Because freelancers are not our employees and we don't pay taxes on payouts, they must declare any income received through Solar Staff by themselves.

To carry on tax accounting in Serbia for your Solar Staff income, you need to:

• be a tax resident.

• obtain a tax ID number.

• select the tax regime.

Serbia taxes its residents on their worldwide income, while non-residents are taxed on Serbian-source earnings only.

A resident of the Republic of Serbia shall be understood to mean any individual:

The tax identification number (Poreski Identifikacioni Broj, PIB) in Serbia is a unique number that you need to obtain to pay the country's taxes (including property tax) and to set up as a sole proprietor. PIB consists of 9 digits for sole proprietors and 13 digits for individuals. The Tax Administration assigns PIB based on a registration application:

Examples of PIB application forms.

Tax liabilities in Serbia depend on the freelancer's status and/or fulfillment of certain conditions. See a detailed breakdown below.

On January 1, 2023, a new tax regime became available to freelancers in Serbia. It introduced an online platform where each quarter Serbia-based freelancers can choose one of two taxation models:

Reporting and payment. Regardless of the chosen model, taxpayers must file quarterly tax returns under the PP OPO form and pay the tax within the same period of no later than 30 days after the end of the quarter. For example, from April 1 to April 30, 2023, the taxpayer pays tax and reports income for the period from January 1 to March 31, 2023. The tax return contains information about the taxpayer and the amount, type, receipt method, basis, and date of income. To file a PP OPO tax return, follow these steps:

To streamline data entry and tax calculation, the Tax Administration prepares the tax return in advance and sends it to the taxpayer. The taxpayer is expected to update the data (change or supplement it). Should the taxpayer fail to file the return within the statutory period, the Tax Administration does it for them based on the data available to the fiscal authority (which may be incomplete).

To sum up, Model A is the better option for smaller incomes, while Model B becomes more profitable as your income grows.

Entrepreneurs who set up as sole proprietors (preduzetnik) must be Serbia's citizens, or have Serbian residence and work permits which they renew regularly. After registering as a sole proprietor, you can apply to the Department for Foreigners for a residence permit, and then for a work permit to the National Employment Service. Foreign nationals arriving to Serbia are required to register their residence ("potvrda o prijavi boravišta") with the local police station or online within 24 hours of their arrival.

Setting up as a sole proprietor:

Registering as a sole proprietor in Serbia takes an average of 5 business days.

IMPORTANT! Entrepreneurs need to pass an independence test that assesses them based on 9 criteria (clause 17 of article 85 of the Personal Income Tax Law) to ensure there is no employee misclassification and the entrepreneur is in fact independent from the client. If a sole proprietor doesn't pass at least 5 of the 9 criteria, they may be reclassified into the client's employee.

Entrepreneurs in Serbia have two taxation methods to choose from: lump-sum or self-taxation (bookkeeping).

You pick lump-sum taxation when registering as a sole proprietor, and the APR passes on this information to the Tax Administration. Within 48 hours from the registration, the tax authority sends the respective calculation to the entrepreneur's E-Porezi account. Changing the taxation method is only possible in the next taxable period (year) and is done by submitting an application before October 31 of the current year through the E-Porezi portal. Upon terminating a sole proprietorship, the entrepreneur must notify the tax authority and file a tax return within 30 days.

Requirements and limitations. Lump-sum entrepreneurs have an annual income limit of RSD 6 million. They also can't be in the VAT system; should the entrepreneur register for VAT, they must start the respective accounting no later than the day their VAT obligations arise.

Accounting and reporting. The only obligation such flat-rate taxpayers have is recording issued invoices in a special book called KPO (knjiga o ostvarenom prometu paušalno oporezovanih obveznika). There's no need to file a tax return: the tax authority sends in the tax and contributions to be paid via E-Porezi.

Calculation and payment. The amount of tax and contributions is not income-dependent. Instead, the tax authority calculates it based on the business activity, place of registration, gender, and age of the entrepreneur. Taxes and contributions must be paid by the 15th of each month.

Entrepreneurs who keep books have two options: pay a personal salary or don't pay a personal salary.

In this scenario, taxes and contributions are payable on the difference between income and expenses:

Accounting and reporting. Sole proprietors who choose this taxation method are obliged to keep books and file tax returns (PPDG-1S) and tax-basis balance sheets (PB2) to the tax authority via the E-Porezi portal. We recommend that you double-check the full list of accounting requirements directly with the Serbian Tax Administration. Within 15 days from the date of registration, the bookkeeping entrepreneur must file the first PPDG-1S tax return online. The return includes estimated income and expenses for the period from the incorporation date to the end of the financial year, with the difference between the two constituting the estimated profit (income) that serves as the basis for advance tax and contribution calculation. At the end of the year, that basis for the calculation of taxes and contributions is updated in the PPDG-1S return to factor in the actual income and expenses. To file a PPDG-1S tax return online (the process is the same as that for self-employed individuals), you need to specify the following data:

Payment of tax. Taxes and contributions (advance payments) for the previous reporting month are to be paid before the 15th day of the current month. If the income for the month is less than the minimum base of RSD 22,000, then it is this minimum that serves as the calculation basis for social contributions.

Entrepreneurs who opt for salary payment must apply online before December 15 of the current year to be eligible in the next taxable period (year).

Under this taxation method, the entrepreneur's income is divided into:

The following deductions are available (deductions cannot exceed 50% of taxable income):

The tax return (PP OPO form) is provided by the tax authority annually before April 1 of the year following the reporting one. The return is filled out the same way as that of a self-employed individual. Next, the taxpayer must verify the information online or make changes to it before May 15, and pay the tax within the same period.

Social security contributions are 19.9% (employee's rate) and 17.9% (employer's rate), deductible.

The standard VAT rate is 20% (10% or 0% for certain types of goods and services).

The deadline for filing an application to register for VAT is until the end of the first VAT reporting period. Once registered, terminating VAT is only possible after a 2-year period.

Requirements and limitations. No tax regime affords exemption from VAT, but if the entrepreneur pays VAT, they cannot apply lump-sum taxation.

Self-employed individuals and sole proprietors must pay VAT if their total turnover of goods and services for the last 12 months exceeds RSD 8 million (voluntary registration without exceeding the turnover limit is also possible).

Reporting and payment. The tax return is filed within 15 days after the expiration of the tax period, and then the taxpayer is given another 15 days to pay the tax. There are two taxable periods for VAT purposes: month and quarter. For taxpayers whose annual turnover for the previous 12 months exceeds RSD 50 million, the taxable period is a month, while for all the rest the taxable period is a quarter (as per Article 48 of Serbia's Law on Value-Added Tax). For more information on filling out a VAT return, see here.

IMPORTANT! Solar Staff does not have the option to choose a tax status for freelancers based in Serbia, but you can fill in your tax ID in your account.

• Official website of Serbia's Tax Administration;

• Income received through Solar Staff is declared based on certificates and invoices;

• Reporting templates for individuals and sole proprietors;

• Serbia has double taxation agreements with a number of countries;

• FAQ on sole proprietorship in Serbia.

If you have any questions, get in touch via the chat in your Solar Staff account or email us at [email protected].