Entrepreneurs from across the globe flock to Serbia to establish a company. What makes the country so appealing? There are many factors that contribute to its attractiveness, but benign taxation is probably one of the most important ones. We cannot say that Serbia is a tax-free jurisdiction, but its tax rates are certainly low if compared to the rest of Europe. What is more, incentives are generously provided to the companies registered in the local free economic zones. Setting up a company gives you the right to a local residence permit, which is yet another enticing feature. Serbia is a recommendable jurisdiction, and we will help you take advantage of its opportunities without much hassle.
Would you like to discover this beautiful Balkan country? We will be glad to welcome you to our portal where you can read a more detailed article on business taxes in Serbia and follow the links below to learn more about the remarkable destination. Feel free to explore our knowledge base of practical articles on global business, company and private banking services, tax optimization schemes, asset protection opportunities, investment in real estate, citizenship-by-investment programs, and so on. Do not hesitate to schedule a free preliminary meeting with our specialist to discuss your preferences and find the best solution. We will help you set up a company and open an account in Serbia at an affordable fee!
How to Acquire Serbian Tax Residence?
You will have to meet the following requirements to become a tax resident of Serbia:
- Reside in the country for at least 183 days during a year
- Provide evidence that you have vital interests in Serbia
What do the local laws mean by vital interests? Here they are:
- Living in the country along with your family members
- Buying real estate in Serbia
- Your minor children are being educated in Serbian institutions
Your worldwide income will serve as the base for personal income tax payable in Serbia. It is paid if you are a foreign company employee living in the country or a non-resident who works for a Serbian company.
Let’s take a look at personal income tax rates:
- The minimum non-taxable income is RSD 19,300 (USD 178).
- If your income does not exceed the average annual salary by more than three times (about USD 31,000), you will be liable for 10%.
- If your income exceeds the average annual salary by more than three times but no more than six times (from 31,000 to 61,000 US dollars), you will have to pay a 20% tax.
- Finally, if your income exceeds the amounts above, a 25% tax will be imposed.
You will also have to pay social security contributions that amount to 36.05% in total, with 19.9% being paid by the employee and 16.15% being paid by the employer.
Taxes Payable by Freelancers in Serbia
Serbia is popular with freelancers, and here are the taxes they have to pay:
- Non-residents are liable for personal income tax on the income earned with the engagement of Serbian customers. The remaining taxes are paid at the place of their tax residence.
- If you are a Serbian resident, you will have to pay personal income tax for all income derived from any country. 36.55% is also payable as social contributions.
Company Taxation in Serbia
Let’s look at the tax rates payable by companies established in Serbia:
- VAT is payable on all taxable goods and services at a rate of 20%. There are some essential products, though, taxed at 10% (such as medicine, public transportation services, food, etc.). Zero VAT also exists, and it is applicable to international air transportation, specific export-related services, as well as exported goods and services.
- The corporate income tax is payable in Serbia at a rate of 15%.
- The goods and services imported to Serbia are subject to customs duties that range between 0% and 57.6%. The majority of them are subject to duties that do not exceed 30%.
- If a company has ownership or usage rights with regard to real estate, it is subject to annual property tax at a rate of 0.4% (or even less with proper accounting).
- Goods/services with adverse external effects are subject to excise duties. These include alcoholic drinks, tobacco products and related goods, as well as petroleum products.
- If you sell real estate, you will have to pay a property transfer tax at a rate of 2.5% from the price set out in the contract.
- Capital gains tax is applicable to non-residents and amounts to 20%.
- Let’s finish on a positive note: you will not pay any stamp duties in Serbia.
Tax Benefits for Employment of Foreigners
Serbia is interested in attracting highly qualified professionals from abroad, so it gives tax incentives to the employers that hire such foreigners. Each newly hired foreigner may bring the employer a 70% reduction in personal income tax and zero contributions related to mandatory pension and disability insurance! It makes it possible for non-resident entrepreneurs to relocate their companies to Serbia together with employees.
Tax Benefits for Startups
Here are the tax incentives for you if you establish a startup:
- The company founder can have a complete exemption from taxes and contributions in Serbia if he or she is an employed worker in the startup that receives a minimum salary of RSD 150,000 (USD 1,400).
- If you need investments, you will be able to attract companies formed in Serbia more easily as they will have the right to a corporate income tax reduction if they invest in a startup (30% of the invested amount).
R&D Benefits
If you are planning to launch an R&D project, Serbia will offer the following benefits.
First of all, the costs of research and development activities will be recognized as a double deduction in the balance sheet, which will considerably reduce the corporate income tax.
Second, the employer will have the right to use the same deductions as the one that employs foreigners (see the description above) for its R&D employees.
Conclusion
Impressed by the number of tax benefits available in Serbia? Click on the above link to read more or get in touch with our specialist straight away to ask your questions, share your doubts, and get a company in Serbia without much hassle!