Category: Serbia

As one of the fundamental rights, the Labour Law stipulates that employees are entitled to health and safety at work, as well as health protection, according to the law and general act i.e. employment agreement.

In relation thereto, the Law on Health Protection contains special provisions referring to social care for health at the level of employers and prescribes that an employer shall organise and ensure from his own funds health protection for employees, for the purpose of creating conditions for health-accountable conduct and protection of health at employee’s place of work including, among other, preventive check-ups of employees (preliminary, periodical, control and targeted examinations) depending on sex, age and working conditions, as well as occurrence of professional illnesses, injuries at work and chronical diseases, in accordance with law.

Considering that employers cover the costs of the said examinations and that they represent certain allowance to employees, their tax treatment comes into question and the payment of mandatory social insurance contributions i.e. whether these can be considered as employees’ salary.

The Law on Citizens’ Income Tax stipulates that salary, in terms of this law, means salary earned on basis of employment and it is defined by the law regulating employment relations and other receivables of an employee.

The Law on Contributions for Mandatory Social Insurance establishes that the base for contributions for employees and employers is salary/wage and salary/wage contribution under the law regulating employment relations, general act and employment agreement or decision of competent authority.

In relation thereto, back in 2011 the competent ministry stands on the opinion that if an employer, for the purpose of providing regular health protection (medical check-up) under equal conditions to all its employees for establishing their health state required for performance of tasks within their assigned job, and in accordance with the general act of the employer, covers the costs and effects payment directly to the account of health institution rendering services, this shall not imply allowance to employees by the employer and as such it is not subject to citizen’s income tax on salary and payment of contributions for mandatory social insurance (Opinion of the Ministry of Labour and Social Policy, no. 011-00-00012/2011-02 of January 13, 2011).

Therefore, it stems from the above stated that an employer is obliged to ensure to the employees appropriate health protection and periodical medical check-ups on his own account, which may be exempted from taxation and payment of contributions for mandatory social insurance, under the following conditions:

• That medical check-ups are ensured for all employees under equal terms;
• That they are exercised for establishing employees’ health state related to performance of jobs with the employer;
• That employer effects payment from his own funds;
• That employer effects payment directly to the account of health institution rendering the service of medical check-up.

The above stated was confirmed by the recently published opinion of the Ministry of Finance no. 011-00-135/2021-04 from March 31, 2021.

On the other hand, when an employer effects payment in the manner departing from the stated conditions and if such payment is not done directly to health institutions but to a company that does not perform health activity – e.g. insurance company with which an employer has concluded the agreement  on employees’ voluntary health insurance, the Ministry of Finance deems that such payment from employer’s funds represents allowance to employees by employer and as such it is subject to payment of taxes and contributions for mandatory social insurance based on salary, along with application of non-taxable amount in accordance with the Law on Citizens’ Income Tax/Law on Contributions for Mandatory Social Insurance.

This article is to be considered as exclusively informative, with no intention to provide legal advice. If you should need additional information, please contact us directly.

By Jovana Milic, Senior Associate, PR Legal

The new Law on Archival Materials and Services („Law“), which came into force on February 2, 2021, provided obligations for creators and holders of archival material and documentary material.

In practice, a large number of questions were raised regarding the application of the Law, especially with regard to the drafting of prescribed normative acts and the submission of transcripts of the archive book to the competent public archive.

After the Historical Archive of Belgrade first published a statement on its website that the deadline for submitting transcripts of the archive book is extended until the end of 2021, and after a few weeks withdrew it from the website, before the expiration of the statutory deadline for fulfilling this obligation, the Ministry of Culture and Information (“Ministry”) has issued an opinion on the application of the Law which has finally resolved the doubts regarding the deadlines.

Namely, in the official opinion no. 011-00-71/2021-02 dated 29 April 2021 the Ministry stated that the obligation to submit a transcript of the archive book to the competent archive for companies arises in 2022. In other words, a transcript of the archive book for documentary material created by the end of 2021 must be submitted by 30 April 2022. In 2021 companies have no obligation to submit transcripts of the archive book.

In another official opinion no. 011-00-32/ 021-07 dated 1 April 2021 the Ministry specified that the obligation to submit a transcript of the archive book can be performed even before the competent archive approves the list of categories of archival material and documentary material with retention periods. In that way, it was confirmed that the consent of the competent public archive to the List of categories is not a condition for keeping the archive book, i.e. submitting its transcript to the competent archive.

In this opinion, the Ministry also confirmed that creators and holders of archival material may ask the competent public archive for professional assistance with respect the application of the Law.

This article is to be considered as exclusively informative, with no intention to provide legal advice. If you should need additional information, please contact us directly.

