The Ministry of Finance has published the Rulebook on Arm’s Length Interest Rates applicable for 2024 on related parties’ loans. The Rulebook is coming into force on June 8, 2024.
Interest rates following the “arm’s-length” principle that apply to banks and financial leasing companies for 2024 are:
- 5.02% applicable to short-term loans in RSD;
- 5.16% applicable to long-term loans in RSD;
- 4.31% applicable to loans in EUR and dinar loans indexed in EUR;
- 5.02% applicable to loans in USD and dinar loans indexed in USD;
- 2.80% applicable to loans in CHF and dinar loans indexed in CHF;
- 4.19% applicable to loans in SEK and dinar loans indexed in SEK;
- 1.88% applicable to loans in GBP and dinar loans indexed in GBP;
- 2.42% applicable to loans in RUB and dinar loans indexed in RUB;
- 4.55% applicable to loans in CNY and dinar loans indexed in CNY.
Interest rates following the “arm’s-length” principle that apply on for other companies for 2024 are:
- 7.57% applicable to short-term loans in RSD;
- 8.30% applicable to long-term loans in RSD;
- 6.12% applicable to short-term loans in EUR and dinar loans indexed in EUR;
- 6.23% applicable to long-term loans in EUR and dinar loans indexed in EUR;
- 7.54% applicable to long-term loans in CHF and dinar loans indexed in CHF;
- 8.20% applicable to short-term loans in USD and dinar loans indexed in USD;
- 4.25% applicable to long-term loans in USD and dinar loans indexed in USD.
Taxpayers can use the prescribed interest rate to determine corporate income tax in 2024, i.e., when adjusting expenses and incomes between related parties.
Additionally, we note that the interest mentioned above rates can be used during 2024 while paying out interest rates for received loans, i.e. loans from foreign related parties, since most Double Taxation Treaties prescribe the option of using beneficiary withholding tax rates only up to “arm’s length” interest rate amount. A withholding tax rate of 20% is applied on an amount that exceeds the “arm’s length” interest rate.
The TPA team is at your disposal for any further questions.