Taxation

Working in Europe | Taxation/salaries | Serbia

Tax residents in Serbia are liable to pay Serbian tax on their worldwide income. Non tax residents in Serbia are liable to pay tax on their Serbian-source income only.

Individuals will be regarded as tax residents:

  • if they stay permanently in Serbia,
  • if they have their habitual place of abode in Serbia, i.e. if they stay in the country for at least 183 days in a 12 month period that begins or ends in the relevant tax year,
  • if they are sent abroad for the purpose of working for an individual or legal entity that is a resident of the Republic, or an international organisation,
  • if their centre of vital interests is located in Serbia.

Married persons are taxed separately and there is no group taxation of a family unit.

 

Most recent amendments of the tax law and practices in Serbia

The amendments to the Personal Income Tax (PIT) Law, adopted in July 2014, introduced reduction of tax rates for certain types of income. The amendments also explain the equal annual PIT thresholds for Serbian tax residents and Serbian tax non-residents and provide clarification on certain issues.

Note that the salary tax rate remains 10%.

With the latest changes, applicable as of January 2018, the non-taxable amount for salary tax increased from 11,790 Serbian dinars (RSD) to RSD 15,000.

 

Foreign tax relief and tax treaties

Double tax treaties

Serbian residents are taxed on their worldwide income. When income generated in another country is taxed there, the taxpayer has the right to decrease the tax liability by claiming a tax credit to the tax authorities in Serbia. This tax credit is equal to the tax paid in another country, but it cannot exceed the amount of the tax that would have been paid in Serbia.

Find out more

 

 

Income determination

What constitutes the income of the tax resident?

Employment income is subject to withholding tax at a 10% flat rate after deducting the RSD 15,000 non-taxable salary cap. The taxable base is gross salary.

Other types of income are subject to a flat rate tax that ranges from 10% to 20%, depending on the type of income concerned.

Find out about the different types of income on the right.

Special types of income, up to prescribed amounts, are tax exempt. Such income includes public transportation costs incurred by an employee for home-to-office travel and daily allowances for business trips.

In certain cases, non-residents working for diplomatic and consular missions or international organisations in Serbia are not taxed on their remuneration.

 

 

 

 

Stay responsible for lesser taxes

Decuctions and tax-exempt income

There are areas of income that are exempt from taxation in Serbia. Also, certain deductions are permissible. Find out about those on the right.

  • social security contributions,
  • a basic personal allowance
  • a certain amount for each dependent family member,
  • an additional allowance of 15% of the country average annual salary for each dependent; the total of the allowances may not exceed 50% of the taxable income.
 

 

 

 

 

Social security contributions are mandatory

Social security rates

In Serbia, the Social Security Rate is a tax related with labor income charged to both companies and employees. Revenues from the Social Security Rate are an important source of income for the government of Serbia because they help to pay for many social programs including welfare, health care and many other benefits.

Social security contributions are calculated and withheld by the employer from the salary paid to an employee, up to a specified cap. These contributions are also payable by the employer on top of the employee’s gross salary. The amount borne by the employer is treated as an operating cost, while the portion payable by the employee is taken from gross salary. The rates are as follows.

For the employee:

  • Pension and disability insurance: 14%.
  • Health insurance: 5.15%.
  • Unemployment insurance: 0.75%.

For the employer:

  • Pension and disability insurance: 12%.
  • Health insurance: 5.15%.
  • Unemployment insurance: 0.75%.

Serbian law on mandatory social security insurance contributions can be downloaded here (in English).