tax
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 place of residence in Serbia, that is, if they have stayed in the country for at least 183 days within 12 months of 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 the Republic or an international organization,
- If their vital interests are located in Serbia.
- Married persons need to be taxed separately, and family units are not required to collect taxation.
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.
Employment income
Taxpayers are employees, but employers are responsible for calculating and withholding personal income tax on behalf of their employees when paying wages.
The taxable base is the total salary minus the tax-free salary cap of 15,000 RSD.
The taxable base also includes social security contributions on behalf of employees
Operating income
As of May 31, 2013, income from agriculture and forestry was classified as income from entrepreneurial work (ie self-employment income).
Self-employment income includes income from business activities and the provision of professional and/or knowledge services, as well as income from other activities, unless such income is taxed for other reasons in accordance with this law.
If the taxpayer is unable to keep accounts, or in some other difficult circumstances, the so-called “total price” tax will be applied.
Capital gains
Taxable income as capital gains includes income from sales or other transfers, including the ownership of real estate, permanent use rights of urban land and buildings, intellectual property rights and the share of assets of legal entities, and other securities other than stocks and bonds.
The taxable base is the difference between the sale price of securities and shares and the purchase price of rights adjusted in accordance with the provisions of the Individual Income Tax Law.
The tax rate applicable to capital gains is 15%.
Investment income
Taxable income as investment income includes loan interest, savings and other deposits, profit dividends/dividends, income based on profit distribution, and income derived from assets and used by the company owner for personal corporate service needs and real estate ( Real estate) income.
There is no tax on interest accrued from savings in Serbian dinar and government bonds.
The tax base of all types of investment income is regarded as the total amount of the income.
The tax rate applicable to investment income is 15%.
The tax rate applicable to real estate income is 20%.
Royalty income
Taxable income as royalties includes income from copyright, copyright-related rights and industrial property rights.
Taxpayer refers to an individual who is the owner of copyright, holder of copyright-related rights, or owner of industrial property rights and who receives compensation for any of these rights.
The tax base is the difference between the total income and the cost incurred by the taxpayer in generating and retaining income. Standard fees are used to reduce the taxable base, depending on the type of royalties, which are equal to 50%, 43%, and 34% of total revenue, respectively.
The tax rate applicable to royalty income is 20%.
Tax-free income
Special income categories that do not exceed the prescribed amount are exempt from tax. Such income includes public transportation expenses incurred by employees for travel to the office and daily allowances for business travel.
In some cases, non-residents working for diplomatic and consular missions or international organizations in Serbia are not taxed on their income.
Tax cuts
Social security payments,
Basic personal allowance
A certain amount of money for each dependent family member,
Each dependant’s national average annual salary plus a 15% allowance; the total subsidy shall not exceed 50% of the taxable income.
Tax-free income
Serbia’s taxable income does not include the following benefits:
Reimbursement of travel accommodation expenses, up to the actual cost
Commuting costs do not exceed the price of a public transport monthly pass, but not more than 3,837 Serbian dinars (as of February 1, 2018)
As of February 1, 2018, the private car allowance for business purposes is up to 30% of petrol liters multiplied by the number of liters spent, but does not exceed R6,716 per month
Serbia’s two average monthly pension severance payments
Damages from property and life insurance
Compensation for death and funeral expenses, maximum limit
Compensation for losses caused by natural disasters.
Social security payments are mandatory
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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