Tax residents of Serbia are obliged to pay Serbian taxes on their global income. Non-tax residents of Serbia are only taxed on income from Serbia.
Individuals will be considered tax residents:
- If they stay in Serbia permanently,
- If they have a habitual residence in Serbia, that is, if they have stayed in the country for at least 183 days within the 12 months from the beginning or end of the tax year,
- If they are sent abroad for the purpose of working in an individual or legal entity that is a resident of a republic or an international organization,
- If their vital interests are located in Serbia.
Married people are taxed separately, and family units are not taxed collectively.
The latest amendments to Serbian tax laws and practices
The amendment to the Personal Income Tax (PIT) Law passed in July 2014 reduced the tax rate for certain types of income. The amendment also explains that the annual PIT thresholds for Serbian tax residents and Serbian tax non-residents are equal, and clarifies certain issues.
Please note that the payroll tax rate is still 10%.
With the latest changes applicable since January 2018, the salary tax allowance has been increased from 11,790 Serbian Dinars (RSD) to 15,000 RSD.
Foreign tax relief and tax treaties
Double taxation treaty
Serbian residents are taxed on their global income. When income generated in another country is taxed in that country, the taxpayer has the right to reduce the tax payable by applying for tax credits to the tax authorities in Serbia. This tax credit is equal to the tax paid in another country, but cannot exceed the tax payable in Serbia.
What is the income of tax residents?
After deducting the tax-free salary cap of SEK 15,000, employment income should be withheld at a flat rate of 10%. The taxable basis is the total wages.
Other types of income are subject to a flat tax rate of 10% to 20% depending on the type of income.
Decoration and tax-free income
Some income regions in Serbia are exempt from tax. Likewise, certain deductions are allowed. Find the ones on the right.
Social security rate
In Serbia, social security tax is a tax related to labor income collected by both companies and employees. Income from social security rates is an important source of income for the Serbian government because they help pay for many social programs, including welfare, medical care and many other benefits.
The employer calculates and withholds social security contributions from the wages paid to employees up to the specified upper limit. The employer should also pay these contributions on top of the employee’s total salary. The amount borne by the employer is regarded as the operating cost, and the part due by the employee is deducted from the total salary. The rates are as follows.
For employees:
Pension and disability insurance: 14%.
Health insurance: 5.15%.
Unemployment insurance: 0.75%.
For employers:
Pension and disability insurance: 12%.
Health insurance: 5.15%.
Unemployment insurance: 0.75%.
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