Law on Personal Income Tax
Pursuant to the provisions of the Law on Personal Income Tax (the “Law”), the income of athletes and sports professionals includes earnings received by professional and amateur athletes, sports professionals, and experts in sports. These incomes are received from sports organizations, entities engaged in sports activities, and sports associations and do not have the same meaning as salary within the regulations governing sports.
Under the Law, certain types of income received by athletes and sports professionals are considered taxable income, including but not limited to: compensation for signing contracts (such as transfers), compensation for the use of an athlete’s image, scholarships granted to top-tier athletes for sports development, monetary and other awards, national recognition payments, and awards for significant contributions to the development and promotion of sports, as well as other types of income not specifically listed.
Such income is subject to a tax rate of 20%, with the taxable base being the gross income reduced by standardized expenses in the amount of 50%.
This method of tax calculation applies exclusively when professional athletes, amateur athletes, sports professionals, and experts in sports receive the aforementioned income from a sports organization, an entity engaged in sports activities, or sports associations.
If an athlete or sports professional receives income from sources other than a sports organization, such as sponsorships, such income is taxed as “other income” under Article 85 of the Law. In such cases, the taxable base is the gross income reduced by standardized expenses in the amount of 20%.
Transfer of Players for a Fixed or Indefinite Period (Transfer) from the VAT Perspective
When a player is transferred for a fixed period, the place of supply of services is considered to be the place where the recipient of the service conducts its business or has a business unit for which the service is provided. Accordingly, if a domestic sports club transfers a player to another domestic sports club for a fixed period, such a transfer is subject to VAT at the rate of 20%. Similarly, the transfer of a player from a foreign sports club to a sports club in Serbia for a fixed period is also subject to VAT at 20%.
Conversely, if a Serbian sports club transfers a player to a foreign sports club for a fixed period, such a transaction is not subject to VAT.
For transfers of players for an indefinite period, the place of supply of services is considered to be the place where the service provider conducts its business. If the service is provided through a business unit, the place of supply is the location of that unit. Consequently, if a domestic sports club transfers a player to a foreign club for an indefinite period, such a transfer is subject to VAT. However, the transfer of a player from a foreign club to a Serbian club for an indefinite period is not subject to VAT.
Intermediation in Player Transfers from the VAT Perspective
Intermediation services related to the transfer of a player from one domestic club to another domestic club in Serbia or from a domestic club to a foreign club are subject to VAT at the rate of 20%. However, intermediation services related to the transfer of a player from a foreign club to a domestic club in Serbia are not subject to VAT.
Income of Athletes Classified as Salaries
Under the Law on Sports, a professional athlete establishes an employment relationship with a sports organization by signing an employment agreement. Income received by a professional athlete as compensation, bonuses, incentives, or other payments based on their contribution to achieving sports results are treated as salary income and are subject to income tax and mandatory social security contributions.
Scholarships and Meal Allowances
Scholarships awarded to students who are members of a sports club and are paid by sports organizations are exempt from personal income tax up to a monthly amount of RSD 43,160.00. However, scholarships granted to top-tier athletes are subject to taxation, allowing for standardized expenses of 50% without the right to a non-taxable deduction.
Meal allowances paid to amateur athletes by amateur sports clubs are exempt from personal income tax up to a monthly amount of RSD 14,077.00.
If meal allowances and scholarships granted to amateur athletes exceed the prescribed non-taxable amount, such income is subject to taxation as “other income,” allowing for standardized expenses of 20%.
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