Tax on Absolute Rights

Basic Information

Taxpayer: An individual or legal entity that transfers or acquires ownership rights over real estate.

Subject of Taxation: Transfer of ownership of real estate (apartment, house, land, etc.), as well as the right of use, long-term lease rights, building rights, and other real rights over real estate.

Tax Base: The market value of the real estate at the time of contract conclusion, according to the assessment made by the Tax Administration. This value may differ from the contracted price, so it is important to pay attention to the assessment conducted by the competent authorities.

Tax Rate

The standard tax rate for the transfer of absolute rights is 2.5% of the market value of the real estate.

This rate applies to most cases of ownership transfer. However, in special cases (such as transfer based on a gift contract between close relatives) different rates may apply, depending on the type of transfer and the relationship between the parties.

Exemptions from Tax Payment

There is no obligation to pay the tax on transfer of absolute rights in the following cases:

• Purchase of First Real Estate (First Home): The exemption applies when the buyer (an individual) purchases an apartment or house for the first time to solve their housing issue, under the following conditions:
  • The buyer is an individual purchasing real estate in Serbia for the first time
  • The area of the purchased property does not exceed a certain limit (up to 40 m² for the buyer alone, plus an additional 15 m² for each household member living with them)
  • The property is used exclusively for housing
• Transfer between Close Relatives: In some cases of gifts between direct ancestors and descendants or between spouses, special regimes or tax exemptions may be possible
• Transactions between VAT Subjects: When the transaction occurs between entities that are VAT payers and where VAT is calculated on the transfer (e.g., for new apartments), the tax on absolute rights is not paid

Documentation and Payment Procedure

• Authentication of Sales Contract: The real estate sales contract must be authenticated by a public notary to be legally valid
• Submission of Application: The public notary is obligated to submit the application for the tax on transfer of absolute rights to the Tax Administration (using form PPI-4 or similar)
• Issuance of Decision: The Tax Administration analyzes the application, assesses the market value of the property if necessary, and then issues a decision determining the tax due
• Payment Deadline: The buyer is obligated to pay the tax within 15 days from the date of receiving the Tax Administration's decision
• Payment Method: The tax is paid to the appropriate account of the budget of the local self-government unit (municipality/city where the real estate is located)

Legal Framework

• Property Tax Law (Official Gazette of RS, No. 26/2001 with amendments)
• Law on Real Estate Transactions
• Regulation on Determining the Tax Base and Tax Rate for the Tax on Transfer of Absolute Rights
• Laws and regulations enacted at the municipality and city level

Important Notes and Practical Advice

• Registration of Ownership: If the buyer has not paid the tax, the Real Estate Cadastre may prevent the registration of ownership, thereby preventing the completion of the ownership transfer
• Default Interest: In case of delayed tax payment, default interest is calculated according to the legal rate
• Possibility of Appraisal: If you disagree with the market value assessment determined by the Tax Administration, you can request an appraisal of the property value by an authorized appraiser
• Consultation with Experts: Consultation with a lawyer or tax advisor is recommended to ensure all obligations are met and all necessary conditions are fulfilled
• Advance Payment: In some cases, the buyer must pay an advance on the tax before the decision is issued, depending on regulations