In the heart of the Balkans, nestled amidst a population of approximately 7 million and boasting a GDP of USD 51 billion, Serbia stands as a notable player on the global stage. A nation with UN, Council of Europe, OSCE, and WTO memberships, Serbia is also making strides as a candidate for EU accession.

With its promises of growth and potential, it’s little wonder that Serbia has become an attractive destination for expats seeking to live, work, or establish businesses. If you find yourself among those drawn to Serbia’s allure, understanding the intricacies of the tax system and the corresponding tax rates is paramount. 

Our team is delighted to offer you a comprehensive overview of the Serbian tax landscape, alongside valuable insights on navigating local tax obligations and optimizing your tax position.

Personal Income Tax

Personal Income Tax (PIT) is the fiscal framework that impacts individuals deriving income from diverse sources, spanning employment, self-employment, capital gains, dividends, interest, royalties, rents, pensions, and other revenue streams. The tax rates and taxable base hinge on the specific income category and the individual’s residence status. We also have detailed material on how to get a legal tax residency in Serbia.

• Resident vs. Non-resident: Residents, defined as individuals with a domicile or habitual abode in Serbia or those who spend more than 183 days in a 12-month period within its borders, are subject to worldwide income taxation. Non-residents, on the other hand, are liable for taxes exclusively on income originating from Serbian sources or work carried out in or for Serbia.

The standard Personal Income Tax rate stands at 10{4ff670bb91f5a71bed27471ead6462c9b16f5bdce5956c8330f96255c052ee42}, with exceptions and variations contingent upon income type:

• Employment Income: Taxed at 10{4ff670bb91f5a71bed27471ead6462c9b16f5bdce5956c8330f96255c052ee42} on gross salary, inclusive of mandatory social security contributions shouldered by the employer (14{4ff670bb91f5a71bed27471ead6462c9b16f5bdce5956c8330f96255c052ee42} for pension and disability insurance, 5.15{4ff670bb91f5a71bed27471ead6462c9b16f5bdce5956c8330f96255c052ee42} for health insurance, and 0.75{4ff670bb91f5a71bed27471ead6462c9b16f5bdce5956c8330f96255c052ee42} for unemployment insurance). The onus of tax collection rests with the employer.
• Self-Employment: Self-employed individuals are obliged to pay 10{4ff670bb91f5a71bed27471ead6462c9b16f5bdce5956c8330f96255c052ee42} of net income post-allowable expenses. Social security contributions, ranging from 25.5{4ff670bb91f5a71bed27471ead6462c9b16f5bdce5956c8330f96255c052ee42} to 36{4ff670bb91f5a71bed27471ead6462c9b16f5bdce5956c8330f96255c052ee42}, vary depending on activity and status.
• Capital Gains Tax: Imposed at 15{4ff670bb91f5a71bed27471ead6462c9b16f5bdce5956c8330f96255c052ee42} on the difference between the selling and acquisition price of capital assets. Capital losses can be offset in the same period or carried forward for up to 5 years.
• Dividend Tax: Currently fixed at 15{4ff670bb91f5a71bed27471ead6462c9b16f5bdce5956c8330f96255c052ee42}, this tax is levied on the gross amount received from both domestic and foreign sources. The payer of dividends is responsible for withholding and remitting the tax on behalf of the recipient.
• Interest Income: Prepare for a 15{4ff670bb91f5a71bed27471ead6462c9b16f5bdce5956c8330f96255c052ee42} tax rate. The same principle governing dividend tax applies to both payer and recipient.
• Royalties*: Royalty income is subject to a 20{4ff670bb91f5a71bed27471ead6462c9b16f5bdce5956c8330f96255c052ee42} tax rate.
• Rents and Pensions: In Serbia, taxes on rents and pensions are set at 20{4ff670bb91f5a71bed27471ead6462c9b16f5bdce5956c8330f96255c052ee42} and 10{4ff670bb91f5a71bed27471ead6462c9b16f5bdce5956c8330f96255c052ee42}, respectively.

In addition to these core taxes, individuals earning more than three times the average annual salary in Serbia may face annual supplementary taxation. For detailed insights on these supplementary levies, our consultants are at your disposal.

Corporate Income Tax

Corporate Income Tax pertains to legal entities conducting business activities within Serbia or maintaining a permanent establishment within the nation. The tax rate is set at 15{4ff670bb91f5a71bed27471ead6462c9b16f5bdce5956c8330f96255c052ee42} on net profits post-expense and loss deductions.

• Resident vs. Non-resident: Resident legal entities encompass those either established in Serbia or having their place of effective management and control within the country. They are liable for tax on global profits. Non-resident entities, conversely, are taxed solely on profits attributed to their permanent establishment in Serbia. This establishment signifies a fixed place of business where non-resident entities conduct activities within Serbian borders.

Value-Added Tax

Value-Added Tax (VAT) applies to the supply of goods and services in Serbia or the import of goods into the country. The standard VAT rate stands at 20{4ff670bb91f5a71bed27471ead6462c9b16f5bdce5956c8330f96255c052ee42}, while specific goods and services enjoy a reduced VAT rate of 10{4ff670bb91f5a71bed27471ead6462c9b16f5bdce5956c8330f96255c052ee42}. These categories include essential foodstuffs, medicines, medical devices, books, newspapers, hotel accommodations, public transportation, and utility services.

Select examples of VAT-exempt services and industries include:

• Export of goods and related services
• International air transport
• Financial and insurance services
• Postal services
• Education and healthcare services
• Cultural and religious services

Serbia’s VAT system adheres to the destination principle, meaning that the location of the customer, rather than the supplier, determines the place of supply. Consequently, if a Serbian supplier sells goods or services to a foreign customer, the supply is zero-rated or exempt from VAT in Serbia but may be subject to VAT in the customer’s country. Conversely, if a foreign supplier sells goods or services to a Serbian client, the supply is subject to VAT in Serbia but may be exempt from VAT in the supplier’s jurisdiction.

The primary VAT liability typically rests with the supplier. In certain cases, however, VAT liability may shift to the customer, who must account for VAT under the reverse charge mechanism.

Other Taxes

Serbia also imposes additional taxes that may be relevant to your financial activities in the country. These encompass excise duties, property taxes, and local taxes.

• Excise Duties: Excise duties pertain to the production and import of specific goods, such as oil derivatives, tobacco products, alcoholic beverages, coffee, electricity, bioliquids, and biofuels. Tax rates vary contingent on the type and quantity of goods involved.
• Property Taxes: Property taxes in Serbia are applicable to ownership, transfer, or inheritance of real estate and movable property. The tax rates fluctuate based on property type, value, and taxpayer status.
• Local Taxes: Local governments in Serbia levy taxes on various activities or transactions within their respective jurisdictions. These encompass city tax on hotel accommodations, city surcharges on property tax, and more.

Serbia’s tax landscape, comprising an intricate web of taxes and rates applying to diverse income and activities, may seem daunting. However, with prudent preparation and a commitment to understanding your tax obligations and opportunities within the country, the journey becomes more manageable. Seeking professional guidance in advance is a wise step, and our experts are here to provide complimentary recommendations on optimizing your tax position in Serbia while ensuring compliance.