By Natalija Djukic, Associate, PR Legal

Before competent courts in Serbia, there is an increasing number of cases in the field of intellectual property rights that are run upon complaints for infringement of copyright related to the authors’ works whose content is embedded in the webpages of respondents (registered media or third person).

For clarification, the term embed that is taken over from the English language, in technical sense implies inserting/embedding of media graphic, audio or video content into electronic document (on website, e-mail). On the other hand, framing in this context means the division of webpage into several frames and the display in one of them through active Internet reference or inline linking of elements that originate from another page for the purpose of hiding from the user the original environment that such element belongs to.

Court epilogue in the cases concerned depends on the particular state of facts, i.e. whether the content in question represents author’s work, whether the content on respondent’s webpage has indeed been embedded or not, whether the author explicitly prohibited any form of addressing/transferring content without his consent, how the embedding was done, all of which is usually subject to court experts’ opinion during evidence hearing. Also, another significant factor for proper deciding is also the education of judges, i.e. knowledge of modern technology possibilities for use of audio and video content on the Internet, which should neither be excessively trusted nor feared because of the above-stated possibility for extracting evidence by means of court experts.

In terms of the provisions of the domestic Law on Copyright and Related Rights and the ratified international conventions, an author has exclusive right for his name, pseudonym or mark to be indicated on each piece of work or indicated upon each public communication of the work unless, considering the concrete form of public communication of the work, this is technically impossible or not worthwhile. In addition to other rights (e.g. the right to publishing, right to protection of work’s integrity), an author has exclusive right to prohibit or to allow to another person to circulate the original or multiplied copies of his work, by sale or other form of property transfer.

Also, an author has exclusive right to prohibit or allow to another person to publicly communicate the work, including making the work available to public through wired or wireless means, in the manner which enables a person to individually accede the work from the place and at time designated by such person.

Without going into detail regarding legally permitted limitations and suspension of exclusive property rights of authors, there are disputes running before domestic courts that deal with violation of copyright allegedly committed by respondent (by default registered medium or another person), usually within textual content, by embedding content via Internet link to the author’s work published by its author on various Internet platforms (YouTube, Instagram etc.).

In such situations, claimaint presents standard statement that the respondent violated moral and property rights of the claimaint because there was no consent of the author for publishing the work through the Internet, while the respondent’s defence states the arguments that the author’s consent was not necessary because the work was not “published” by the respondent as third parties were automatically directed to the claimant’s website by clicking on the disputed content – i.e. the content of the claimant on certain platform that he individually uploaded.

Case law in the USA regarding this legal matter is rather versatile, yet variable, therefore it does not yield concrete and uniform answers. However, court practice of the Court of Justice of the European Union (CJEU) that we hereby refer to is much more relevant for domestic judiciary.

Namely, on March 9, 2021, the Court of Justice of the European Union (CJEU) issued the decision in case C-392/19 VG Bild-Kunst/Stiftung Preußischer Kulturbesitz, which is based on Article 3 of Directive 2001/29 EC of the European Parliament and the Council of May 22, 2011, on harmonisation of certain aspects of copyright and related rights in information society. Please note that one of the reasons for amendment of the Serbian Law on Copyright and Related Rights in the course of 2019 was the alignment with the stated Directive 2001/29 EC of the European Parliament.

In the stated judgment, the CJEU assumed a legal position that the technique of framing/embedding implies the same technical manner already used during public information on protected work on the original website and therefore such communication does not meet the requirement of “new public”, hence it is not covered by information of the “public” in terms of Article 3, para. 1 of the Directive 2001/29 EC.

In such a situation, according to the court, it would be considered that the right holder from the beginning approved the communication of his works to all Internet users.

The CJEU also clarifies that such position should only be applied in situations where the access to the works concerned on the original Internet page is not restricted. If the holder of right established or implemented restrictive measures from the very beginning as regards the publishing of his works, it will be deemed that he did not consent to third persons freely communicating his works to the public and that the right holder wished to restrict the public that has access to his works only to users of certain (original) Internet page.

Therefore, in the particular case the CJEU restricted the scope of rights to the measures undertaken by the right holder and deliberated that the approval of the right holder is required for communication to the public about the work, but only given that the right holder had previously established/implemented the measures for restricting framing/embedding. The opposite legal position would imply the introduction of the right on exhaustion of the right to communication.

The Court also holds that the holder of copyright may not restrict his consent to framing/embedding in any other way other than through efficient technical measures. Namely, the CJEU deems that in the absence of such measures, it might be hard to establish whether the right holder expressed his intention to be against the framing/embedding of his works.

The stated judgment of the CJEU is undeniably in conformity with Article 30 of the Law on Copyright and Related Rights, and it provides a very useful interpretation of the problems that arise in practice regarding the framing/embedding of authors’ works, including clear guidelines for actions in evidence hearings before competent courts.

