Taxation

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.

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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.

Employment income

The taxable person is the employee, but the employer is responsible for calculating and withholding personal income tax on behalf of its employees at the moment of salary payment.

The taxable base is gross salary reduced for the non-taxable salary cap of RSD 15,000.

The taxable base also includes social security contributions (see below) on behalf of the employee.

Business income

As of 31 May 2013, income from agriculture and forestry is categorised as income from entrepreneurial work (i.e. self-employment income).

Income from self-employment includes income generated from business activity and provision of professional and/or intellectual services, as well as revenue from other activities, unless such income was taxed on some other grounds under the present Law.

If a tax payer is unable to keep books, or in the case of certain other difficulties, the so called ‘lump-sum’ tax will be applicable.

Capital gains

Income subject to tax as capital gains includes income generated by the sale or other transfer with consideration of the right of ownership to real estate, permanent right of use of an urban land building, intellectual property rights and share in the assets of legal entities, and shares and other securities, other than bonds.

The taxable base is the difference between the sale price of rights, securities, shares, and their purchase price adjusted in accordance with the provisions of the personal income tax Law.

The tax rate applicable to capital gains is 15%.

Investment income

Income subject to tax as investment income includes interest on loans, savings, and other deposits, dividends/shares in profits, receipts on a profit sharing basis, and taking from the assets and using the services of the company by the company’s owner for one’s personal needs, as well as the revenues from real estate (immovable property).

Tax is not payable on the interest accrued from savings in Serbian dinars and on government bonds.

The tax base for all types of investment income is considered to be the total gross amount of such income.

The tax rate applicable to investment income is 15%.

The tax rate applicable to real estate income is 20%.

Royalty income

Income subject to tax as royalty income includes revenue from copyrights, rights related to copyright, and industrial property rights.

The taxpayer is an individual who acts as a copyrighter, holder of rights related to copyright, or owner of industrial property rights and receives remuneration for any of these rights.

The tax base is the difference between gross revenue and cost incurred by the taxpayer in generating and preserving the income. Standard costs are used to reduce taxable base, and are equal to 50%, 43%, and 34% of the gross income, depending of the type of royalty.

The tax rate applicable to royalty income is 20%.

Exempt income

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.

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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.

Tax deductions

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.

Tax-exempt income

The following benefits are not included in taxable income in Serbia:

reimbursement of expenses for accommodation on a business trip up to the amount of actual expenses
commuting costs up to the public transport monthly ticket price, but not more than RSD 3,837 (as of 1 February 2018)
allowances for the use of a private car for business purposes up to the amount of 30 percent of a petrol liter multiplied with number of liters spent, but not more than RSD 6,716 per month (as of 1 February 2018)
pension severance payment in the amount of two average monthly salaries in Serbia
damages received from property and personal insurance
death and funeral costs compensation up to limited amount
compensation for damages from natural disasters.

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).