If Serbia is on your radar, you’ll be pleased to know its tax system is relatively straightforward and competitive in the region.
Let’s break down the key taxes and contributions you need to know about.
Value Added Tax (VAT)
- Who needs to register? If your business has a 12-month income exceeding €68,000, you are legally required to register for the VAT system.
- What’s the rate? The standard VAT rate in Serbia is 20%. There is also a reduced rate for certain basic goods.
Corporate Profit & Dividend Tax
This is where international agreements become very important.
- Corporate Profit Tax: The standard tax on your company’s profit is a flat 15%.
- Paying Yourself (Dividends): When you want to take profits out of the company as dividends, the tax rate depends on who is receiving the payment:
- For individuals (natural persons): The dividend tax is 15%.
- For foreign legal entities: The dividend tax is 20%.
The Double Taxation Trick: Here’s a key tip for foreign owners! Serbia has signed Double Taxation Avoidance Agreements with over 60 countries. If your home country is on that list, you may be able to pay a lower dividend tax rate. Always check the official list on the website of the Serbian Ministry of Finance to see how your country’s agreement can benefit you.
Personal Income Tax
This is a very attractive feature for employees and entrepreneurs drawing a salary.
- The personal income tax rate in Serbia is a flat 10%, one of the lowest in Europe.
Social Security Contributions
Contributions are shared between the employer and the employee. Here’s how they break down:
- Pension & Disability Insurance: 24% total
- Employee Pays: 14%
- Employer Pays: 10%
- Health Insurance: 10.3% total
- Employee Pays: 5.15%
- Employer Pays: 5.15%
- Unemployment Insurance: 0.75%
- Employee Pays: 0.75%
In a Nutshell: Serbia offers a compelling tax package with low corporate and personal income taxes. The key to optimizing your structure is understanding the VAT threshold and leveraging international tax treaties to minimize your liability on dividends.