Serbia: Rulebook on arm’s length interest rates for 2023

Interest rates for for all non-finance entities and a single interest rate for banks and finance leasing companies

Interest rates for 2023

The Ministry of Finance adopted the rulebook on arm’s length interest rates for 2023. The rulebook was published in the official gazette dated 29 March 2023 and is effective 6 April 2023.


According to the provisions of article 61 of the corporate income tax law, in determining arm’s length interest income or expense, taxpayers can:

  • Use interest rates as prescribed by the rulebook
  • Apply general OECD-based methods for assessment of arm’s length interest as prescribed by the corporate income tax law

The selected option must be consistently applied to all intercompany loans, and prescribed interest rates must be applied to income and expense recognized during 2023 regardless of the period from which loan(s) originate.


The rulebook prescribes separate interest rates for long-term and for short-term borrowings for all non-finance entities and a single interest rate for banks and finance leasing companies (except for RSD denominated loans when interest rate is prescribed separately for short-term and long-term loans).

KPMG observation

The rulebook provides an upward trend of interest rates from 2022 in line with increasing average borrowing costs in the economy.

Companies exposed to significant, long-term related-party financing may want to consider applying general OECD-based methods for assessment of arm’s length interest, as that approach may be more beneficial and provide an increased level of certainty in relation to future tax treatment.

The effect of the rulebook on the application of beneficial withholding tax rates on interest in accordance with income tax treaties requires detailed review.

Read a March 2023 report [PDF 2.0 MB] prepared by the KPMG member firm in Serbia



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