SerbiaTax Obligations Detailed

In Serbia, employers have various tax obligations, including withholding employee taxes and making employer contributions.

Employer Contributions and Withholding

• Pension and Disability Insurance: Employers contribute 10% of the employee's gross salary up to the maximum contribution base of RSD 656,425. Employees also contribute 14% of their gross salary.
• Health Insurance: Employers contribute 5.15% of the employee's gross salary. There's no maximum contribution base for health insurance.
• Unemployment Insurance: Employees contribute 0.75% of their gross salary, while employers do not contribute to this.
• Income Tax: Employers withhold 10% of the employee's gross salary, applying the non-taxable income threshold of RSD 28,423. Note: An additional annual income tax applies to income exceeding three times the average salary.

Payment Deadlines and Procedures

• Corporate Income Tax: Advance payments are due monthly by the 15th of the following month. Annual filing is due within 180 days of the tax year-end.
• Payroll Taxes: All withheld employee taxes and employer contributions are generally due by the 15th of the month following the salary payment.
• Registration: Employers must register with the Serbian Business Registers Agency, obtain a tax ID, and register with relevant social funds.

Minimum and Maximum Contribution Bases

• The minimum contribution base for social security is RSD 45,950.
• The maximum contribution base for social security contributions is RSD 656,425.

Additional Information

• Minimum Wage: The net minimum hourly wage is RSD 308 as of January 1, 2025, translating to RSD 56,672 monthly for 184 working hours.
• Non-Taxable Income: The non-taxable income threshold is RSD 28,423 as of January 1, 2025. This reduces the taxable income amount for employees.
• Business Travel Allowance: The non-taxable daily allowance for international business travel is EUR 90 as of January 1, 2025.
• Tax Incentives for New Hires: The government offers tax incentives for newly hired employees, including refunds on portions of paid salary tax and social security contributions. These incentives have been extended until December 31, 2025.
• Seafarers' Income: A new regulation sets the tax rate for seafarers' income at 10% and defines the contribution base for their mandatory health insurance.

Please note that this information is current as of February 5, 2025, and might be subject to change. Consulting with a tax professional is always recommended for personalized advice.

In Serbia, employee tax deductions encompass various areas, including income tax, social security contributions, and personal allowances.

Income Tax

• Salary Tax: A flat rate of 10% is applied to employment income after deducting the non-taxable monthly threshold. As of January 1, 2025, this threshold is RSD 28,423. The taxable base includes the gross salary and any fringe benefits.

Social Security Contributions

• Pension and Disability Insurance: Employees contribute 14% of their gross salary to this program.
• Health Insurance: This program provides healthcare coverage, and the contribution rate varies based on several factors not detailed in the provided sources.
• Unemployment Insurance: Employees contribute 0.75% of their gross salary to this fund.

Personal Deductions and Allowances

• Taxpayer Deduction: Individuals can deduct 40% of the average annual salary for the previous year as of January 1st, 2025.
• Dependent Deduction: An additional 15% of the average annual salary can be deducted for each dependent family member.
• Maximum Deduction Cap: The combined total of personal deductions cannot exceed 50% of the taxable income.
• Additional Deduction for Under 40s (for 2023 Tax Year): Individuals under 40 years old by December 31, 2023, were eligible for an additional deduction equal to the non-taxable income threshold (4,269,564 RSD in 2023) when filing their 2023 annual tax return.

Other Tax Credits and Incentives

• Newly Hired Employee Incentives (extended to December 31, 2025): Employers hiring new employees are eligible for partial refunds on paid salary tax and social security contributions. Details regarding specific refund amounts and eligibility requirements are not provided here.
• Newly Settled Experts: For newly hired experts with specific skills not available in the Serbian labor market, employers may be eligible for a 70% reduction in income tax and contribution base over five years, subject to specific conditions.
• Startup Founders: Founders of new innovative companies who are also employed by the company might qualify for income tax and social security contribution exemptions on their salaries up to certain limits for 36 months after the company's establishment.
• Tax Credits for Investments in Alternative Investment Funds: Tax credits can be applied for investments held for a minimum of three years. If divested before this period, the credit is revoked.

Annual Tax Return

The deadline for submitting the annual tax return and specific details on the process for 2025 have not been provided. Residents are taxed on worldwide income, while non-residents are taxed only on Serbian-sourced income.

Additional Notes

• Married couples are taxed separately.
• The non-taxable salary threshold is adjusted annually based on the consumer price index. The adjustment for 2025 is already in effect.

It is important to consult with a tax professional for personalized advice. Tax laws are complex and are subject to change.

In Serbia, Value Added Tax (VAT), known locally as Porez na dodatu vrednost (PDV), is levied on most goods and services.

