On February 2nd, 2019, Sector for Financial System of the Ministry of Finance of the Republic of Serbia issued an Opinion no. 011-00-12/2019-04 (hereinafter referred to as: „Opinion“) regarding the content of credible accounting document on which basis the employer registers the obligation and makes the payment of compensation for expenses for arrival and departure from work (transportation costs), tax treatment of that compensation and recognition of expenditures on this basis in the tax balance.
Relevant laws which were basis of this Opinion are Law on Accounting, Corporate Income Tax Law and Personal Income Tax Law.
Firstly, according to Article 7 paragraph 1 of Law on Accounting (“Official Gazette of the Republic of Serbia”, no. 62/13 and 30/18; hereinafter referred to as: “Law”) legal entities and sole proprietors shall regulate, in their constitutional documents and in conformity this Law, the organization of accounting in a way that provides comprehensive recording, as well as prevention and detection of incorrectly recorded business changes, regulate the internal accounting control procedures, establish accounting policies, designate the persons responsible for legality and accuracy of initiation of a business change and the preparation and control of accounting documents pertaining to the business change, regulate circulation of accounting documents and set deadlines for their submission for further processing and recording in the books of account.
According to Article 8 paragraph 1 and 2 of the Law, the recording of business changes in the accounts of assets, liabilities and equity, income and expenses, shall be based on credible accounting documents. An accounting document shall bea written document or electronic record of business transaction, which includes all information required for entry into the books of account, so that the origin, type and content of each business change may be clearly learned from the accounting document.
Secondly, according to Article 7a point 1) of Corporate Income Tax Law (“Official Gazette of the Republic of Serbia”, no. 25/01, 80/02, 80/02-otherlaw, 43/03, 84/04, 18/10, 101/11, 119/12, 47/13, 108/13, 68/14-otherlaw, 142/14, 91/15- authentic interpretation, 112/15, 113/17 and 95/118) non-documentable expenditures shall not be recognized as a charge to expenditures.
And finally, according to Article 18 paragraph 1 point 1) of the Personal Income Tax Law(“Official Gazette of the Republic of Serbia”, no. 24/01, 80/02, 80/02-otherlaw, 135/04, 62/06, 65/06-correction, 31/09, 44/09, 18/10, 50/11, 91/11-CC, 93/12, 114/12-CC, 47/13, 48/13-correction, 108/13, 57/14, 68/14-other. law, 112/15, 113/17 and 95/18) the wage tax on the salary of an employee shall not be payable based on transportation allowances for arrival and departure from work – up to the price of the monthly ticket in public transport, or up to the amount of actual transport costs, but not more than 3,914 dinars per month.
According to above mentioned relevant laws, the employer will be exempted from paying taxes only if he possesses proof of paymentof the employee’s expenses for arrival and departure from work in the form of credible accounting documents defined in the Law, bearing in mind the fact that these costs could not be recognized as expenditure if they are not documented. In relation to that, an employer should impose an obligation to its employees to provide him with proof of transportation costs they incurred (for example a receipt for the purchase of a monthly subscription ticket, daily or one-ride ticket in public transport, a fuel bill in the case of using own vehicle and similar).
Employers would have to change their internal act/sin order to prescribe and impose the obligation totheiremployees regarding the delivery of credible accounting documents within a specified deadline, all as a proof of existence of transportation costs, and also to prescribe certain disciplinary measures if the employees do not act in accordance with the aforementioned.
If you have any questions or need further information regarding this legal opinion, please contact your regular contacts at the Živković Samardžić Law Office or Ana Popović, Partner at firstname.lastname@example.org and Filip Erić, attorney at law at email@example.com.