On June 16, 2022, the Government of Serbia passed a Decree on the criteria for granting incentives to employers who employ newly settled persons in Serbia (hereinafter: “The Decree”).
The Decree determines the criteria for granting incentives to employers who employ newly settled persons in Serbia for whom there is a need, since the workers of similar profiles cannot be easily found in the domestic labor market (hereinafter: “newly settled person”).
The employer may be a domestic or foreign legal or natural person, entrepreneur, branch, or representative office of a foreign employer.
For the purposes of the Decree, a newly settled person is a natural person who has not resided in the territory of Serbia for more than 180 days in the period of 24 months preceding the day of concluding an employment contract and with whom the employer has concluded a full-time employment agreement for an indefinite period, with a monthly salary (gross 1) of at least RSD 300,000.
The Decree envisages that incentives are paid to the employer in the amount of 70% of the paid salary tax and 100% of the paid mandatory pension and disability contributions for one or more newly settled employees, for payments made for the newly settled employed person for a maximum period of 60 months starting from 1 July 2022 till 31 December 2028.
Main conditions are the following:
- Eligible employer is the one which, by employing a newly settled person, increases the total number of employees in relation to June 18, 2022
- The employer has the right to an incentive only for newly settled persons employed as of 31 December 2023.
- The right to incentives starting from 2024, the employer can realize if he has not reduced the number of employees compared to 31 December 2023, which is checked on the last day of each quarter by the Ministry in charge of economic affairs.
- The right to incentives is exercised by the employer if the newly settled person is continuously employed by the employer in the period between the day of submission of the application and 31 December.of the year in which the application was submitted.
The Decree prescribes which categories of employers and under which conditions are not entitled to incentives as well as the form and manner in which the employer can apply for the tax incentive at the Ministry in charge of economic affairs.
Please note that the employer has no right to use the tax incentive for a newly settled person for which he already used or is using a tax relief as prescribed in the Article 15v of the Personal Income Tax Law and Article 15a of the Mandatory Social Contributions Law.
Furthermore, the Decree prescribes when the employer loses the right to the entire amount of incentives and when he is obliged to return the received funds in the name of incentives.
Finally, it should be noted that the payment of funds in the name of incentives is made up to the amount of available budget funds in line with the Law on Budget for the years in which the payment is granted.