Everything You Need to Know About Freelancer Taxes in Serbia

If you're a freelancer in Serbia, how will the new tax laws affect you? The good news is that there are now two ways to pay income tax, so you can choose the one that works best for you. In this blog post, we'll break down the new tax laws and explain how they affect freelancers in Serbia.

What is a Freelancer?

First, let's define what a freelancer is. A freelancer is a person who is self-employed and offers services to clients on a project-by-project basis. Freelancers can work in a variety of industries, from programming and design to teaching and writing.

Taxation of Freelancers in Serbia

Freelancers in Serbia have not been "given" a special law that defines how they will pay taxes to the state. Instead, taxation of freelancers will be introduced into the existing Law on personal income tax with some changes.

How Taxes Are Calculated

From all the income that a freelancer makes in one quarter, the amount of expenses prescribed by law is deducted. The rest represents the basis on which freelancers will pay taxes.

There are two "formulas" for calculating taxes for freelancers. According to the first method, RSD 96,000 of so-called normalized costs are deducted from the quarterly income, and a tax of 20% is paid on the resulting difference. According to the second model, standardized expenses of RSD 57,900 are deducted from the quarterly income, but 34% of the realized income of each specific freelancer is also deducted. The difference is taxed at a rate of 10%.

Reporting Income

Freelancers report their income quarterly to the Tax Administration. The tax return is submitted within 30 days from the end of the quarter in which the revenues were generated.

Paying Contributions

Freelancers will also need to pay contributions for pension and health insurance. Contributions for pension and health insurance will be paid by the freelancers themselves, and the bases are determined by law.

For the payment of contributions to the PIO Fund, the base is at least three times higher than the lowest monthly contribution base. The minimum basis for the cost of pension contributions is the amount of 35% of the average monthly salary in Serbia paid in the period of the previous 12 months starting from September of the current year. Pension contributions of 24% are calculated on the base determined in this way. For the year 2023, this minimum basis is, according to the PIO Fund, RSD 30,880.

For contributions for compulsory health insurance, the basis is at least three times the amount of the basis calculated for "compulsory health insurance of persons for whom funds for the payment of contributions are provided in the budget of the Republic". By law, this basis is calculated on a monthly basis as 15% of the average monthly salary in Serbia, paid per employee in the previous year. The amount on a monthly basis is published by the Minister of Finance, and according to the latest, valid for 2023, it amounts to RSD 13,618.

Tips for Freelancers

Here are some tips for freelancers in Serbia to help them navigate the new tax laws:

• Keep track of your expenses: Make sure to keep detailed records of all your business expenses so you can deduct them from your income at tax time.
• Consult with a tax professional: If you're unsure about how to navigate the new tax laws, consider consulting with a tax professional who can provide guidance.
• Plan for retirement: As a freelancer, you're responsible for paying your own pension contributions. Make sure to plan ahead and set aside enough money.

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