This article is to be considered as exclusively informative, with no intention to provide legal advice. If you should need additional information, please contact us directly.

By Milan Petrovic, Managing Partner, PR Legal

On 30 March 2021, Government of the Republic of Serbia, submitted set of energy laws to the National Assembly for adoption, on the basis of which proposals of laws in various energy areas are rendered on 20 April 2021. One of these laws is completely new –  Law on Utilization of Renewable Energy Sources (hereinafter referred to as: “Law on RES”).

By rendering of this law, utilization of renewable energy sources (hereinafter referred to as: “RES”) in energy production is legally recognized as one of the energy priorities of the Republic of Serbia, especially having in mind that production of electric energy from coal leaves grave consequences to the environment, as well as induces enormous emission of harmful gases.

Until now, utilization of RES was shyly regulated in the Energy Law (“Official gazette of the RS”, no. 145/2014 and 95/2018 – other law), precisely in its section V – renewable energy sources, by which section such significant area was not comprehensively regulated, and which regulation also represents an obligation of the Republic of Serbia, having in mind its membership in the Energy Community. After adoption of the  law which, as a subject has exclusively RES,  the Republic of Serbia shows more determination to create conditions for production of electric energy from RES as much as possible. It is worth noting that by National action plan for utilization of RES, it is planed that until 2020, Republic of Serbia achieves RES participation of 27% in the gross final consumption of energy in the Republic of Serbia. However, now, in 2021, it is achieved only 20%.

Law on RES sets out goals to achieve, which encompass, among others: i) decrease of utilization of fossil fuels and increase of utilization of RES in order to protect environment, ii) long-term decrease of dependence on import of energy-generating products, as well as iii) creating new working spaces and development of entrepreneurship in RES sector.

Law on RES sets out power plants which use RES, namely, hydropower plants, power plants on biomass and biogas, wind power plants, solar power plants, geothermal power plants, powerplants on biodegradable waste and power plants on landfill gas and gas from the utility for wastewater treatment.

As Law on RES is adopted primarily to protect environment, it is additionally strictly forbidden to construct hydropower plants in the protected areas. 

Also, it is determined that participation of energy from the RES in gross final energy consumption and in final consumption of energy in traffic, as well as participation of production of electric energy and heat energy from the RES, is set out in Integrated national energy and climate plan.

In order to attract investment in this sector, Law on RES envisages various incentives:

• Market premium;
• Feed-in tariffs;
• Undertaking of balancing responsibility; and
• Right to priority access to transmission i.e., distribution system.

It is particularly marked that for the same power plant, privileged producer of electric energy cannot be simultaneously user of feed-in tariff and market premium.

Regarding the power plants which use RES, in order to be in the incentives system, it is necessary to be newly constructed or reconstructed.

Market premium 

Market premium represents new form of incentives for producers from RES, taking into account that until now only system of feed-in tariffs existed. Incentives in the form of market premium means that guaranteed supplier shall pay market premium (determined in eurocent per kWh) to the user of market premium for every sold kWh, as additional amount to the price for the sold electric energy. The amount of the market premium is not determined a priori but on auctions. 

Auctions for market premium are conducted by the Ministry of Mining and Energy (hereinafter referred to as: “Ministry”), by publishing public invitation. Auction may be related to one or more different power plants (solar, hydro, wind etc.). In the public invitation, the quota of the total power for which the market premium shall be granted is determined, while the maximum amount of market premium that may be bid is set out by the Energy Agency.

In the biding phase, participants determine amount of market premium which satisfies them, and upon the conclusion of the auction, submitted bids are ranked by the criterion set from the lowest to the highest – comparing to the maximum amount of market premium, until the quota is filled. 

Upon the auction, participants to whom market premium is granted, acquire status of temporary privileged producer of electric energy and they are obliged to, within deadline of 30 day as of acquiring such status, deliver to the Ministry the payment security instrument in a form of either deposit or bank guarantee. Upon delivering of payment security instrument, temporary privileged producer of electric energy has: i) right to execute agreement on market premium with guaranteed supplier, and ii) obligation to deliver to the Ministry construction permit and study on assessment of impact on environment within two years. If these documents are not delivered to the Ministry within deadline, Ministry will deprive such entity of status of temporary privileged producer of electric energy. 

In order that the temporary privileged producer of electric energy becomes privileged producer of electric energy, it is necessary to, inter alia, constructs power plant for which market premium is granted, acquires usage permit, acquires license for conducting energy activity of production of electric energy, connects power plant to the transmission i.e., distribution system.

Incentive period for market premium is 15 years, starting from the first payment of market premium (whereby it is paid on monthly basis).

