COVID-19. For companies, the benefits include:
To qualify, it is required that companies have not reduced their number of employees by more than 10% between 15 March and the date the Regulations entered into force (10 April 2020). Certain entities are specifically excluded, however, including entities covered by the List of Beneficiaries of Public Funds, as well as banks, insurance and reinsurance companies, voluntary pension fund management companies, financial leasing providers, and payment institutions and electronic money institutions.
The regulation also provides other relief benefits, including grants for payments to employees in May, June, and July 2020. For SMEs, the grants are equal to the minimum net earnings for March 2020 multiplied by the number of full-time employees. For large companies, the grants are equal to 50% of the minimum net earnings for March 2020 multiplied by the number of full-time employees that have been issued a decision to terminate their work. The grants must be paid to employees in full.
Companies taking advantage of the payment deferral and the grants will lose the benefits in certain cases, including where there is a 10% or greater reduction of employees in the period 15 March until three months after the final grant is paid. Further, companies are not allowed to pay any dividends until the end of 2020 (except for dividends paid as shares). In the event that benefits are lost, deferred tax liabilities will become due, with interest, and grants received must be repaid, also with interest. Further penalties may also apply.
Lastly, the regulation provides a VAT exemption on supplies of goods and services without consideration to certain health institutions. Taxpayers making such supplies are allowed to deduct input VAT. The exemption applies from 15 March until the state of emergency is ended.
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