Transfer Pricing in Serbia

The legal framework

Serbia runs a mature transfer pricing regime without an OECD Transfer Pricing Country Profile. The OECD's profile index, last updated 22 January 2026, covers 83 jurisdictions; Serbia is absent, as are Montenegro and North Macedonia, while Albania, Bosnia and Herzegovina, Croatia, Kosovo and Slovenia are all covered. Serbia is not an OECD member and has submitted no profile. Advisers scoping a Serbian file have no OECD summary to lean on and must read the domestic instruments directly.

Those instruments are few but dense. Transfer pricing occupies Part Eight of the Law on Corporate Income Tax, Articles 59 to 61v, with thin capitalisation in Article 62; the operative detail sits in the Rulebook on transfer pricing, consolidated at Official Gazette RS nos. 61/2013, 8/2014, 94/2019 and 95/2021. The standard is split across two paragraphs of Article 60. Article 60(1) requires the taxpayer to show separately in its tax balance what the same related-party transactions would have yielded at market prices between unrelated parties; Article 60(8) then requires the positive difference to be included in the tax base, within the correction mechanics of Article 60(5) to (9). Article 60(3), often miscited as the arm's length rule, does something else entirely — it is the obligation to file the documentation itself.

The related-party net is wide. Article 59 catches anyone able to control or significantly influence the taxpayer's business decisions, with control presumed at 25% direct or indirect ownership and significant influence at 25% of the votes in management bodies, extending to family members. Article 59(7) then deems every entity resident in a jurisdiction on the Ministry of Finance's preferential-tax list to be a related party, with no ownership link required at all. The list is numbered to 51 but two ordinals have been deleted, leaving 49 live jurisdictions — a provision that regularly surprises groups holding a service company in a listed jurisdiction.

Two authorities matter, not one. The Tax Administration (Poreska uprava, PURS) administers and audits. The Ministry of Finance writes the secondary legislation, publishes the annual arm's length interest rates, hears second-instance appeals and acts as treaty competent authority for MAP.

Methods, comparables and benchmarking

Article 61(1) permits the comparable uncontrolled price, cost plus, resale price, transactional net margin and profit split methods, plus any other method where none of those can be applied. There is no statutory hierarchy: Serbia runs a best-method rule, with CUP favoured where reliable comparables exist. The Rulebook develops each method at length — CUP at Articles 12 to 14, resale price 15 to 18, cost plus 19 to 24, TNMM 25 to 27, profit split 28 to 30 — so a study that recites a method label without tracking the Rulebook's steps invites challenge.

Serbia codifies the interquartile range rather than leaving it to practice. For TNMM the Rulebook defines the market range as the net margins between the first and third quartiles, and contemplates comparable financial data over three to five years. Where the tested result falls outside the range, adjustment is made to the nearest edge or to the median depending on the facts.

Benchmarking is local-first. The Tax Administration prefers internal comparables — the taxpayer's own dealings with independent parties — over any database search. Where an external set is needed, Serbian companies come first; Balkan, South-East European or wider Eastern European sets are accepted if the domestic sample is genuinely inadequate and the widening is reasoned in the study. Pan-European and global sets attract scrutiny. The analysis must be refreshed annually: Serbia does not accept a multi-year benchmark roll-forward, and unexplained year-on-year movement in a computed range is itself an audit trigger. In the overwhelming majority of studies the Serbian entity is the tested party — a consequence of the Rulebook's entity-focused content requirements and of Article 60 operating only on the Serbian tax base, not of any express rule.

Documentation: what the Tax Administration expects

Serbia has not adopted the OECD three-tier model. There is no master file and no local file; the Rulebook requires a single composite study folding group-level and entity-level material into one document. Articles 3 to 8 prescribe the contents: analysis of the group and its structure, industry and market analysis with competitive factors and risks, description of each controlled transaction with functions, risks and assets, selection and justification of method with the comparables identified, the arm's length conclusion, and sources and appendices. Any adviser told that Serbia now expects a master file and local file should check the Official Gazette: the Rulebook has not been amended since 95/2021.