User of market premium has the right to transfer its balancing responsibility to the guaranteed supplier, up to the law determined limit. However, duration of this right is not related to the incentives period, but until establishment of liquid period, organized within day market of electric energy.

Last but not least, user of market premium has priority right to access transmission i.e., distribution system. Operator of transmission i.e., distribution system is entitled to deny such right only in case the system will be jeopardized. However, this right is not reserved only for user of market premium but for all producers of electric energy from RES, regardless of being  in incentives system or not.

Feed-in tariffs

Second kind of incentives for production of electric energy from RES are feed-in tariffs, which already exist in our legislation. Energy law represented the basis for feed-in tariffs, while the Government determined conditions for acquiring status of privileged producer of electric energy by regulations, as well as the system of incentives for privileged producers of electric energy.

Pursuant to the Law on RES, person entitled to feed-in tariff has guaranteed selling of produced electric energy from RES at a priori determined price. Major difference to the market premium, apart from the fact that feed-in tariff represents selling price of electric energy while market premium is addition to the price acquired on the market, is that feed-in tariffs may be granted only for demonstrative projects (projects using innovative technology) and small power plants (power plant with power less than 500 kW, i.e., wind power plant with power less than 3 MW), while market premium may be granted for all other power plants regardless of their power (save for hydropower plant with power up to 30 MW).

Pursuant to the previous legislative, Government set out exact amount of feed-in tariff payable per kWh, by regulations. However, Law on RES does not envisage such possibility, but persons who wish to be part of such incentive system have to participate on auctions and in their bids they will determine amount of feed-in tariff.

Course of auctions, acquiring status of temporary privileged producer of electric energy, privileged producer of electric energy, execution of agreement on feed-in tariff with guaranteed supplier is the same as described for the market premium.

Difference exists in balance responsibility, precisely, guaranteed supplier undertakes balance responsibility from the user of market premium up to the law determined limit i.e., if imbalance is higher, user of market premium is obliged to pay it. Such limitation does not exist with feed-in tariff. Additionally, balance responsibility of user of feed-in tariff is undertaken by guaranteed supplier during the whole incentive period, while with user of market premium balance, responsibility is undertaken by guaranteed supplier only until establishment of liquid market of electric energy.

Last but not least, incentive period for feed-in tariff is, compared to the previous solution, extended for three years, so pursuant to the Law on RES, it is fifteen years. 

Other provisions of Law on RES

Other noteworthy provision of Law on RES is that producers of electric energy from RES are entitled to sell such electric energy to the final costumers, provided that they have license for supply of electric energy.

Producer of electric energy from RES is entitled to, provided that conditions determined by the law are fulfilled, guarantee of origin. Guarantee of origin represents confirmation that certain quantity of electric energy is produced from RES, and it is issued upon the request of producer by the operator of transmission system, who is obliged to keep record of issued guarantee of origin.

One of the novelties is introduction of costumer-producer institute, who actually represents the final costumer who produces electric energy from RES for his personal needs, and if he does not use it all, he may storage such produced electric energy as well as deliver it to the transmission i.e., distribution system. Costumer-producer does not have rights on incentive measures, nor on the guarantee of origin.

Apart from the production of electric energy from RES, Law on RES envisages possibility of production of heat energy from the RES. Units of local self-government are exclusively authorized to prescribe incentive measures, conditions and procedure for acquiring of right on incentive measures.

By Jelena Gazivoda, Partner, Nikola Djordjevic, Partner, and Marko Mrdja, Senior Associate, JPM Jankovic Popovic Mitic

The new Law on Archival Material and Archival Activities (“Official Gazette of the Republic of Serbia”, No. 6/2020), in application as of 2 February 2021, does not stipulate the reporting requirement of the Archive Book for the first time (the same obligation existed in previous law), however it does regulate in more detailed manner the system of protection of archival material and documentary material, conditions, their use, organization and impose additional obligations and conditions for obligors.

The fines for non-compliance with the obligations in this new Law have been increased in comparison to the previous law and hence the failure to comply with obligations prescribed by the new Law represent misdemeanour, per breach, to be fined in amount from RSD 50,000 to RSD 2,000,000 for legal entities, and from RSD 5,000 to RSD 150,000 for responsible person in a legal entity.

The deadline for submission to the competent public archive of the transcript of the Archive Book for previous 2020 year is 30 April 2021 (for those who have regularly complied with this obligation), while others should comply and submit the Archive Book as of incorporation, together with the other documentation on establishment and contact data on appointed person responsible for archive. 

