Serbia Tax System

Serbia Tax System: 10 Key Insights You Need to Know about the Serbia Tax System Serbia Tax System: Individuals and companies planning to establish a business, invest, employ personnel or acquire real estate in Serbia should assess their tax obligations before undertaking any transaction. Serbia’s tax system comprises personal income tax, corporate income tax, social security contributions, value added tax, withholding taxes, customs duties, excise duties, local taxes, and the Serbia tax system obligations that must be adhered to.

Understanding the Serbia Tax System is crucial for navigating the financial landscape in the country and leveraging the benefits of the Serbia Tax System.

Understanding the Serbia tax system helps in making informed financial decisions and complying with local regulations regarding the Serbia tax system.

Additionally, the Serbia tax system plays a vital role in determining the cost of doing business in the region.

This guide also highlights important aspects of the Serbia tax system that investors should consider.

Understanding the Serbia Tax System is essential for anyone engaging in business or investment in the region and adapting to the Serbia Tax System.

This guide has been prepared based on the technical information contained in the Serbia Tax Card 2026. The publication examines the taxation of individuals, corporate taxation, indirect taxes, local taxes, the Serbia Tax System, the tax calendar and administrative penalties under separate headings, ensuring a comprehensive overview of the Serbia Tax System.

Since tax rates, monetary thresholds and filing deadlines may be affected by legislative amendments, the current position should always be verified with the competent Serbian authorities and professional advisers before any transaction is completed.

Staying updated on the Serbia tax system ensures compliance and maximizes potential tax benefits.

The Serbia tax system is designed to facilitate economic growth while ensuring fair contributions from all taxpayers.

1. Individuals Understanding the Serbia Tax System Understanding changes in the Serbia tax system is essential for businesses operating in an evolving economic landscape.

Familiarity with the Serbia Tax System can significantly enhance your investment strategy.

The Importance of Understanding the Serbia Tax System 1.1 Personal Income Tax Individuals who are considered Serbian tax residents are generally subject to personal income tax on their worldwide income. Non-residents are taxed only on income derived from Serbian sources.

Thorough knowledge of the Serbia tax system empowers companies to optimize their tax strategies.

Income tax is assessed for the calendar year in which the income is earned.

1.1.1 Tax Rates For annual personal income tax purposes, the total income earned by an individual from all taxable sources is taken into account.

In conclusion, engaging with the Serbia tax system effectively can result in significant savings and compliance benefits.

Annual personal income level Tax treatment Total income up to three times the average annual salary Exempt Income between three and six times the average annual salary 10% Income exceeding six times the average annual salary 15% This structure provides for progressive taxation, under which higher rates apply to the relevant income bracket as the taxpayer’s annual income increases.

For income earned in 2025, individuals whose annual taxable income exceeded the threshold determined by the Serbian Ministry of Finance were required to submit their annual personal income tax return by 15 May 2026.

1.1.2 Taxable Income The main categories of income subject to personal income tax in Serbia include the following:

Income type Determination of taxable amount Salaries and bonuses arising from employment agreements Gross salary, consisting of net salary, income tax and social security contributions, less the applicable variable non-taxable amount Income from renting privately owned property A 20% tax on gross income after deducting standardized expenses of 25%, or 50% for tourism-related rentals Dividends and other profit distributions The monetary or non-monetary amount received as income Royalties and intellectual property income Gross income after deducting standardized expenses ranging from 34% to 50%, depending on the nature of the income Capital gains The difference between the sale price and acquisition price, subject to further adjustments under the Personal Income Tax Act 1.1.3 Exempt Income The document identifies the following types of income as fully or conditionally exempt from personal income tax.

Social security and health insurance benefits Payments received under the social security and health insurance system are listed as fully exempt from tax.

Inheritances and gifts The following inheritances and gifts may qualify for exemption, subject to the applicable legal conditions:

Inheritances received from a first-degree relative, Agricultural land received by a farmer under specified conditions, Residential property received under specific statutory conditions. Pensions Retirement pensions are listed as fully exempt from personal income tax.

Gambling income Income from casinos and slot machines is included among the categories of exempt income in the source document.

Social and humanitarian assistance Organized social and humanitarian assistance payments are fully exempt from personal income tax.

Disability-related income Income received under legislation governing persons with disabilities is listed as fully exempt.

Scholarships Scholarships of up to RSD 44,325 per month are fully exempt from personal income tax.

Unemployment benefits Unemployment benefits are listed among exempt income categories, although the applicable exemption amount is not clearly stated in the source table.

