What is annual tax in Serbia?
Annual tax in Serbia is a type of tax for individuals whose total annual income is higher than 4,269,564 Serbian dinars or about EUR 36,429 . The aim of the annual tax is to ensure that people with higher incomes bear a higher taxes.
Whether it sometimes seems that the taxes for higher payers are too high, this kind of tax actually has a humane side. People who pay this tax are often well-educated. They are not at risk of poverty, and have a lot of potential to find such a well-payed job. For this reason, this tax is shown to be a direct social means by which the taxes are evenly and humanely distributed among a population. Although this tax can be found in many states, there are also states that do not have this tax. These include:
- Bermuda;
- Monaco;
- Bahamas;
- Andorra;
- UAE.
Is There Annual Tax in Serbia?
Annual tax in Serbia must be paid by individuals whose income is higher more than 3 times than the annual average net salary.
Taxpayers of annual tax in Serbia are:
residents – for an income earned in Serbia and abroad;
non-residents – for an income earned in Serbia.
Annual income is considered to be the sum of the following incomes:
- Basic income;
- Income from self-employment;
- Income from copyrights;
- Income from real estate;
- Income from movable property;
- Income from athletes and sports professionals;
- Income from the provision of catering services;
- Other income.
Salaries and taxable income are reduced by taxes and contributions for compulsory social insurance, if such income was paid in Serbia. For entrepreneurs who have opted for personal income, the salary is reduced by taxes and contributions to mandatory social insurance as well.
Tax Base of the annual tax in Serbia
The basis of annual tax is the difference between income and personal deductions.
Personal deductions are:
- for the taxpayer – 40% of the average annual salary per employee paid in Serbia in a year;
- for a family member without income – 15% of the average annual salary per employee paid in Serbia in one year.
The total amount of personal deductions may not exceed 50% of the taxable income. The taxpayer who is younger than 40 years old has the right to an additional deduction of three average annual incomes.
It is also possible to obtain tax deduction by investing funds in an open investment fund in Serbia.
Tax Rates
Tax rate of annual tax in Serbia is 10%, for the income up to six times the average net annual salary. For the amount of income above six times the average net annual salary – 10% for the amount up to six times the average annual salary nad + 15% for the amount above six times the average annual salary.
Management contract and labor law
The Labor Law prescribes work within the employment relationship and work outside the employment relationship. In any case, any employment contract must have the amount of salary for the employee. Just as any contract to hire a director / manager must have a certain amount of salary compensation. If the amount of salary or salary compensation for a year is higher than the annual amount required by law, annual income tax must be paid.
Tax return
The Tax Administration has information on the income of natural person. If the annual income of natural person exceeds the annual tax base, the tax administration prepares a tax return for taxpayers. If the tax administration fails to prepare a tax return for a taxpayer, the taxpayer must do so himself. The annual income taxpayer is obliged to sign and pay the income tax return electronically. The deadline for payment of the annual tax in Serbia is no later than May 15 for the income earned in the previous year.