Changes to Personal Income Tax in Serbia

Amendments to the Law on Personal Income Tax

At its session held on 28 April 2021, the National Assembly of the Republic of Serbia adopted the Law on Amendments to the Law on Personal Income Tax (the „Law“).

The Law was published in the Official Gazette of the Republic of Serbia, no. 44/2021 of 29 April 2021, and entered into force on 7 May 2021.

Constitutional basis for passing the Law

The constitutional basis for the enactment of this Law is contained in Article 97, item 6 and 15 of the Constitution of the Republic of Serbia, which stipulates that the Republic of Serbia regulates and provides, among other things, the tax system and financing the exercise of the rights and duties of the Republic of Serbia, determined by the Constitution and law.

Reasons for passing the Law and novelties

In order to regulate the taxation of income of natural persons who earn income from copyrights and related rights on which the tax is paid by self-taxation, as well as on the basis of the agreed compensation for work on which the tax is paid by self-taxation, the Law brings the following novelties:

• The amount of standard costs in dinars is determined on the basis of income from copyrights and related rights on which the tax is paid by self-taxation, as well as income on the basis of the agreed compensation for work performed on which the tax is paid by self-taxation. Standardized costs are recognized in the amount of RSD 54.900,00 for the gross amount of stated income that the taxpayer realizes in the quarter, where the amount of standardized expenses is the same regardless of whether the taxpayer realized income on one or another basis or on both bases simultaneously.

• For revenues from copyrights and related rights on which the tax is paid by self-taxation, except for those revenues realized by a taxpayer who has the status of an independent artist in accordance with the law governing the field of culture, standard costs are recognized in accordance with the newly added Article 12b of the Law, i.e. in the amount of RSD 54.000,00 for the stated income that the taxpayer realizes in the quarter.

• By amending Article 85 of the Law on Personal Income Tax (“Official Gazette of the RS“, No. 24/2001, 80/2002, 80/2002, 135/2004, 62/2006, 65/2006, 31/2009, 44/2009, 18/2010, 50/2011, 91/2011, 7/2012, 93/2012, 114/2012, 8/2013, 47/2013, 48/2013, 108/2013, 6/2014, 57/2014, 68/2014, 5/2015, 112/2015, 5/2016, 7/2017, 113/2017, 7/2018, 95/2018, 4/2019, 86/2019, 5/2020, 153/2020, 156/2020, 6/2021 and 44/2021) as taxable income , which is taxed in accordance with that article, the income on the basis of the agreed compensation for the performed work, on which the tax is paid by self – taxation, is stated. Taxable income is the gross income on that basis, realized in the quarter, reduced by standard costs that are recognized in the amount of RSD 54.900,00.

• A tax return for income for which standard costs are recognized in accordance with Article 12b shall be filed within 30 days of the end of the quarter in which the income was earned.

The tax authority determines the income tax on the basis of the agreed fee from copyright and related rights and the agreed fee for the work performed, on which the tax is paid by self-taxation, realized in the period from 1 January 2015 to 31 December 2021. The tax is determined if it is not:

• the statute of limitations for determining the tax liability in accordance with the regulations in force at the time of revenue generation has become obsolete;

• the procedure for determining the tax liability has been finalized;

• before the entry into force of this Law, the tax liability was paid in accordance with the regulations that were in force on the day the tax liability arose.

• On the basis of the stated incomes, no personal income tax is paid on incomes realized in a calendar year in the amount of up to RSD 384.000,00 per year. Standard costs of 50% of realized income are recognized. The tax determined by the decision is paid in 120 equal monthly amounts, with the first amount due for payment on the 15th of the month following the month following the month in which the decision of the tax authority was made.

This Law shall apply from 1 January 2022.