Rulebook on Arm’s Length Interest Rates applicable for 2019 which applies on related parties’ loans has been published in the Official Gazette of Republic of Serbia No. 13/2019 on 28 February 2019. The Rulebook has entered into force on 8 March 2019.
1. Interest rates on banks and financial leasing
Interest rates in accordance with “arm’s-length” principle that apply on banks and financial leasing companies are:
- 2,72% on short-term loans in RSD;
- 3,64% on loans in EUR and dinar loans indexed in EUR;
- 5,05% on loans in USD and dinar loans indexed in USD;
- 2,98% on loans in CHF and dinar loans indexed in CHF;
- 3,91% on loans in SEK and dinar loans indexed in SEK;
- 4,25 % on loans in NOK and dinar loans indexed in NOK;
- 1,92% on loans in GBP and dinar loans indexed in GBP;
- 1,41% on loans in RUB and dinar loans indexed in RUB.
2. Interest rates for other companies
Compared to 2018, the falling trend of interest rates for other companies has continued, except for the long-term loans in RSD:
- 4,98% on short-term loans in RSD;
- 5,69% on long-term loans in RSD;
- 2,71% on short-term loans in EUR and dinar loans indexed in EUR;
- 2,90% on long-term loans in EUR and dinar loans indexed in EUR;
- 7,61% on long-term loans in CHF and dinar loans indexed in CHF;
- 3,08% on short-term loans in USD and dinar loans indexed in USD;
- 4,12% on long-term loans in USD dinar loans indexed in USD.
Prescribed interest rates taxpayers may apply for the purpose of determining corporate income tax i.e. calculation of the expense adjustment with related parties for 2019.
Attention! The abovementioned interest rates may be used by tax payers when paying interest on received loans by non-resident related parties, having in mind that the most of Double Tax Treaties provide possibility of using beneficial WHT rate only up to the amount of interest that is in accordance with the arm’s length principle. For the amount of interest exceeding the amount considered to be in accordance with arm’s length principle, the statutory tax rate is applied (20%).