The obligors of the Law are creators and holders of archival material and documentary material, and they have to:

1) Adopt general act on the manner of recording, classification, archiving and storage of archival material and documentary material,

2) Adopt List of categories of archival material and documentary material, with storage deadlines and obtain approval of the competent public archive on this document,

3) Adopt general act on the method of recording, protection and use of electronic documents.

Also, there is obligation to duly keep the material in safe and adequate state in the form in which it originated as well as: 

1) to secure adequate space and equipment for storage and protection of archival material and documentary material;

2) to appoint responsible expert for the protection and handling of archival material and documentary material;

3) to evidence, marks, classify, date and archive the archival material and documentary material;

4) to submit the archival material to the competent Archive under terms and in deadlines as prescribed by the law;

5) to secure for permanent storing of archival material in electronic form, its maintenance, migrating, and transfer to new media in prescribed formats until its submitting to the competent public archive;

6) to keep Archive Book on prescribed form;

7) to submit the transcript of the Archive Book at latest until 30 April of the current year, for documentary material created in previous year,

8) to obtain the opinion of the competent archive, before taking any measures regarding archival material and documentary material, such as status changes, relocation, adaptation of space, initiation of bankruptcy procedure, liquidation procedure, digitalization, microfilming etc.

9) to select the archival material and separate for destruction of worthless whose storage period has been expired, one year as of the date of expiry of determined deadline;

10) to enable the authorized person of the public archive the supervision of evidencing, classification and protection of archive material and to comply with the measures and deadlines established by the decree of the public archive;

11) to report to the competent public archive on all changes that are of importance for the archival material within 30 days.

The companies are also obliged to provide professional training and development, as well as verification of professional competence of employees who manage documents. Creator of material in electronic form is obliged to undertake procedures for management of data and documents and to use information system which guarantee the protection, authenticity, integrity and usability of electronic documents. It shall also adopt a plan of measures for protection of archival material and documentary material in case of risk of disasters and emergency situations in accordance with the Law and shall be obliged to implement all protection measures determined by the Plan of measures. If an emergency situation occurs, the creator is obliged to state the minutes the day, hour and circumstances that have arisen and to inform the competent archive in writing without delay. 

Creators and holders of the archival material and documentary material are obliged to inform the competent archive about its incorporation, as well as about all changes of their status and organization, i.e. change of status/name, organization, address, cessation of activities, no later than 30 days as of the day of such occurrence.

By Jelena Stankovic Lukic, Partner, JPM Jankovic Popovic Mitic

Green and energy-efficient construction made its shy debut on the Serbian market almost a decade ago. Although various attempts were made to promote these green investments by creating a demand on the market, the results were moderate.

Nevertheless, this initial spark has finally been recognized by the Serbian Government, which recently published a draft Law on Renewable Energy Sources and a draft Law on Energy Efficiency and Rational Use of Energy. These laws, which relate to the construction sector – for many years the main pillar of Serbian economic growth – represent the Government’s intentions to make this sector as green and efficient as possible.

Although it is known that greater initial investments in the construction of the energy-efficient buildings will be fruitful and economically viable for investors and property owners in the long run, constructing energy-efficient buildings has been implemented only by a few major and innovative players so far. The majority remain skeptical, and they continue to use decade-old materials and techniques, despite the financial downsides and negative environmental impacts.

The new draft Law on Energy Efficiency and Rational Use of Energy aims to turn the tide and push green and energy efficient construction forward in the Serbian market. The main goal of this law is to promote the construction of new energy-efficient buildings, and to make already-constructed as energy-efficient as possible. To do so, it seems that the lawmakers have predominantly opted for a carrot, rather than a stick.

In order to boost energy-efficiency transparency and the rational use of energy, the law requires the obtaining of a certificate of energy efficiency. This would come handy for future buyers and lessors who want to avoid “the cat in the sack” when calculating future operating expenses, and it should be of great importance in calculating potential effect-expenses caused by, for instance, changes in temperature levels and other climate alterations.

The law also defines products and materials that increase energy efficiency. Their use in construction and adaptation of buildings, especially those categorized in top energy classes, is promoted through various incentives. As there is no better way to implement and promote new trends than through incentives, the draft law states that tax and customs relief, among others, can be provided to investors who use technologies and products that contribute to more efficient use of energy, or who place such products on the market.

In order to prevent this of becoming just an empty bill, licensed energy managers and energy counsels are envisaged as experts authorized to monitor and improve the implementation of the rational and efficient use of energy.

Additionally, once the Law on Renewable Energy Sources enters into force, use of renewable energy sources will be declared of special importance and public interest for the Republic of Serbia. By doing so, there will be room for local municipalities to reduce land development and infrastructure fees, as well as to provide other incentives for the construction of new buildings and the reconstruction of old which will be powered and heated by renewable sources of energy.