A short-form report is available under Article 60 and Article 2(3) of the Rulebook where a one-off transaction, or the aggregate of transactions with a single related party in the period, does not exceed the VAT registration turnover threshold — currently RSD 8,000,000, roughly EUR 68,000. That is a cross-reference, not a fixed number, so it moves whenever the VAT threshold moves. Loans and credits are carved out: an interest-bearing intercompany loan requires the full study whatever its size.

The documentation is filed, not merely held. Article 60(3) requires it to accompany the tax balance, and Article 63 sets the return deadline at 180 days from period end — for calendar-year taxpayers 29 June, or 28 June in a leap year. The 30 June that advisory summaries quote is not a rounding, it is a date that never arises. Filing runs through the ePorezi portal; the CbC form is the exception and goes in on paper. Documentation must be in Serbian, so group material needs translating. Disclosure lands on Form PB 1, expanded to 69 positions, with lines 51 to 54 carrying the transfer pricing expenses and income (52 and 54 for short-form amounts), line 57 the sum of final corrections from the conclusion of the study and line 58 the thin-capitalisation disallowance. CbC reporting under Article 61v applies to Serbian-resident ultimate parents of groups with consolidated revenue of at least EUR 750 million, on Obrazac CbC, within 12 months of year end.

Audits, penalties and the enforcement climate

Transfer pricing is the leading audit exposure for foreign-owned Serbian subsidiaries, and the Large Taxpayers Centre now reads studies with real technical sophistication. Recurrent targets are intra-group services and management fees, where the authority tests benefit and actual provision before it argues about price; royalties for software, brands and know-how, with DEMPE-flavoured substance questioning; intercompany financing, where the safe-harbour election and the Article 62 debt-to-equity ratio are checked together; persistent losses in entities described as limited-risk; and unexplained profitability swings.

The penalties live in the Tax Procedure Law, not the CIT Law. Article 112 of the CIT Law has been repealed, leaving Article 112a as the only surviving penal provision and Article 74 referring penal matters onward. ZPPPA Article 178a(1) fines a legal person RSD 100,000 to RSD 2,000,000 for failing to submit prescribed documentation with the tax return, with a flat RSD 100,000 for late submission under Article 178a(3) and RSD 10,000 to RSD 100,000 for the responsible person under Article 178a(5); failure to disclose related-party values in the tax balance is caught by Article 178(2). CIT Law Article 112a still requires a written notice giving between 30 and 90 days to cure. On an adjustment the additional tax is charged at 15% with default interest, and the misdemeanour penalty is Article 178: 30% to 40% of the difference, floor RSD 200,000 for a legal person, falling to a flat RSD 100,000 where the difference is 5% or less. The "up to 25% of the understatement, RSD 500,000 floor" formulation that circulates in advisory summaries is wrong twice over — the range is 30% to 40%, and the RSD 500,000 floor belongs to Article 177(1), the failure-to-file offence.

There is no documentation-based penalty protection: a compliant study is not a defence to an Article 178 adjustment penalty. There is, however, a voluntary-disclosure style relief that summaries usually miss. Under Article 40(4), filing an amended return that removes the error or omission means no criminal offence or misdemeanour under that law is deemed to have been committed — available for at most two amended returns, and lost once a tax audit of the period has commenced, an assessment decision under Article 54(2)(2)(2) has issued, or tax police action has begun. Assessment is limited to five years under Article 114, with an absolute ten-year cut-off under Article 114ž, after which the liability must be terminated ex officio; Article 114z is the separate suspension provision and should not be cited for the absolute period. Serbia has no express secondary adjustment: Article 60(8) makes the primary adjustment, and Article 60(11), implemented by Article 30a of the Rulebook, allows only netting of negative differences against positive ones with the same counterparty, with Article 60(12) confining downward adjustments to treaty-based corresponding adjustments.