VAT Rates

• Standard Rate: 20% (applicable to most goods and services).
• Reduced Rate: 10% (applicable to basic foodstuffs like bread, milk, and eggs; essential utilities; some medical supplies and services; specific agricultural products; educational materials; daily newspapers and certain publications; firewood; hotel accommodations; tickets for cultural and sporting events; certain utility, environmental, and transportation services).
• Zero Rate: 0% (applicable to exports of goods, international transport services directly linked to exports, and supplies related to aircraft and ships used in international traffic). Exempt Categories: Certain goods and services are exempt from VAT, including educational services provided by the state, healthcare services offered by public facilities, specific cultural services performed by state institutions, trading of company shares, insurance, reinsurance, and the leasing of apartments and business premises

VAT Registration

• Threshold: RSD 8,000,000 (approximately EUR 65,000) in annual turnover for businesses established in Serbia. Businesses exceeding this threshold must register for VAT.
• Non-Resident Businesses: Foreign businesses supplying taxable goods or services in Serbia are required to register for VAT, regardless of their turnover. They can register directly or appoint a fiscal representative.

VAT Filing and Payment

• Tax Period: As of December 20, 2024, all businesses follow a monthly tax period for VAT purposes.
• Filing Deadline: VAT returns and payments must be submitted by the 15th day of the month following the reporting period.
• Preliminary VAT Return: Starting from January 2026, a preliminary VAT return, pre-filled with data from the System of Electronic Invoices (SEF), will need to be submitted along with the regular VAT return. The POPDV form is no longer required from January 2026.
• Electronic Submission: VAT returns must be filed electronically.

VAT Refund

Taxpayers are entitled to a refund if their input VAT exceeds their output VAT. The deadline for the refund is 45 days from the deadline for submitting the VAT return. Foreign taxpayers may also be eligible for VAT refunds under certain conditions. More precisely, only if they do not perform any supply of goods or services in Serbia, except for international transportation services.

General Considerations

Serbia follows a similar VAT model to the European Union, even though the country isn't part of the Union. If a business exports goods to a customer (business or private), it does not need to charge VAT. If goods are imported to Serbia, they are subject to import VAT. Reverse charge mechanism is applicable for some supplies of goods and services. In this case the recipient of the supply is liable to pay VAT. Penalties can be incurred for late submissions of VAT returns and payments. The most up to date information regarding VAT regulations in Serbia can be found on the website of Serbian tax authority.

Serbia offers various tax incentives to stimulate investment, innovation, and employment.

Corporate Tax Incentives

• Tax Holiday: Companies investing over RSD 1 billion and hiring over 100 employees can benefit from a 10-year corporate tax holiday, starting when the company becomes profitable.
• Investment in Startups: A 30% tax credit is available for investments in qualifying startups. These startups must be less than three years old, focused on innovation, and have annual revenue under RSD 500 million. The investing company cannot own 25% or more of the startup's shares or voting rights.
• R&D Double Deduction: Companies can deduct double the amount of their qualified research and development (R&D) costs.
• IP Box Regime: Startups can exclude 80% of their "qualified income" derived from R&D from their tax base.

Employment Incentives

• Newly Hired Employees: As of 2025, a 30% reduction on payroll tax and a 55% reduction on social security contributions are applicable for newly hired employees. These incentives are valid until December 31, 2025.
• Qualified Newly Settled Experts: A 70% reduction on payroll tax and social security contributions is available for five years when hiring foreign experts with unique skills not readily found in Serbia.
• Hiring Unemployed Individuals: Companies hiring individuals registered with the National Unemployment Agency for over six months qualify for significant payroll tax reductions.

Individual Tax Incentives

• Startup Founders: Founders of innovative startups employed by their company can receive tax exemptions on their salaries (up to specified limits) for 36 months from the company's establishment.
• Non-Taxable Salary Threshold: As of January 1, 2025, the monthly non-taxable salary threshold is RSD 28,423.
• Business Travel Allowance: The non-taxable daily allowance for business trips abroad is EUR 90.
• Personal Deductions: Individuals can deduct 40% of the average annual salary, plus 15% per dependent. The total deduction cannot exceed 50% of taxable income.

Other Incentives

• Cash Grants: Cash grants are available for Greenfield and Brownfield projects in manufacturing and internationally traded services, subject to specific regulations.
• Land Subsidies: Government or municipalities may offer construction land below market price for nationally or locally significant projects.
• Double Taxation Treaties: Serbia has numerous double taxation treaties to avoid double taxation on international income.

This information is current as of February 5, 2025, and may be subject to change. Consulting with a tax advisor is recommended for the latest updates and personalized guidance.