Personal Income Taxes in Serbia

If you are considering Serbia as a place for potential relocation or if you have made a decision to move here, you should know the personal income tax rates and how to pay them to avoid issues with the law. If something goes wrong, you may bear administrative or even criminal liability – well, like in any other country. The taxes are not very high in Serbia (which may be a reason in favor of the decision to move here), and there are some tax benefits available. If you want to know more about different aspects of living here, please follow the link to explore the portal that is devoted entirely to Serbia or talk to an expert who will give you free professional advice (use the live chat during office hours).

All Serbian residents who comply with the criteria below have to pay an annual personal income tax:

• Their income is derived from local and foreign sources
• The income they receive exceeds the average annual salary by three times (about 30,000 euros a year).

As for non-resident taxpayers, they are only required to pay taxes on the profits derived from sources located within Serbia.

Who Qualifies as a Serbian Tax Resident?

Serbian individuals who are considered residents for tax purposes have to comply with the following criteria:

• They have their vital interests, center of business, or place of residence in Serbia.
• They live in Serbia for at least 183 days during any 12 months that start/end in the relevant fiscal year.

Which Income Sources Are Taxed in Serbia?

Let’s look at the income types subject to income tax in Serbia:

• Catering services provision
• Property sale
• Lease of movable/immovable property
• Industrial rights, copyrights, and related rights
• Occasional and temporary work
• Income earned under an employment contract
• Other income specified in the Individual Income Tax Law

Taxable Base

The calculation of the individual personal income tax is based on the taxable income which is the difference between earnings and personal deductions. This difference is calculated on the basis of the following information:

• 40% of the average annual salary for the taxpayer
• 15% of the average annual salary for one dependent family member

The basis for the calculations is the average annual salary according to the Serbian statistical authority for the relevant tax year.

If the annual income tax has to be paid by two or more family members, the deductions for dependent family members can only be claimed by one taxpayer.

Tax Rates

Here are the individual personal income tax rates applicable to Serbian residents:

• If the income is up to 6 times higher than the average annual salary, the tax rate amounts to 10%.
• If the income is higher than the above amount, you will have to pay 10% for the amount equaling six times the average annual salary and 15% on any income above that.

Tax Deductions: Investments and Age Under 40

If taxpayers invest in alternative investment funds, they have the right to a tax credit with regard to their annual personal income tax payment. The credit does not exceed 50% of the investment amount. If you want to take advantage of this incentive, please pay 100% of your contribution to the alternative investment fund. 

Serbia also provides incentives to individuals under 40 years of age. The non-taxable limit for this category of taxpayers was doubled on the basis of the net income from copyright and related rights, employment, or self-employment. While the income tax on earnings paid previously exceeded RSD 3.2 million, the limit was now raised to RSD 6.4 million.

Serbian Income Tax: Changes in 2023

On January 1, 2023, amendments to the Laws on Personal Income Tax and Compulsory Social Insurance Contributions took effect. Here are the main modifications:

• The non taxable amount used to find the base of income tax calculation rose from RSD 19,300 to RSD 21,712.
• The disability insurance and mandatory pension contribution rate was reduced from 25% to 24%. The rate payable by employers was reduced from 11% to 10%.
• A tax for freelancers with two calculation models was introduced.

Annual Personal Income Tax Payment: Self-Assessment

2023 marked the start of a new tendency: the annual personal income tax will not be reported and paid on the basis of self-assessment rather than the tax authority’s decision. Are there any implications for the taxpayers?

The tax office will now make up a draft declaration on an annual basis, no later than the 1st of April, relying on the data available on the individual’s income for the preceding year. The taxpayer will then check the calculations made in the electronic account. If any inaccuracies are detected, the taxpayer will make relevant modifications before filing the tax declaration. The latter is required to be submitted online using the website of the tax authority. Paper declarations are no longer accepted.

Make sure to submit the tax declaration and pay the annual tax before May 15th for the previous calendar year.

If you fail to amend the tax declaration before the deadline set, the tax authority will submit it on its behalf without changing the available data for the preceding year.

Income Tax Payment Violations: Penalties and Sanctions

If you fail to provide the tax declaration on time or at all, you will be subject to criminal or administrative liability. 

Administrative Liability

Individuals (who are not entrepreneurs) committing the following violations are subject to a fine ranging between RSD 15,000 and RSD 150,000:

• Non-provision of evidence and documents that have an impact on tax calculation.
• Submission of wrong data that is not corrected within the prescribed period.
• No signature on the declaration.
• Failure to file the tax declaration on time.

Criminal Liability

The taxpayer will be criminally liable if there is evidence that he or she intentionally provided wrong data or concealed information to evade mandatory contributions or tax payments. In these cases, everything depends on the amount of overdue payments:

• Up to 3 years of imprisonment and a fine for the amount from RSD 150,000 up to RSD 1,500,000
• From 1 to 5 years of imprisonment and a fine for the amount from RSD 1,500,000 up to RSD 7,500,000
• From 1 to 8 years of imprisonment and a fine for the amount from RSD 7,500,000

Interested in discovering Serbia in more detail? Do not hesitate to follow the above link and talk to an expert or read more articles.