Amendments to the Personal Income Tax Law

14. December 2018 | Reading Time: 2 Min

Amendments to the Personal Income Tax (PIT) Law are published in the Official Gazette of the Republic of Serbia No. 95/2018 dated 8 December 2018. The most important changes are presented below.

  • The new tax exemption is introduced for benefits that employee receives from employer or employer’s related parties, without compensation or at the beneficial price, based on the own shares, share options or stakes in the employer’s related parties, with certain restriction related to the disposal and repurchase of own shares and termination of the employment relation;
  • Tax exemption is introduced for the help in the case of child’s birth, up to the amount of the average salary paid in Serbia, per new-born child;
  • Tax exemption is prescribed for expenses for the purpose of creating and maintaining recreation of employees at their workplace, compensation for the costs of collective recreation of employees, including organizing sports and other activities for employees in order to improve their health and / or to build better interpersonal relationships among them (team-building), only if recreational activities are carried out in accordance with the employer’s internal policies and if all employees have the right to participate in recreation of the same type, quality and volume;
  • Tax and SSC exemptions in the first business year of the newly established company or entrepreneur have been expanded to the newly established entrepreneur – agriculturist while this tax exemption is revoked for newly employed persons. The condition for the use of the exemption is that monthly net salary of the founder, entrepreneur and entrepreneur – agriculturist does not exceed amount of RSD 37,000 (approx. EUR 315);
  • Natural person is obliged to pay tax on income generated from the services of renting of apartments and rooms for a period longer than 30 days, which are not considered hospitality services. The tax base is calculated as a gross income reduced for 25% of standardized costs;
  • It is prescribed that hospitality income assumes the income that natural person generates from providing hospitality services in a hospitality domestic facility (house, apartment and room) and in countryside tourist facility. The tax is paid in accordance with the Decision of the Tax Authority, and the taxpayer is a natural person who generates income, while taxable income for the respective calendar year amounts to 5% of the average monthly salary per employee in Serbia in the year preceding the year for which the tax is determined, multiplied by the number of individual beds, or camping plots and with corresponding coefficient of tourist place category. The above income is subject to the annual income tax;
  • Above mentioned amendments will be effective from 1 January 2019, except changes related to the taxation of income generated from renting of apartments and rooms for a period exceeding 30 days and income from hospitality services, that will be effective from 1 July 2019, and exemption for the help in the case of child’s birth which will be effective from 16 December 2018.