Many Serbian companies use LinkedIn's premium services for recruiting — LinkedIn Recruiter, Sales Navigator, or other paid subscriptions. These payments raise an important tax question: should your company withhold tax when paying LinkedIn?

The answer depends on how the payment is classified under Serbian tax law and the applicable tax treaty. Get it wrong, and you risk either unnecessary withholding tax costs or potential penalties for non-compliance.

This guide explains the tax treatment of LinkedIn fees for Serbian companies, including VAT implications and the critical distinction between royalties and business income.

The Basic Setup: How LinkedIn Invoices Serbian Companies

LinkedIn Corporation operates through LinkedIn Ireland Unlimited Company, a legal entity resident in Ireland. For Serbian customers, LinkedIn Ireland is registered for VAT in Serbia through a fiscal representative.

This means when your Serbian company subscribes to LinkedIn services, you receive invoices from LinkedIn's Serbian VAT representative with Serbian VAT charged. The VAT treatment is straightforward — it's a service with place of supply in Serbia, so 20% VAT applies.

The more complex question involves withholding tax.

The Withholding Tax Question

Under Serbian Corporate Income Tax Law, payments to non-residents for certain types of income are subject to 20% withholding tax. Royalties — payments for using intellectual property — fall into this category.

So the key question becomes: are LinkedIn subscription fees "royalties" subject to withholding, or something else entirely?

If the payment is classified as a royalty, your company must:

- Withhold 20% tax (or a reduced rate under the Serbia-Ireland tax treaty)

- The VAT base should include the withholding tax amount

- File withholding tax returns

If the payment is NOT a royalty, no withholding applies, and VAT is calculated on the net service fee only.

What Makes Something a "Royalty"?

Serbian domestic law and the Serbia-Ireland Double Tax Treaty define royalties differently — and the treaty definition controls when it applies.

Under the treaty, royalties include payments for:

- Copyright on literary, artistic, or scientific works

- Patents, trademarks, designs, models, plans

- Secret formulas or processes

- Computer software

- Industrial, commercial, or scientific equipment

- Know-how and industrial/commercial/scientific experience

The critical test: is the payment for using or having the right to use intellectual property that belongs to the recipient?

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LinkedIn's Service: Database Access, Not IP Transfer

To determine the correct tax treatment, we need to understand what LinkedIn actually provides.

LinkedIn is essentially an electronic database of professional profiles — information about individuals' education, work experience, skills, and career history. When companies pay for LinkedIn Recruiter or similar services, they're paying for enhanced access to search and filter this database, contact candidates more easily, and use advanced features.

Here's what's important: the underlying data in LinkedIn's database consists of publicly shared information from individual users. LinkedIn doesn't own intellectual property rights over this personal data — users voluntarily publish their own profiles.

What you're paying for is:

- Faster and more efficient database searching

- Advanced filtering and matching algorithms

- Direct messaging capabilities

- Team collaboration features

What you're NOT paying for:

- Proprietary know-how or trade secrets

- Copyrighted content owned by LinkedIn

- The right to use LinkedIn's software code

- Information that's otherwise unavailable

The Ministry of Finance Position

The Serbian Ministry of Finance has addressed similar situations. In an official opinion regarding payments for access to financial market data, the Ministry concluded that such payments are NOT royalties when:

- The data being accessed is publicly available information

- The recipient doesn't hold intellectual property rights over the content

- The payment is essentially for data acquisition, not for using or having the right to use protected IP

- The "service" is providing easier access to information, not licensing intellectual property

Under this analysis, the payment constitutes business income of the foreign company — not royalties. And under the Serbia-Ireland tax treaty, business income is taxable only in Ireland (the country of residence), not in Serbia.

LinkedIn's Own Position

LinkedIn itself takes the position that its subscription fees are not royalties. When asked about the nature of payments, LinkedIn has stated:

"LinkedIn gives users access to its online database. The information forming this database is available in the public domain and is not something exclusively available to LinkedIn. Therefore, providing access to the database does not constitute transferring information about LinkedIn's own knowledge, expertise, or skills. As such, payments made to LinkedIn should not be treated as royalties because we do not transfer any copyrights, patents, or trademarks to the customer."

This characterization supports treating LinkedIn fees as payment for services (business income) rather than royalties.

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Practical Implications for Your Company

If the analysis above applies to your LinkedIn subscription, the tax treatment is:

- No withholding tax required: The payment is business income taxable only in Ireland under the tax treaty.

- VAT calculated on net amount: LinkedIn's fiscal representative charges VAT on the service fee without grossing up for withholding tax.

- Input VAT deductible: You can claim the VAT on LinkedIn invoices as input tax under normal rules.

- No additional Serbian filings: Since no withholding applies, you don't file withholding tax returns for these payments.

Important Caveats

This analysis applies to standard LinkedIn subscription services — Recruiter, Sales Navigator, Premium subscriptions, and similar products where you're essentially paying for enhanced database access and communication tools.

Different treatment might apply if:

- You're licensing LinkedIn's software for integration into your own systems

- You're paying for custom data analytics or proprietary insights

- The specific service involves actual IP licensing rather than platform access

- You're using LinkedIn Learning content (which might involve copyright considerations)

Each situation requires analysis based on the actual service being provided and the substance of the arrangement.

Documentation Recommendations

Even when no withholding applies, prudent practice suggests documenting your position:

- Keep copies of LinkedIn's service descriptions and terms

- Retain any correspondence about the nature of services

- Document your analysis of why the payment isn't a royalty

- Maintain records supporting the Serbia-Ireland treaty application

If the Tax Administration questions your treatment during an audit, you'll want clear documentation showing you analyzed the issue properly.

What If Your Analysis Differs?

If you conclude that withholding does apply — perhaps because you're using a different LinkedIn service with actual IP licensing — then:

- Withhold at the treaty rate (typically 5% for royalties under Serbia-Ireland)

- Ensure LinkedIn's fiscal representative grosses up the VAT base to include the withholding

- File appropriate withholding tax returns

This is more complex and costly, which is why the characterization matters.

How Tax Advisor Serbia Can Help

Cross-border payments require careful analysis of both domestic law and applicable tax treaties. We help Serbian companies evaluate withholding tax obligations on payments to foreign service providers, ensuring correct treatment while avoiding unnecessary tax costs.

If you're uncertain about withholding requirements on LinkedIn or other international service payments, book a consultation to review your specific situation.

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