Specified Amount for Payment of Annual Personal Income Tax in Serbia

All residents of the Republic of Serbia who earned an income exceeding the net amount of 4,269,564 dinars in the year 2023 have until May 15 to pay their annual personal income tax.

According to the data from the Republic Institute of Statistics, the average annual salary per employee in Serbia, paid out in 2023, amounts to 1,423,188 dinars. The non-taxable income threshold in this case is 4,269,564 dinars, corresponding to three times the average annual salary paid out last year.

Those liable for the annual personal income tax are entitled to personal deductions amounting to 40 percent of the average annual salary per employee, which is 569,275 dinars, and for each dependent family member – 15 percent or 213,478 dinars.

Given the progressive nature of taxation, a crucial element for applying the specific tax rate is the amount of taxable income. If the taxpayer’s taxable income does not exceed 8,539,128 dinars, a tax rate of 10 percent is applied. If the amount is higher, the same tax rate applies up to that sum, and 15 percent for any amount above it.

All those who fall under the annual income tax obligation and who were under 40 years of age on the last day of 2023, are entitled to an additional reduction of their net income earned through salaries, income from independent activities, and income from copyrights and related rights, as well as industrial property rights. This reduction amounts to 4,269,564 dinars, the equivalent of three average annual salaries per employee for that year.

This tax relief applies only to incomes earned from salaries, independent activities, and copyrights and related rights. This means that if an individual under 40 years had, for example, income from leasing real estate, this income does not count towards the tax relief amount.

Tax advisors point out an important fact that entrepreneurs often aren’t aware of – by definition, they are “business-capable individuals who conduct activities in the market”.

As they operate under the same principles as companies, they perceive their entrepreneurial businesses as enterprises and consider the income reported in the Tax Balance Sheet as the profit of the business, not their personal income, although they can withdraw it just as the founders of companies do. However, as explained by tax advisor Zvezdana Pisarević, it’s crucial to emphasize that entrepreneurs are also required to pay annual income tax on the profit of their entrepreneurial activities and their personal salary, if they paid themselves during 2023.

Companies that pay out incomes are obliged to provide all individuals who have received salaries and other personal incomes, and for whom tax returns have been filed, a certificate of the amount of income paid in the previous year on the PPP PO form.

Regarding the usefulness of these certificates for individuals, the tax advisor Zvezdana Pisarević explains that they are less helpful as they show gross amounts, while the tax-exempt threshold is in net terms. Hence, individuals with higher-than-average incomes should calculate their net annual earnings independently.