The Serbian tax system has been favoring the richest citizens for decades, however, there is another option on the menu of tax breaks for the wealthy since last year.
As BIRN writes, with the amendments to the Income Tax Act valid from January 2023, citizens with incomes three times higher than the average were given the opportunity to practically halve their tax obligations on that basis. And that if they decide to pay the debt - instead of into the state budget - into one of the existing alternative investment funds in Serbia.
For example, if a rich citizen needs to pay a million euros in taxes, according to this law, even 500.000 can be diverted to the fund, instead of filling the state coffers.
And that's not all. The law also left room for abuse.
A wealthy taxpayer can transfer his tax debt to the fund in December and then withdraw the same amount from the fund account in January of the following year. In this way, he formally complied with the income tax law, but kept most of the money.
It was this legal amendment that enabled alternative investment funds in Serbia to attract new clients eager to reduce their tax obligations.
During the three-month research, BIRN analyzed the work of these funds. One of them is Vista Rica, translated from Spanish as "rich view", currently the only company for managing open alternative investment funds, which was not created within the framework of existing registered banks in Serbia.
Company owners
The owners of Vista Rica are influential members of the ruling Serbian Progressive Party.
Half of the ownership in Vista Rica is held by Tatjana Vukić, a member of the SNS presidency and manager of the SNS Foundation "For the Serbian People and the State", which was created by the President of Serbia, Aleksandar Vučić.
BIRN sources claim that Tatjana Vukić is also in an emotional relationship with Andrej Vucić, the brother of the President of Serbia.
Exactly 25 percent of Vista Rica is held by the well-known lawyer Vojislav Nedić, a member of the SNS presidency and the father of Novak Nedić, the long-time general secretary of the Government of Serbia, known for his connections with criminal groups, primarily with the hooligan group led by Veljko Belivuk, whose members are currently courts for murder, drug trafficking and money laundering.
Apart from Tatjana Vukić and Nedić Sr., 25 percent is held by 44-year-old Srđan Davidović, a chemical engineer who currently works for the Swiss insurance company Swiss Re, and who is little known to the general public.
Suspicion of tax evasion
The founding capital of the company is EUR 300.000, and two funds are currently under its management - Vista Rica Invest and Vista Rica Corporate.
The contested provision of the Income Tax Act entered into force in January 2023, and Vista Rica Invest received its establishment license from the Securities Commission in December 2023, near the end of that same business year.
The financial reports, which BIRN analyzed together with financial experts, indicate that the value of the "Vista Rica Invest" fund already in January, in just one month after its establishment, decreased by one million euros, and that in the first six months as much as 3,77 million - almost half of the value of the fund - which points to the suspicion that the fund was used to avoid paying taxes - all according to the controversial law.
Data from the monthly reports of the two remaining alternative investment funds, which are under the umbrella of Intesa Bank and Raiffeisen Bank, also show the outflow of money in the first month after the new year.
Violation of equality
Dejan Šoškić, former governor of the National Bank of Serbia and an expert on investment funds, tells BIRN that the exemption from income tax through investment in alternative investment funds is "completely unjustified and represents a flagrant violation of the equality of citizens before the tax system", because investments in these funds "they are in no way of any particular social benefit compared to investments in other financial instruments".
"The AIF Law itself as well as the tax stimulus from 2022, in my opinion, represent another in a series of legal and by-laws that have been adopted in recent years without public and parliamentary debate and with an obviously high level of incompetence of the proponents, possible harm to social interests and with the opening of serious possibilities of abuse in practice," Šoškić points out.
The contested provision of the law entered into force in January 2023, and Vista Rica Invest received its foundation license from the Securities Commission on December 20, right before the end of the year.
The investors of the fund are secret, as well as their reasons for investing and withdrawing money, however, it is interesting that at the end of that year 2023, Vista Rica had an inflow of as much as 7.66 million euros.
It collected that amount practically in a couple of weeks since the Securities and Exchange Commission gave its license to operate.
A month later, by the end of January 2024, the number dropped to 6.6 million.
According to official data, from the beginning of January 2024 to the end of June, investors bought back investment units worth 3,77 million euros from the Vista Rica fund.
At the end of July, the value of the fund was 4,68 million euros, which means that the net value of the fund decreased by as much as three million euros in the six months since its establishment.
In this way, the investors in the fund, for whom it served as a flow boiler, using the disputed provision of the Law on Income Tax, got their money back, without the state collecting income tax.
Read more at BIRN website.