Redundancy and retirement payments Payments made upon redundancy or retirement are subject to the limits and conditions prescribed by Serbian legislation.

Non-taxable payments made by employers The following tax-free thresholds apply to certain payments and benefits provided by employers:

Payment or benefit Non-taxable threshold Daily allowance for domestic business travel Up to RSD 3,471 per day, approximately EUR 29 Daily allowance for international business travel Up to EUR 90 per day Business travel transportation costs Up to RSD 10,121, approximately EUR 85 Public transportation costs for commuting Up to RSD 5,782, approximately EUR 49 Compensation for using a private vehicle for business travel 30% of the cost of one litre of fuel per kilometre travelled Accommodation and meal expenses during business travel Fully non-taxable when supported by invoices Funeral expenses for an employee, spouse or child Up to RSD 101,194, approximately EUR 857 Solidarity payment following the death of an employee, family member or company retiree Up to RSD 101,194, approximately EUR 857 Solidarity payment for serious illness, rehabilitation or disability Up to RSD 57,827, approximately EUR 490 Long-service or anniversary award Up to RSD 28,912, approximately EUR 245 Christmas gifts for employees’ children up to 15 years of age Up to RSD 14,457, approximately EUR 122 Scholarships for pupils and students Up to RSD 44,325 per month, approximately EUR 375 Additional health insurance and private pension plan premiums Up to RSD 8,677 per month, approximately EUR 73 Retirement severance may be determined either in accordance with the company’s internal rules or at twice the average monthly salary, as prescribed under Serbian labour legislation.

Redundancy severance is stated as one-third of the employee’s salary for each year of employment with the employer making the payment.

Solidarity payments made to mitigate the consequences of floods, natural disasters or other extraordinary circumstances may be determined on a case-by-case basis according to the actual damage and the decision of the authority providing the assistance.

The document also refers to loans provided for the purchase of heating materials, schoolbooks and winter food supplies, although no specific monetary limit is stated.

These monetary thresholds are indicated as valid from 1 February 2026 until 31 January 2027.

1.1.4 Deductible Expenses According to the source document, expenses are generally not deductible for personal income tax purposes. In other words, no general business-expense deduction system applies when calculating annual personal income tax.

1.1.5 Allowances The following personal allowances may be applied when calculating annual personal income tax:

A personal allowance equal to 40% of the average annual salary is deducted automatically. An additional allowance equal to 15% of the average annual salary may be claimed for each dependent family member. The total amount of allowances may not exceed 50% of aggregate taxable income. 1.2 Social Security and Health Insurance Contributions Social security and health insurance contributions are divided between the employer and the employee.

Contribution type Employer contribution Employee contribution Pension and disability insurance 10% 14% Health insurance 5.15% 5.15% Unemployment insurance — 0.75% Total 15.15% 19.90% Accordingly, employers must take into account not only the employee’s gross salary but also the additional employer-side contribution burden when calculating the total cost of employment in Serbia.

1.3 Submission of Tax Returns The deadline for submitting tax returns and paying tax varies depending on the type of income and the person or entity making the payment.

For income generated in 2025, the deadline for submitting the annual personal income tax return was 15 May 2026.

The return is submitted electronically through the Serbian Tax Administration’s online portal, and the payment instructions are generated automatically by the system.

2. Corporate Tax 2.1 Corporate Income Tax Companies regarded as Serbian tax residents are subject to corporate income tax on their taxable profits.

Capital gains, dividends, interest and royalties are included in corporate income and taxed as part of the company’s overall taxable profit. The standard corporate income tax rate in Serbia is 15%.

2.1.1 Tax Residency A company may be considered tax resident in Serbia when:

Its registered office or place of business is located in Serbia, It has a permanent establishment in Serbia, or Its management and control are exercised in Serbia. Tax residency is therefore not determined solely by the company’s registered address. The place from which the company is effectively managed and where its principal commercial decisions are taken may also be relevant.

2.1.2 Tax Rates The corporate income tax rate in Serbia is a flat 15% of taxable corporate profit.

2.1.3 Taxable Income The following categories of corporate income are treated as fully taxable under the Serbian tax system:

Income type Taxable proportion Income derived from ordinary business activities or activities closely connected with ordinary business operations 100% Income from the transfer of immovable property 100% Rent, royalties, remuneration and other profits arising from property 100% Dividends and other profit distributions received from non-resident subsidiaries 100% Interest income 100% Royalty income 100% Other income not falling within the above categories 100% 2.1.4 Exempt Income The following categories of income are listed as exempt from corporate income tax:

Income of up to RSD 400,000 earned by non-profit organizations, Dividend income received from shares in Serbian resident companies, Capital gains arising from the sale of bonds issued by the Serbian state, the National Bank of Serbia, autonomous provinces or local municipalities, Interest income arising from the above-mentioned securities. 2.1.5 Deductible Expenses Expenses incurred wholly and exclusively for business purposes may be deducted from the corporate income tax base, provided that they are supported by appropriate documentation.

