Flat-rate taxation extended until 2028: practical guidelines for entrepreneurs
The Government of the Republic of Serbia has extended the existing flat-rate taxation rules for entrepreneurs, thereby ensuring continuity and predictability in this segment of the tax system. The current tax model will remain in effect until at least the end of 2027, or practically until 2028, which is especially important for entrepreneurs planning to operate in the long term.
Several amendments were made to the Personal Income Tax Act in 2024 and 2025. While some legal provisions were adjusted, the mechanism for determining the flat-rate tax remained unchanged, thereby avoiding additional uncertainty for entrepreneurs taxed at the flat-rate.
How is the flat-rate tax determined?
The method for calculating the flat-rate tax has not changed and remains based on clearly defined criteria:
• the type of activity carried out by the entrepreneur,
• the registered place of business,
• the average salary in the municipality or city,
• the age of the entrepreneur. Based on these parameters, the Tax Administration issues an annual tax decision, requiring no additional procedures or new obligations for entrepreneurs.
Tax Incentives for New One-Time Payments
One of the key measures remaining in effect is the tax incentive for new flat-rate taxpayers, introduced at the end of 2023. Entrepreneurs registering a business for the first time and choosing the flat-rate tax receive a 50% reduction in their tax and contribution base in their first year of operation.
It is important to emphasize that this incentive is applied automatically. There is no need to submit additional applications or complete special forms, as the Tax Administration applies a coefficient of 0.50 when issuing a tax decision. All relevant data is available on the ePorezi portal.
Gradual Increase in Tax Liabilities
Entrepreneurs who opened their businesses in 2024 or earlier retain their right to tax incentives, but the amount of the deduction gradually decreases over the first three years of operation. This system allows for a smoother transition from the initial, subsidized tax rate to the full tax liability without sudden financial difficulties.
Protective Rule for Existing Lump-sum Payments
For entrepreneurs who have been operating under the flat tax rate for a long time, the protective rule still applies, which states that the annual tax assessment cannot be increased by more than 10 percent compared to the previous year. However, this limitation does not apply in all situations.
If the business activity code changes or the business moves to another municipality or city, the tax administration may issue a new tax assessment without applying the aforementioned limitation, except in cases of relocation within the same city.
Who is not eligible for tax benefits?
Entrepreneurs previously registered as flat-rate taxpayers are not entitled to a reduction in their tax base when re-entering the flat tax system. In such cases, the tax liability is determined in full from the very beginning of the business’s operations.
Conclusion: stability with careful planning. The extension of the current flat tax rate provides stability, but also requires careful planning. Entrepreneurs are advised to regularly monitor legislative changes and assess whether the flat tax rate remains the optimal model for their business.
Our team is ready to analyze your tax situation, assess the profitability of the flat tax rate, and advise on next steps in business development.
