When a company incurs a loss, this may significantly affect its tax position.

A tax credit is an amount that may be deducted from the tax otherwise payable. In the context of a loss, it often refers to the possibility of carrying that loss forward to future years and using it to reduce the tax base for future corporate income tax calculations.

If your company recorded a loss in the current year, this means you will not pay corporate income tax for that year. However, the loss is not lost forever: it may be carried forward and used in future years to offset taxable profit, thereby reducing the tax that must be paid.

Which law regulates this?

The main law governing taxation of companies in Serbia is the Corporate Income Tax Law. It prescribes the conditions and the method for carrying forward and using losses.

Accounting loss vs. tax loss

Accounting loss is the difference between total income and total expenses as shown in the financial statements, especially the profit and loss statement submitted to the APR.

Tax loss is the loss used for calculating the corporate income tax base to which the 15% corporate income tax rate applies. It may, but does not necessarily, coincide with the accounting loss because accounting and tax regulations differ.

Preparing the tax balance sheet

The starting point for preparing the tax balance sheet is the accounting profit and loss statement. The accounting result is then adjusted through tax corrections.

In practice, the largest number of corrections relate to expenses. Certain expenses recorded in accounting are not recognized for tax purposes. These often include:

• interest for late payment of taxes, contributions and other public charges,
• undocumented expenses,
• costs of enforced tax collection and certain misdemeanor proceedings,
• monetary fines, contractual penalties and similar charges.

Some expenses are only partially recognized in the tax balance sheet. For example:

• representation expenses are generally recognized only up to 0.5% of total revenue,
• certain donations for health, education, science, humanitarian, religious, sports and environmental purposes are recognized up to 5% of total revenue,
• membership fees to chambers, unions and associations are generally recognized up to 0.1% of total revenue, except where prescribed by law,
• expenditure on investments in culture, including cinematography, is recognized up to 5% of total revenue.

Advertising expenses are generally recognized in full for tax purposes.

There are also corrections on the income side, as well as corrections related to transfer pricing, interest on loans and many other items that may appear in the tax balance sheet.

If you want to see what the PB-1 form for an LLC looks like, contact us at and we can send you an Excel example.

Once the tax balance sheet is prepared and all corrections are made, accounting files the PP-PDP through the ePorezi portal. The final deadline for paying current-year corporate income tax is 30 June of the following year.

Important note: period for using a loss

There are deadlines for using a tax loss. The unused portion of the tax credit may be carried forward against future corporate income tax liabilities, but generally for no longer than five years.

Example: If the company had a loss of RSD 1,000,000 in 2024, it may use that loss through 2029 to offset future taxable profit. After that period, the right expires.