Invoices, foreign invoices, receipts issued by public authorities and other documents prepared in accordance with Serbian Ministry of Finance rules may be used to substantiate deductible expenses.

Expense type Deductible amount Salaries and social security contributions 100% Interest and royalty payments 100% Expenses for health, education, science, humanitarian activities, environmental protection, religion and sport, paid to registered organizations Up to 5% of total revenue Advertising and promotional expenses 100% when supported by invoices Entertainment expenses Up to 0.5% of total income Bad debts, after all necessary legal recovery steps have been undertaken 100% Investments in culture, including the film industry Up to 5% of total revenue Voluntary membership fees paid to chambers, unions and associations Up to 0.1% of total revenue Bad debts are particularly important from a legal and tax perspective. The mere fact that a debtor has failed to pay is not generally sufficient. The company must first undertake the necessary legal steps to recover the debt before it may qualify for full deduction.

2.1.6 Non-Deductible Expenses Expenses that are unrelated to the company’s business activities or that are not properly documented are not deductible for corporate income tax purposes.

Expense type Non-deductible proportion Expenses unrelated to business activities 100% Expenses that cannot be documented 100% Interest arising from late payment of taxes, contributions and other public liabilities 100% Enforcement and compulsory collection costs 100% Fines imposed by competent authorities 100% Gifts and contributions made to political organizations 100% Certain gifts and default interest involving related parties 100% For related-party purposes, a direct or indirect holding of at least 25% of the shares, or the ability to exercise control or significant influence over business decisions, may be taken into account.

2.2 Withholding Taxes Payments made by Serbian resident companies to non-resident individuals or legal entities may be subject to withholding tax.

20% withholding tax A general withholding tax rate of 20% applies to certain payments, including:

Dividends and profit distributions, Royalties and intellectual property payments, Interest payments, Lease payments relating to real estate and other assets located in Serbia, Certain service fees paid to non-residents, Income derived by non-residents from entertainment, artistic, sporting or similar events where such income is not taxed as personal income. Since 1 April 2018, payments made to non-resident legal entities for the following services have also been subject to 20% withholding tax, irrespective of where the service is provided or used:

Market research, Accounting, Auditing, Legal consulting, Business consulting. 25% withholding tax A 25% withholding tax may apply to payments made to persons resident in jurisdictions with preferential tax systems, including:

Royalties, Interest, Rental income, Service fees. The same treatment may apply to payments made to a permanent establishment of an entity resident in a preferential tax jurisdiction.

Capital gains of non-resident companies Certain capital gains earned in Serbia by non-resident companies are subject to tax at a rate of 20%. The tax is generally payable following an assessment by the Serbian tax authorities.

The applicability of a double taxation treaty must always be assessed before withholding tax is calculated. Treaty provisions may reduce or eliminate the domestic withholding tax rate, provided that the relevant residency and beneficial ownership conditions are satisfied.

3. Indirect Taxation 3.1 Value Added Tax The supply of goods, provision of services and importation of goods in Serbia are generally subject to value added tax.

3.1.1 VAT Registration Threshold The mandatory VAT registration threshold is RSD 8,000,000, stated in the source document as approximately EUR 68,000.

Individuals and legal entities whose turnover does not exceed the compulsory registration threshold but who carry out taxable supplies of goods or services in Serbia may voluntarily register for VAT.

Businesses approaching the threshold should monitor their turnover carefully because exceeding the limit may trigger registration and reporting obligations within a short statutory period.

3.1.2 VAT Rates VAT category Scope Rate Standard VAT General domestic transactions and imports of goods 20% Reduced VAT Basic food products, medicines, prosthetic devices, surgical implants, dialysis materials, books, daily newspapers, water supplies, hotel accommodation, firewood, briquettes, pellets, natural gas, thermal energy for heating, passenger transport and accompanying luggage 10% Rate for products purchased from farmers Products purchased from farmers, as stated in the source document 8% Zero rate Exports of goods from Serbia and international transport of goods and passengers 0%

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