Japan–Serbia tax treaty to enter into force

The governments of Japan and Serbia on November 5 completed the necessary exchange of diplomatic notes for the entry into force of the tax treaty between the two countries that was signed in July 2020.

In accordance with its terms, the treaty will enter into force 30 days after the exchange of diplomatic notes, i.e., December 5, and will generally have effect beginning in 2022.

The treaty establishes a 10% general maximum withholding tax rate for dividends. A reduced 5% rate applies if the beneficial owner is a company holding directly, for the previous 365 days, at least 25% of the voting power (Japanese companies) or capital (Serbian companies) of the paying company.

For interest, the treaty establishes a maximum 10% withholding tax rate – with some exemptions, such as when the government is the beneficial owner.

The treaty establishes a maximum 5% withholding tax rate for copyright-related royalties. A 10% tax rate applies for payments related to patents, trademarks, and other types of royalty payments.