Dispute resolution and advance certainty

Serbia has no APA programme — no unilateral, bilateral or multilateral route, no fee schedule, no rollback, no binding advance ruling on methodology. Its own OECD Dispute Resolution Profile, last updated 5 May 2023, records the APA contact point simply as not applicable. Certainty has to be manufactured through the documentation itself and, for financing, through the prescribed interest rates.

MAP is available under Serbia's roughly 64 treaties, and the competent authority is the Ministry of Finance's Fiscal System Department, not the Tax Administration — a distinction that has cost taxpayers time. Serbia published English-language MAP guidance in December 2020 and provides the procedure free of charge; taxpayers cooperate but do not sit at the negotiation. The MLI entered into force for Serbia on 1 October 2018, modifying the MAP articles of covered agreements.

Domestically, an assessment is appealed to a second-instance body inside the Ministry of Finance, which has held the appellate function since 1 July 2017; the first-instance authority may amend its own act before forwarding the file. Judicial review then lies to the Administrative Court, and MAP may run in parallel with that litigation, though the authorities may suspend the international procedure. Expect no precedent: targeted searching of the Serbian court databases surfaces no landmark transfer pricing judgment, and Ministry of Finance opinions do the interpretive work instead.

Pillar Two and what changes in 2026

Serbia has not enacted Pillar Two. As at August 2026 there is no income inclusion rule, no undertaxed profits rule and no qualified domestic minimum top-up tax, and no published implementation timetable; Serbia is outside the EU and so is not bound by the Minimum Tax Directive. That is not neutrality. Serbian constituent entities of in-scope groups remain exposed to IIR and UTPR charges levied elsewhere, and the headline 15% rate does not translate into a 15% GloBE effective rate once the ten-year large-investment holiday and the IP and R&D reliefs are applied. A QDMTT would keep that top-up revenue at home; nothing suggests one is imminent.

On Amount B, Serbia is a covered jurisdiction that has not adopted the approach. The OECD's June 2024 List of Covered Jurisdictions for the Inclusive Framework political commitment on Amount B includes Serbia, as a low- or middle-income Inclusive Framework member outside the EU, OECD and G20. The commitment therefore runs outward rather than inward: other Inclusive Framework members undertake to respect Amount B outcomes where Serbia applies the simplified and streamlined approach, and to relieve any resulting double taxation under treaty. Serbia does not apply it — neither the CIT Law nor the 2021 Rulebook mentions the simplified and streamlined approach — and the OECD is explicit that appearing on the list carries no obligation to adopt.

What actually changed in 2026 was narrow: the annual interest-rate rulebook, Official Gazette RS no. 36/2026, adopted 24 April and in force 2 May 2026. For non-banking companies the prescribed rates are 7.13% RSD short-term, 7.21% RSD long-term, 4.75% EUR short-term and 5.42% EUR long-term, and the short-term USD benchmark was dropped. The 2024 CIT amendment touched only Articles 34 and 63 and left the transfer pricing provisions alone.

How practitioners should respond

Four practical points follow. First, treat the calendar as the compliance risk. Because the study is filed with the tax balance at the 180-day mark rather than produced on demand, benchmarking and functional analysis must be finished months before an OECD-model group would normally begin; the Article 112a cure notice is a fine-avoidance mechanism, not a filing extension.

Second, decide the financing election deliberately. Article 61(4) offers the alternative of benchmarking the rate under the general rules instead of taking the prescribed rates, and Article 61(5) requires whichever route is chosen to be applied to every intercompany loan in the period — it cannot be mixed. Run the Article 62 thin-capitalisation test alongside it.

Third, build the study for a Serbian reader: one composite document, in Serbian, internal comparables used first, and any regional widening explained on the page.

Fourth, map the deemed-related-party list before year end rather than after. A single invoice from a listed jurisdiction creates both a documentation obligation and a 25% withholding charge, and neither is curable retrospectively — though an amended return under Article 40(4) of the Tax Procedure Law, filed before any audit begins, will at least remove the misdemeanour exposure.