We faced the introduced changes in taxation and the current problem and crisis caused by the COVID 19 epidemic during 2020, and it escalated with the revolt of freelancers due to the announcement of retroactive taxation in the last 5 years.
Serbian boatmen and sailors make up, or rather did, most of the individual foreign exchange earnings from abroad.
In the former state, this was clearly defined by the tax. With the disintegration of the Serbia-Montenegro community, attempts have been made to improve taxation, but the only thing that has been done so far is the introduction of general confusion and individual interpretation of a very vaguely written law.
Due to numerous ambiguities in the taxation system, as well as the problem of illogicality where one regulation or provision overrides another, we addressed the competent Ministry of Finance with a letter and a request for a clear definition of the status of taxpayers employed on ships in international navigation.
During the first address, electronically, we received an answer within 24 hours that it is necessary to pay a fee of 13100 dinars in order to answer our general question. of public importance.
We acted according to the instructions, paid the fee, sent an official inquiry by regular mail (as it was especially emphasized to us) and we did not receive an answer even after two full months.
The last time we sent an inquiry on this issue, we were told that the "case is in process".
We are publishing our letter with defined questions to the Ministry of Finance, which, unfortunately, are still without any answer.
The letter was sent on 01.05.2021. officially and before that, a few months earlier electronically.
Request for defining the tax status of Serbian seafarers and domestic workers on foreign ships
We are addressing you regarding the unclear status of seafarers and employees on ships under foreign flags, with a request to resolve and define several issues of general importance, which we as the Association of Shipowners and the Union of Shipowners and Seafarers of Serbia received on request from regular members and the international organization ITF as the largest and oldest union of transport workers in the world.
The issue and complaints of seafarers are mainly on the vaguely defined tax status.
Individuals are treated as freelancers, more precisely as freelancers, although business engagements, residence and income vary greatly.
In our country, this is a relatively new problem that arose with the disintegration of the community of Serbia and Montenegro and which has not been clearly defined since then.
Seafarers and individual workers on river vessels spend over 183 days outside Serbia, depending on the company and the country of affiliation of the vessel, pay insurance and contribute at least during the boarding period.
Some companies, ie. agencies hire workers seasonally, with a gross salary and a contractual tax return clause in the country of residence.
The problem arises when arriving in Serbia, more precisely after receiving personal income in Serbia.
We are instructed in the obligation of an individual to file a tax return himself, but in practice this is often very difficult and is reduced to an independent interpretation by the tax inspector.
Starting from the principle that ignorance of regulations does not release from responsibility, we ask you the following questions. Your answers to them should clearly and unambiguously define our obligations and responsibilities.
1. Is a citizen of the Republic of Serbia employed on a vessel owned by a foreign company registered abroad, and who spends more than 183 days a year performing activities outside the territory of the Republic of Serbia, considered a resident of the Republic of Serbia?
2. If the citizen from question number 1 is considered a resident, what are his obligations?
3. Citizens of the Republic of Serbia engaged with a foreign employer for less than 183 days and who is considered a resident and a taxpayer, what are his obligations and what is the correct procedure?
4. For citizens of the Republic of Serbia from question no. 3. When applying a double taxation agreement with another country, the other country is considered to be the country in which the employer has a registered activity or the country in which the vessel is registered? It is often the case that the company is registered in one state and the vessel being worked on in another.
The biggest problem that arises is the difference between seafarers (and people employed on ships), from other "freelancers" who live and do their business in Serbia.
The bill adopted by the Government regarding the debt rescheduling for individuals who were obliged to self-tax and for the last 5 years is that all individuals from 2016-2021 now for that period receive a monthly non-taxable portion of 32.000 dinars, write-off of interest on debt and 43% of the non-taxable part. So, the debt will be paid in amounts higher than 670.000 dinars a year, all interest is written off, 43% of that amount is deducted, and then 55% is paid on the remaining part for taxes and PIO and health.
