In the official Gazette of the Republic of Serbia no. 118/2021 from 9.12.2021, the amendments to the Law on Personal Income Tax and the Law on Contributions for Compulsory Social Insurance were published.
Some of the most significant amendments are:
- Increase of the non-taxable amount of salary to RSD 19.300 – as of 1.1.2022;
- Reduction of the contribution rate for PIO to 25% – as of 1.1.2022;
- The new tax relief for newly employed persons who did not have the status of an insured employee, entrepreneur, or founder of employees in its company in the period from 1.1.2019. to 28.2.2022. – the employer is exempt from 70% of the calculated personal income tax until 31.12.2024. The minimum monthly salary cannot be lower than RSD 76.500 (gross 1). This relief will apply as of 1 March 2022;
- Reduction in terms of annual personal income tax for taxpayers under the age of 40 – the sum of salaries, taxable income from self-employment and taxable income from royalties and related rights and industrial property rights is further reduced by three average annual salaries per employee paid in Serbia in the year for which the tax is determined. This benefit will apply as of 1.1.2022;
- The new tax relief that will be applicable as of 1.3.2022. by employers who perform research and development activity in the territory Republic of Serbia, with the fulfillment of the prescribed conditions. The mentioned relief does not refer only to new employees, but it can also be used based on payment to existing employees, with the fulfillment of certain conditions. The employer is exempt from payment of 70% payroll tax and 100% of contributions for mandatory pension and disability insurance (“PIO” in Serbian) at the expense of the employee and at the expense of the employer, for the salary of persons directly engaged in research and development activity, in proportion to the time that such persons spend on research or development activity compared to full-time work. The relief can be used by legal entities that conduct research and development activities for their own purposes and retain ownership of intangible assets that may arise from such research;
- The period of application of the tax exemption based on the salary of qualified new employees is extended, whereby additional conditions are prescribed for the continuation of tax exemption application until the end of 2025.