An overview of Transfer pricing in Serbia

Serbia/January 2015

How was the first year of implementation of Transfer Pricing Rules in Serbia?

For some multinationals operating in Serbia 2013 it was not the first year of implementation of the Transfer Pricing Rules. The Law was present in Serbia for more than a decade. More specific, Transfer Pricing Rules have been present since 1 July 2001, but the Serbian Rulebook that was enacted on July 2013 gave clarity to Transfer Pricing Rules. Nonetheless, multinational companies operating in Serbia had already their transfer pricing policies in place due mainly to the fact that their headquarters were in countries with developed Transfer Pricing Rules.

For the large majority of the entities, 2014 was the first year of implementation regarding transactions that took place during 2013. For those entities the procedure was demanding both for their financial departments and their advisors.

Is it “right” or “wrong” way to prepare a Transfer Pricing Study?

The application of the arm’s-length principle requires the ability to see the nature of each inter-company transaction by understanding also under what circumstances those transactions took place, interpreting comparable situations and applying judgment.  Moreover since Transfer pricing is not an exact science, there is no “right” or “wrong” but there are some “risky” areas where taxpayers should be very careful. For example, by saying merely that the applied margin is in accordance with the Group’s policy you do not document that the transaction is in accordance with the arm’s length principle. Also by preparing a Transfer Pricing study which does not include a justification for the selected TP method you may face a pitfall because in a potential transfer pricing audit tax authorities in Serbia may have another opinion about the selected method.

Eurofast’s team of highly skilled professionals in each country works together with the client, “back to back”.  We have centralized our work which means that through our network of offices in Southeast Europe and the Eastern Mediterranean, as well as our associates worldwide, we have the ability not only to service a local entity which operates in a specific jurisdiction but also to offer advisory services by understanding the interaction of each country’s legislation to the Group operations.

Anastasia Sagianni
Transfer Pricing Advisor
Eurofast Global, Belgrade Office