This proposal includes ALL natural persons who earned income from work, and were obliged to self-tax and could possibly include a part of the staff employed on ships that perform seasonal work, but for most seafarers this is still not the best solution.
By not taking adequate steps and not introducing the practice of taxation according to the same clear criteria for all seafarers, more precisely all employees on foreign ships, we are in danger of leaving the country a large number of working and hardworking people and transferring their income to neighboring countries.
As an example of good practice of taxation of seafarers, which has been functioning excellently for a whole decade, we single out the example of the Republic of Croatia.
We assume that there are over 20.000 seafarers in Serbia who have been brought into an extremely awkward situation due to the COVID 19 crisis, who have lost their jobs and without much hope for a change of status in the coming period. Imposing unrealistic tax claims over a 5-year period on the basis of gross income is quite difficult to achieve in this situation.
We invite you to hold a joint meeting on this issue if you do not understand our problem or find our questions and suggestions unclear.
If you are interested, we will provide you with the Croatian tax brochure "Argonaut", which describes in detail the problems and solutions that the Republic of Croatia performs over seafarers.
In Novi Sad 01.05.2021.
Board of Directors of the Serbian Boatmen's Association
Board of Directors of the branch union
boatmen and sailors of Serbia
Certificate of paid republic tax in the amount of 13.100,00 dinars.
In the meantime, we have received numerous messages from our members and followers with additional irregularities.
A rather serious omission was noticed in the signed agreement on double taxation with the Swiss Confederation, where the text in the Serbian language differs from the signed document in German and French.
So in the agreement:
AGREEMENT BETWEEN THE COUNCIL OF MINISTERS OF SERBIA AND MONTENEGRO AND THE SWISS FEDERAL COUNCIL ON THE AVOIDANCE OF DOUBLE TAXATION WITH REGARD TO INCOME AND PROPERTY TAXES
in section 8, Serbian versions we find:
International traffic 1. Profits from the operation of international traffic by ship, aircraft or road vehicle shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated. 2. If the place of effective management of a shipping undertaking is situated on a seagoing ship, it shall be deemed to be located in the Contracting State in which the home port of the seagoing ship is located or, if there is no home port, in the Contracting State of which the seagoing user is resident . 3. The provisions of paragraph 1 of this Article shall also apply to profits from the participation in a pool, a joint business or an international business agency.
And in the German version (which is valid) we find a slightly different text:
Art. 8 International traffic
1. The profit from the business of Schiffen, Luft- oder Strassenfahrzeugen in international traffic can be found only in the contract state, in which the order of the full-time management of the company is established.
2. Befindet sich der Ort der tatsächlichen Geschäftsleitung eines Unternehmens der Schifffahrt4 an Bord eines Schiffes, so gilt er als in dem Vertragsstaat lelegen, in dem der Heimathafen des Schiffes liett, oder, wenn kein Heimathafen vorha The person is attached, the ship works.
3. Abscess of 1 year or more for the benefit of a deposit in a swimming pool, a company or an international company.
As in English, the same version of the text:
1. Profits from the operation of ships, aircraft or road vehicles in international traffic shall be taxable only in the Contracting
State in which the place of effective management of the enterprise is situated.
2. If the place of effective management of a shipping enterprise is aboard a ship, then it shall be deemed to be situated in the Contracting State in which the home harbor of the ship is situated, or, if there is no such home harbor, in the Contracting State of which the operator of the ship is a resident.
3. The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency.
It remains unclear how the "ship in international traffic" became a "seagoing ship" in the Serbian language. A ship in international traffic is any ship that sails outside the borders of the country of affiliation and it is not just sea ships. Most river boats can and do perform seafaring, ie. sails in coastal sea areas and this definition of our translator makes no sense. The translation is obviously wrong and has nothing to do with the "spirit of the language", especially since in four world languages the meaning of the text is the same, only in Serbian it is different.
We hope that the Ministry of Finance will see the problems we are facing and will answer our rather simple questions, without bringing us to the final act, as freelancers last year.
UPLS Board of Directors
GSLPS Board of Directors