Guide
Profit distribution and dividends
Biro Vision manages the entire profit distribution process, from verifying available profit and preparing the distribution decision to calculating and filing capital income tax and recording everything in the books.
When a d.o.o. operates at a profit, the owners can pay the earned profit to themselves as a dividend, but only after the financial statements are adopted and corporate income tax is settled. Distribution does not happen automatically; it is based on a decision of the company's competent body that sets the amount, the recipients and the payment deadline. A dividend paid to an individual is subject to capital income tax at a rate of 15%, which the company withholds and pays. A properly executed profit distribution is entirely different from a loan to the owner, so it is important to distinguish these two cash flows and record them correctly.
What you should know
- Profit can be distributed only after the financial statements for the year are adopted and after corporate income tax has been settled, because what is distributed is the net, taxed profit.
- The decision on profit distribution and dividend payment is made by the assembly, that is the company's competent body, and it states the amount, the members entitled to payment and the payment deadline.
- A dividend paid to an individual is subject to capital income tax at a rate of 15% on the gross amount, which the company withholds as withholding tax.
- A dividend paid to a domestic legal entity is as a rule not subject to withholding tax, while a payment to a foreign legal entity is taxed at 20%, with a possible lower rate under a double taxation treaty.
- A profit distribution and a loan to the owner are two completely different things: a dividend is the owner's income that is taxed, while a loan is a debt repaid to the company and is not income.
- The dividend payment deadline is set by the distribution decision itself, and members are notified of the adopted decision in accordance with the law and the founding act.
How we handle it
- 01 We check the available profit We analyze the adopted financial statements and determine the amount of retained earnings genuinely available for payment after corporate income tax has been settled.
- 02 We prepare the distribution decision We prepare the decision on profit distribution and dividend payment that clearly states the amount, the members entitled to payment and the payment deadline.
- 03 We calculate the dividend tax We calculate capital income tax at a rate of 15% on the gross dividend and determine the net amount that the individual owner actually receives in their account.
- 04 We file the tax return We submit the electronic withholding tax return to the Tax Administration and make sure the tax is paid within the legal deadline tied to the payment date.
- 05 We record the payment in the books We record the profit distribution, the tax liability and the dividend payment in the books, and clearly separate the dividend from any loans to the owner.
- 06 We track deadlines and documentation We track the payment and member notification deadlines and keep complete documentation of the decision and calculation for accounting purposes and any inspection.
Company formation
We register your company with APR and handle all tax and banking obligations.
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