Serbia: Elements Determining The Annual Personal Income Tax

for the fiscal year 2020

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On March 9^th, 2021, the Ministry of Finance announced explanation No. 413-00-3 / 2021-04 relating to the manner of calculating the annual income tax. 

According to Article 87 of the Law on Personal Income Tax, the annual personal income tax is paid by persons who have earned over three times the average annual salary (per employee) in the Republic of Serbia in the year for which the tax is determined. The latter is according to the data of the Republic’s body in charge of statistics. 

The non-taxable amount of income for 2020 amounts to 2.987.424,00 dinars (being the average annual salary per employee paid in the Republic of Serbia in 2020 rsd 995.808,00 x 3). 

When calculating their personal income tax, residents of Serbia take into account the income earned in Serbia and other countries, while non-residents take into account only the income earned in Serbia. 

Taxable income is the difference between earned income and the non-taxable amount. 

With reference to personal deductions, the following may be deducted from taxable income: 

• for the taxpayer – 40% of the average annual salary (398.323,00 dinars) 
• for a dependent family member – 15% of the average annual salary (149.371,00 dinars). 

Personal deductions can reach a maximum of 50% of taxable income. The deduction for a certain dependent family member can be realized by only one taxpayer, if both parents have the obligation to file a tax return for the annual personal income tax. 

Annual income tax is paid on taxable income at the rate of: 

•  10% – for the amount of taxable income up to six times the average annual salary being that of 5,974,848 dinars 
•  15% – on the difference between the amount that is higher than 5,974,848 dinars  

The tax return for the annual personal income tax, for 2020, has to be submitted no later than May 17, 2021, on the prescribed form PPDG-2R. This application can be submitted electronically (via the electronic services of the Tax Administration) or in writing (directly or by mail). 

Any tax should be paid no later than 15 days from the day of delivery of the decision on determining the annual personal income tax by the tax authority. 

For additional information, please contact Ms. Aleksandra Delic, at our Eurofast office in Serbia via email at aleksandra.delic@eurofast.eu     

Eurofast is a regional business advisory organization employing local advisors in over 23 cities in South East Europe & Middle East . The Organization is uniquely positioned as one stop shop for investors and companies looking for professional services in South East Europe & Middle East. 

30/3/21