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Last updated, February 2006
Serbia Tax section was written by Branka Buric
Serbia Income Tax
- An individual's income is taxable at the rate of 14%.
- Exemptions are granted to taxpayers with specific types of income.
- The standard rate of tax for a corporation in 2006 is 10%.
INDIVIDUAL INCOME TAX
- An individual in Serbia is liable for tax on his income as an employee, when the tax rate is 14%, and on income as a self-employed person, when the tax rate is 10%.
In the case of an individual who is a "permanent resident" of Serbia, tax will be calculated on his income earned in Serbia and overseas.
A foreign resident pays tax only on his income in Serbia.
- A resident is any individual who resides on the territory of Serbia for at least 183 consecutive days in a 12 month period that begins or ends in the calendar tax year.
- An employer is obligated to withhold, immediately, each month, the amount of income tax and contributions from a salaried worker.
- Certain payments are deducted from taxable income, as will be specified further.
- A self-employed person can request lump sum taxation if their turnover in the year preceding the one for which tax is determined or whose planned turnover at the beginning of business is not higher than 2 million Dinars (approximately 23 000 Euro).
- Income from yield on investments (capital) in Serbia is taxed at the rate of 20%.
- Income from lease of real estate in Serbia is taxed at the rate of 20%.
- There is a surtax of 10% imposed on all individuals whose total annual income (from all sources combined) exceeds 4 average annual salaries in Serbia, the amount of which is determined by the Statistics Agency.
CORPORATE TAX IN SERBIA
- The standard rate of corporate tax in 2006 in Serbia is 10%, the lowest in Europe.
- There are a number of tax incentives for newly formed companies, for those that employ a certain number of new employees, as well as for those that employ workers above a certain age (who have been registered with the Employment Bureau, at least three months prior to their recruitment).
Types of Corporations
In Serbia, the following are acceptable forms of incorporation:
- Stock company
- Limited liability company
- General partnership
- Limited partnership
- Socially owned enterprise
- Public enterprise
CAPITAL GAINS
- Capital gains in Serbia are taxed at the rate of 20%.
REPORTING DATES AND PAYMENT
- The competent tax office issues a general public notice, by December 31 each year, calling citizens to file their tax declaration. This does not apply to those citizens whose income is taxed at source, through withholding tax.
- Payers of annual individual income tax (surtax of 10% for those whose total income exceeds four annual average salaries) file a tax declaration no later than March 15 of the following year.
- Sole proprietors who keep books file the tax declaration by March 15 of the following year.
- Sole proprietors who do not keep books, i.e. who pay lump sum tax have to file their tax declaration by January 31 of the year for which the tax is levied.
- Taxpayers who earns revenues from capital gains and other revenues on which withholding tax is not payable, is obligated to file their tax declaration within 15 days from the date of starting to earn the revenues.
- Any payer of tax on the revenue from real estate, as well as any payer of tax on the revenue from leasing out chattels, is obligated to file a tax declaration also when withholding tax is payable, within 15 days from the date of lease or sub-lease.
- The tax due must be paid within 15 days.
DEDUCTION OF TAX AT SOURCE
Withholding taxes (paid at its source) are charged and paid on the following revenues:
- Wages/salaries - 14%
- Revenues from copyrights and industrial property rights - 20%
- Yield on capital - 20%
- Revenues from real estate, if the payer of revenue keeps books - 20%
- Revenues from leasing out chattels, if the payer of revenue keeps books - 20%
- Games of chance winnings (winnings up to 10,000 Dinars are exempt from tax) - 20%
- Revenues from personal insurance - 20%
- Revenues from athletes and athletic specialists - 20%
- Other revenues, if the taxpayer keeps books - 20%
Comments:
Deduction at source for payments to foreign residents is subject to the Double Taxation Prevention Treaty.
SOCIAL SECURITY
All employers and employees, as well as the self employed are liable for paying mandatory social contributions.
Employer - 35.8% (pension disability insurance -11%, health insurance 6.5% and unemployment contributions - 0.75%)
Employee - 35.8% (pension disability insurance -11%, health insurance 6.5% and unemployment contributions - 0.75%)
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