Milić Đoković, an expert from the real estate brokers group at the Serbian Chamber of Commerce, highlighted in an interview on RTS1’s “Morning Program” that the tax base for the transfer of absolute rights is set at 2.5 percent for all contracts involving burdensome transactions.
Starting January 1, 2025, according to the latest amendments to the law, the responsibility for determining, collecting and controlling taxes related to the transfer of absolute rights will be shifted to local self-government units.
The new process is expected to be implemented within a year to a year and a half.
“The tax is not only applicable on purchases but also on inheritance, property exchanges, and joint construction. Various types of taxes exist. The Tax Administration has the authority to change this rate within 60 days if it is deemed necessary. They have criteria to assess whether the declared price in the contract is accurate, and they cross-reference it with comparative data. When a contract is verified by a notary public, it is then sent to the local government tax administration. However, this process can be slow, and decisions sometimes take up to a year or more to arrive. Once a decision is made, there is a 15-day deadline to pay the tax,” Đoković explained.
He also emphasized that the taxpayer is typically the seller, though foreign sellers may also be involved in some cases. “We advise clients to include a tax power of attorney in the contracts, where the seller authorizes the buyer to act as the signatory and handle the tax payments on their behalf,” he added.
First-time homebuyers are exempt from this tax, and they may benefit from a reduction in the profit tax, or VAT. To qualify for this exemption, the buyer must not have owned property since June 1, 2006. Additionally, there is a 40-square-meter exemption for the primary buyer and 15 square meters for household members living at the same address. This exemption applies to both new and old constructions.
Tax is also not applied on gift transactions. However, there is a distinction between “upstream” and “downstream” transactions. In cases where parents buy property for their children, no tax is due, but when children buy property for their parents (referred to as “upstream”), tax is imposed, which is a more complicated situation.
Đoković further explained that the Tax Administration may visit the property in two instances: when the client is unsatisfied or when the Tax Administration suspects discrepancies. “The Tax Administration may be dissatisfied if the contract shows a lower price, such as €1,500 per square meter for an apartment in Takovska, and that may not be accurate. The apartment may be in poor condition, with issues like a leaking attic. However, factors like the location and the number of floors still influence the price,” he concluded.
