Tax System
VAT
The VAT rates are as follows:
- The standard VAT rate-18% (for most taxable supplies);
- The lower VAT rate-8% (for basic food stuffs, daily newspapers, utilities etc.).
However, there is a 0% tax rate with the right of deduction of the input VAT which applies to export of goods, transport and other services in direct relation with export, international air transport, etc. A 0% tax rate without the right of deduction of the input VAT applies to trading in shares and other securities, insurance and reinsurance, and the lease of apartments, business premises, etc.
Corporate Profit Tax
Corporate profit tax is paid at the uniform rate of 10%. Non-residents are taxed only based on their income generated in Serbia. The taxable base is profit determined by adjusting the accounting profit as stated in the profit and loss statement and in accordance with IFRS, accounting legislation, and the provisions of the Corporate Profit Tax Law.
Personal Income Tax
The personal income tax rate is 12% for salaries, while other personal income is predominantly taxed at the rate of 20%.
Personal income tax is payable by individuals on different sources of income generated throughout the calendar year.
In case of personal income tax on salaries, the person taxed is the employee, but the employer is responsible for calculating and paying personal income tax on behalf of his employees. The taxable base is the gross salary, which includes the net salary and social security contributions.
Annual Income Tax
The annual income is subject to a 10% tax. The annual income tax is levied on the income earned by residents. Such income includes income received in Serbia and income earned worldwide. The annual income tax applies on the income exceeding the amount of 3 times the average annual salary for Serbian citizens. For non-Serbian citizens, the annual income is taxed if exceeding the amount of 5 times average annual salary in Serbia. The tax rate is 10% for the annual income below the amount of 8 times average annual salary, and 15% for the annual income above the amount of 8 times average annual salary.
Property Tax
The rate of the property tax depends on whether the taxpayer maintains business accounts. For taxpayers who maintain business accounts, the rate is 0.40%. For taxpayers who do not maintain business accounts, the rate is progressive and depends on the tax base.
Property tax applies to immovable property where an individual has rights of ownership, usufruct, residence, utilization, time sharing right, a long term lease holding (for a period of longer than one year), and utilization of city, public or other state owned building land with an area of more than 10 acres. In this case, immovable property is considered to be land, residential and commercial buildings, office space, garages, buildings and recreational space.
Individuals or legal entities which hold any of the above mentioned rights on immovable property in Serbia are subject to the property tax.
Social Insurance Contributions
Rates for mandatory social security contributions are:
- 11% for pension and disability insurance,
- 6.15% for health insurance, and
- 0.75% for unemployment insurance.
Social security contributions are paid by both the employer and the employee. The base for calculation of social security contributions is the gross salary. The minimum base for contributions is 40% of the average monthly salary in Serbia, while the maximum base is 5 times the average monthly salary.