This law also regulates the production of energy from renewable sources for producers’ own consumption. This could be an efficient way of incentivizing industrial parks and production facilities to construct renewable energy systems next to their production facilities and use the resulting energy for their own needs, with surpluses available for sale to energy suppliers. This model, combined with the incentives for the use of green energy provided by local authorities, could be a turning point in the construction sector, as it will commercially motivate investors to opt for greener construction.

Although green construction has been present on the Serbian market for some time, it appears that it needed an additional push to be widely used and accepted by investors. These new laws may provide the breakthrough necessary to tip the scales in the promotion of energy-efficient construction, if applied correctly.

By Ana Lukovic, Head of Real Estate, and Igor Golubovic, Junior Associate, Karanovic & Partners

This Article was originally published in Issue 8.2 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Should software be protected as a work of authorship or a patent?

• Software as a work of authorship

The Law on Copyright and Related Rights (the “Law”) defines a work of authorship as following: a work of authorship is an original spiritual work of the author, expressed in a certain form, regardless of its artistic, scientific or other value, its purpose, size, content and manner of expression, as well as the permissibility of public communication of its contents.

Additionally, the Law defines that the work of authorship is considered to be especially computer programs (software) with accompanying technical and user documentation in any form of their expression. The base for this can be found in the fact that the software is written in a programming language and thus during its writing the author expressed a certain spiritual creation that possesses originality.

As one of the proofs of the authorship of the software, author can deposit software with the Intellectual Property Office. The deposit is advisable because it guarantees a greater degree of legal certainty for the author, and if necessary, the author can easily prove their rights in court or some other need related to the software. However, like any other works of authorship, when the software is created the copyright on the software arises.

• Software as a patent

The question of whether software can be patented is far more complex, bearing in mind that the Patent Law defines a patent as a right granted for an invention in any field of technology, which is (i) new, (ii) involves an inventive step and (iii) is susceptible of industrial application.

On the other hand, the Law defines that a computer program is not specifically considered as an invention. Thus, software is rarely protected as a patent i.e.in practice is most often protected as a work of authorship.

The issue arises on the problem of why the Patent Law does not consider a computer program as a patent? Basically, every computer program is a mathematical algorithm, and the Patent Law stipulates that mathematical methods are not considered inventions and therefore cannot be protected by a patent.

On the other hand, software can produce some kind of a technical effect that is industrially applicable. When it is protected by a patent, it is not actually the software itself that is protected but most often the device that the software runs on. In such case, software is a part of a system, it runs the system and because of the software, the device works in a new, different and more innovative way. Essentially, a patent indirectly protects software through the system that software belongs to.

Having in mind the above, as well as the fact that the patent registration requires a complex process of writing a patent application and paying higher fees, it is understandable why software authors generally chose copyright protection. Therefore, it remains for future and legal practice to show whether the current solution of software protection is good enough or the legislator will have to adjust the existing solution to some new challenges.

Legal Intern, Milan Popovic, contributed to this article.

This text is for informational purposes only and should not be considered legal advice. Should you require any additional information, feel free to contact us.

By Radovan Grbovic, Partner, and Katarina Askic, Junior Associate, Samardzic, Oreski & Grbovic

The Ministry of Finance adopted a comprehensive Rulebook on the Value Added Tax (“VAT Rulebook”) that was published in the Official Gazette no. 37/2021 of 14 April 2021.

The VAT Rulebook entered into force on 22 April 2021, however the application of its provisions will start on 1 July 2021. In relation thereto, a transitory provision of the VAT Rulebook stipulates that if fee or a part of fee was charged or paid until 30 June 2021, inclusive, for trade in goods or services carried out from 1 July 2021 onwards, such trade shall be subject to regulations applicable on 30 June 2021.

As mentioned above, on the day of the VAT Rulebook application, 27 rulebooks which regulate various issues related to trade in goods and services that specified certain matters under the Law on Value Added Tax shall cease to be in force. In addition to the mere consolidation of all provisions that were stipulated within 27 different regulations, the VAT Rulebook also introduces certain important novelties that refer, inter alia, to the following:

• Goods and services in the field of construction;
• Determination of the tax base;
• The manner of tax base amendment;
• Manner and procedure for approval of tax proxy;
• Manner and procedure for exercising tax relief with right to deduction of previous tax and without right to deduction of previous tax;

Having in mind that the new VAT Rulebook has 33 chapters and as many as 282 articles, it is not possible to refer to all amendments that will be introduced by application of the VAT Rulebook, therefore we will present an overview of several amendments:

1. Goods and services in the field of construction

Article 10 of the Law on Value Added Tax defines tax debtors in terms of the said Law and Article 10, para. 2, item 3 of the Law stipulates further that tax debtor is recipient of goods and services in the field of construction, VAT taxpayer, for trade realised by VAT taxpayer, if the value of such trade exceeds RSD 500,000, excluding VAT.

