Work out the figures before you decide

Property transfer tax at the rate of 2.5% is, as a rule, payable when buying resale flats and other previously used properties, that is, when no VAT is charged on the transfer.

By law the taxpayer is the seller, that is, the person transferring the right. In practice, however, the contract often provides that the tax is borne by the buyer. Such an arrangement is a matter for the contracting parties, but it does not change who is legally liable for the tax.

The amount of tax depends on the tax base, which as a rule is the contract price, provided it is not lower than the market value. If the competent tax authority finds that the contract price is lower than the market value, it may assess the tax base according to the market value.

A buyer of a first flat may claim exemption from property transfer tax for an area of up to 40 m², plus up to a further 15 m² for each member of the household who meets the statutory conditions.

One of the basic conditions is that, since 1 July 2006, the buyer and the household members for whom the exemption is claimed have not owned a flat in Serbia, whether in sole ownership, co-ownership or joint ownership.

If the flat is larger than the area covered by the exemption, tax is payable on the difference.

On the first transfer of a newly built property, where the seller is registered for VAT, the special VAT rate of 10% applies to a flat.

When you buy a flat from the developer, VAT is already included in the purchase price. For that reason, no property transfer tax is payable on that transfer — the buyer does not pay both taxes on the same transaction.

This applies regardless of whether the buyer is buying their first property or already owns one.

A buyer of a first flat who buys from a developer a newly built property, or a separate unit within it, on which VAT has been charged at the special rate of 10%, may claim a refund of the VAT included in the purchase price, provided they meet the conditions laid down by law.

The refund may be claimed for an area of up to 40 m² for the buyer, plus up to a further 15 m² for each member of their household who meets the statutory conditions.

One of the basic conditions is that, since 1 July 2006, the buyer and the household members for whom the refund is claimed have not owned a flat in Serbia, whether in sole ownership, co-ownership or joint ownership. The price including VAT must be paid in full into the seller's current account.

No refund is available for any area above the recognised floor area.

A contract for the transfer of real property must be concluded in the prescribed notarial form. For a contract subject to notarial certification (solemnisation), the competent public notary is the one for the area in which the property is located. Without the prescribed certification the contract has no legal effect.

The cost of certification depends on the value of the transaction and is calculated according to the notarial tariff in force.

Once the contract has been certified, the public notary forwards the document to the cadastre ex officio so that the ownership right can be registered.

The fee depends on the type of transaction and the specific entry, and is calculated according to the current tariff of the Republic Geodetic Authority.

If the property is bought with a mortgage loan, registration of the mortgage is a separate entry and a separate fee is charged for it.