From January 2026, the Law on Greenhouse Gas (GHG) Emissions Tax will come into effect in Serbia, in order to establish a fiscal mechanism for the systematic reduction of industrial emissions and to encourage the adoption of lower-emission technologies. In this way, funds in the budget of the Republic of Serbia are also secured, which can be used to promote investments related to the green transition, according to the Law.
The new law represents part of Serbia’s obligations in the process of alignment with European climate policies and the CBAM mechanism, which also starts on January 1, 2026. In addition, the law aims to establish the “polluter pays” principle, introducing the costs of pollution into business activities.
The Law on Greenhouse Gas (GHG) Emissions Tax introduces a tax that is calculated and paid on the taxable amount of GHG that the taxpayer emits during the tax period, in accordance with this law.
The taxpayer is a legal entity or entrepreneur who, according to climate change laws, must possess a permit for greenhouse gas emissions. This applies to those managing facilities or parts of facilities for which the permit is mandatory.
The tax applies to facilities engaged in one or more of the following activities:
- Production of artificial fertilizers and nitrogen compounds
- Production of cement
- Production of crude iron, steel, and ferroalloys
- Production of aluminum
- Production of electricity
How is the GHG tax calculated?
The Law states that the tax base is determined as the amount of GHG emissions that the taxpayer emits during the tax period from all individual facilities, reduced by the amount of emissions that is reference for a specific production process or activity.
Explanation:
The tax period is usually a whole calendar year, except if the facility is just starting operations or ceasing operations – then the period is calculated from the start to the end of operation within that year.
Total emissions are the amount of GHG emissions that the taxpayer emits during the tax period. They are determined based on verified reports submitted by the taxpayer to the competent authority in accordance with regulations governing climate change.
The reference emission can be simply explained as the minimal amount of gases that cannot be completely eliminated during production, even when the most advanced technology is used and maximum efficiency is achieved.
The tax base is obtained when the reference emission is subtracted from total emissions. This is a prerequisite for determining the total amount of the tax obligation.
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How is the amount of tax liability calculated?
The tax base is expressed in tons of CO2. For emissions that are not carbon dioxide, the CO2 equivalent is used, meaning that their amount is converted to have the same warming effect as CO2. The resulting value is then multiplied by the tax rate of 4 euros per ton, expressed in dinar equivalent according to the exchange rate of the National Bank of Serbia.
Example of calculating the GHG tax:
Let’s say a company emits 600 tons of CO2 during the year, and the reference emission for its production processes is 360 tons.
The tax base is obtained by subtracting the reference emission: 600 – 360 = 240 tons.
The tax base is multiplied by the tax rate of 4 euros per ton, converted into dinars: 240 × 4 euros = 960 euros in dinar equivalent.
Tax credit
A special article of the Law provides for a tax credit, which means a reduction of the tax for companies that meet certain conditions.
The credit can only be used by companies whose main activity is electricity production, i.e., if at least 80 percent of revenue comes from electricity production.
The credit is granted for investments in activities and measures that reduce GHG. The company receives 20 percent of the invested money, meaning that this amount reduces the GHG tax.
The credit cannot reduce the tax by more than 80 percent of the total tax obligation.
The company must keep records and retain invoices and evidence of the invested funds while the tax payment period lasts, and the Government prescribes which activities are recognized for using the credit.
Incentives for decarbonization
The law stipulates that companies can receive financial assistance from the budget of Serbia for projects that reduce emissions and accelerate the green transformation, including investments in renewable energy sources, energy efficiency, innovative low-carbon technologies, green construction, and more. The Government determines the conditions, criteria, and method of allocating funds, as well as the method and deadlines for reporting on the use of funds.
The law will be applied from January 1, 2026, while the provisions of the Law relating to the tax credit and decarbonization incentives will apply for ten years, starting from the day the law enters into force.
For more on tax filing and payment, read here.
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