Since it was necessary to further specify what goods and services in the field of construction represent, this was done in the currently valid Rulebook on establishing the goods and services in the field of construction for the purpose of establishing tax debtor for the VAT, which explicitly enlists all activities which are considered as goods and services in the field of construction. The list of activities has not been amended by the new VAT Rulebook.

What is new in the VAT Rulebook is the fact that it defines more precisely what goods and services, regardless of their value, do not represent goods and services in the field of construction in terms of the Law on Value Added Tax, such as:

• Repair of equipment that is an integral part of the facility, including the repair of parts of such equipment;
• Repair of fittings and parts of fittings for water, sewage, heating and air-conditioning systems;
• Supply with installation i.e. installation of kitchen and bathroom units (e.g. sink, countertop, top units, shower, washbasin etc.), as well as cabinets, shelves, libraries and other furniture in buildings;
• Supply with installation i.e. installation of heating/cooling devices (such devices usually imply e.g. air-conditioner, refrigerators etc., instead of heating/cooling systems such as central air-conditioning, central heating system etc.);
• Supply with installation i.e. installation of system for watering/irrigation and individual parts of such systems, whereas systems imply a set of goods composing the system, notably hoses, sprinklers, vents, pumps and filters;
• Supply of goods and rendering of services within landscaping activities, including landscaping of greenery in/on facilities.

Also, if auxiliary trade in goods/services is done along with the trade in goods and services in the field of construction, only trade in goods and services in the field of construction shall considered to be done. However, if trade in goods/services that is not deemed as trade in goods/services in the field of construction is done along with the auxiliary trade in goods/services that is deemed as trade of goods/services in the field of construction, only trade in goods and services that is not deemed as trade of goods/services in the field of construction shall considered to be done.

2. Procedure for approval of tax proxy

The manner and procedure for approval of tax proxy is currently regulated by the Rulebook on the manner and procedure for approval of tax proxy for value added tax, which stipulates that tax proxy of a foreign entity can be a natural person, entrepreneur or a legal entity that meets the following requirements:

• Has residence/seat in the Republic of Serbia;
• Is registered as VAT payer for minimum 12 months prior to submitting the application for approval of tax proxy;
• Does not have due and unsettled public revenue duties on the day of application, based on the business activity as prescribed by the Tax Administration;
• Is not legally sentenced for tax criminal offence.

What is a novelty compared to the above mentioned Rulebook is comprised in one of the conditions for tax proxy – that the proxy is registered as VAT payer for minimum 12 months prior to application for approval of tax proxy. Now, it is necessary that minimum 12 months have passed from the date of application for registration until the day of application for approval of tax proxy.

This practically means that a VAT payer does not have to be registered 12 months before the appointment as tax proxy, it may be registered for a shorter period of time having in mind that the calculation of deadline is shifted to the moment of application for registration.

Another novelty is that the VAT Rulebook now prescribes the procedure for submission of notice of withdrawal i.e. cancellation of tax proxy to the Tax Administration. The person whose proxy was terminated by withdrawal or cancellation submits to the relevant tax authority a notice of withdrawal or cancellation of proxy in a prescribed form and with the prescribed information and evidence.

3. The manner of tax base amendment

The VAT Rulebook now specifies in which cases is particularly considered that the tax base amendment occurred, as well as in which cases the tax base is specifically not amended. This was previously not explicitly defined by the Rulebook on the manner of tax base amendment for calculation of value added tax.

Namely, the tax base amendment specifically occurs due to:

• Subsequent inclusion of costs relating to the realised trade in goods or services;
• Subsequent discount of price for the realised trade in goods or services;
• Return of goods:
• Which usual use period expired (remainder), or which shelf life specified by the manufacturer is expiring or has expired (where minimum two-thirds of the shelf life has expired, and there is no more than two months until expiry),
• Which is done in accordance with the law regulating consumer protection (this item is also envisaged in the currently valid Rulebook),
• Due to complaint or termination of contract in accordance with law, given that the VAT payer that conducted the trade in goods possesses solid evidence thereof (this item is also envisaged in the currently valid Rulebook),
• Which are under the VAT Rulebook considered as returnable packaging and whose value was charged to the recipient of goods;
• Subsequent fulfilment of requirement for exercising tax relief with right to deduction of previous tax;
• Difference between the base established by assessment and the base on the day of occurrence of tax obligation;
• Difference between market value of the goods and services which are received against compensation for trade in goods and services on the day of transaction and market value of such goods and services on the day of delivery;
• Changes on basis of decrease or non-existence of tax upon deduction due to subsequent acquisition of right to apply the agreement on avoidance of double taxation valid on the day of occurrence of tax obligation for VAT, which is included in the base.

On the other hand, the tax base amendment specifically does not occur:

• When fees for trade in goods or services are expressed in foreign currency and the value of dinar compared to such currency on the day of occurrence of tax obligation differs from the value of dinar compared to foreign currency on the day of payment of such fee, given that the same type of foreign exchange rate (purchase, middle, sale exchange rate) of the same bank was applied during the establishment of base, VAT calculation and collection of fee;
• If the value of dinar compared to foreign currency on the day of occurrence of tax obligation differs from the value of dinar compared to foreign currency on the day of occurrence of obligation to pay tax upon deduction under the law regulating tax upon deduction;
• If the compensation for realised trade in goods or services is subsequently changed on basis of counter-service rendered by recipient of goods or services, or third person (e.g. positioning of goods, takeover of obligation to transport other person’s goods, takeover of obligation to purchase goods from a specific entity).

Conclusion

Although not all fields regulated by the VAT Rulebook have been amended by its adoption compared to the existing rulebooks regulating these issues, what is the greatest advantage of VAT Rulebook entry into force is that it somewhat “codified” the regulations in one comprehensive document, which will certainly facilitate the management, linking and interpreting the Law on Value Added Tax and other regulations in the field of value added tax.

Consequently, from a long list of regulations in the field of value added tax, starting from 1 July 2021 that list of regulations will comprise from:

• Law on Value Added Tax;
• Rulebook on Value Added Tax;
• Regulation on the quantity of expenditure (ullage, spillage, breakage and defect) that are not subject to value added tax;
• Regulation on criteria for establishing what is, in terms of the Law on VAT, considered as prevailing trade of goods abroad;
• Regulation on enforcement of the Law on Value Added Tax in the territory of Autonomous Province of Kosovo and Metohija during the validity of the UN SC Resolution 1244.

This article is to be considered as exclusively informative, with no intention to provide legal advice. If you should need additional information, please contact us directly.

By Sara Necic, Senior Associate, PR Legal

As we mentioned in our previous article, the Law on Archive Materials and Archiving Activities (“Law“) started to apply as of 2 February 2021.

As a reminder, entities that are subjected to the Law are creators and the holders of archival material and documentary material, i.e. legal or natural person whose activities create archival material and documentary material or who possesses it (“legal entities”).

Above all, legal entities are obliged to conscientiously keep archival material and documentary material in an orderly and safe condition, in the form in which they were first created. Additionally, legal entities are obliged to designate a responsible person on this matter, adopt general acts and a list of categories of archival material and documentary material with storage deadlines, etc.

One of the most important obligations of legal entities is to submit the transcript of the archive book to the competent archive no later than 30 April of the current year, for documents created during the previous year. Also, if the archive book has not been submitted so far, then a copy of the entire archive book has to submitted. However, the deadline for submitting the transcripts of the archival book under the supervision of the Historical Archive of Belgrade is postponed by the end of 2021.

The competent archive is set according to each urban area where the seat of the entity is, and you can find the list of archives at the following link: https://www.paragraf.rs/javne-arhive-arhivska-gradja-republika-srbija.html. For time being, the transcript of the archival book should be submitted in paper work in a form of a copy with an official stamp (if legal entities used it) and signed by the authorized person of the legal entity.

Notwithstanding the above-stated, we would like to point out that (i) entrepreneurs, (ii) associations founded by only natural persons, and (iii) representative offices or branches of a foreign company at this moment do not have the obligations to submit the transcripts of the archival book to the competent archive.

Finally, high fines are prescribed for violations of the provisions of the Law. The amounts range from RSD 50,000.00 to 2,000,000.00 for the legal entity itself and RSD 5,000.00 to 150,000.00 for the responsible person from the legal entity.

This text is for informational purposes only and should not be considered legal advice. Should you require any additional information, feel free to contact us.

By Kristina Pavlovic, Associate, and Katarina Askic, Junior Associate, Samardzic, Oreski & Grbovic

Bojovic Draskovic Popovic & Partners has advised AerCap House and its sister company Flotlease Msn 973 on the lease of an Airbus A330-200 aircraft to Air Serbia.

AerCap is the world’s largest aircraft leasing company, with 1036 aircraft managed and USD 42 billion of total owned assets as of December 31, 2020. According to BD2P, the new Airbus A330, previously owned by Russian company Aeroflot, now has a special livery, featuring Serbian scientist Nikola Tesla on its tail.

Bojovic Draskovic Popovic & Partners’ team was led by Senior Associate Stefan Golubovic and Partner Uros Popovic. The firm was unable to disclose more information about the deal.