Liabilities for non-resident natural persons (foreigners) in Serbia on the basis of tax

Serbia has been seeking to improve investment opportunities for years, and as a result has made numerous changes for various laws in an effort to attract foreign investors. In this regard, there have been some significant changes that have put Serbia high on the list of countries that many foreign nationals opt for when making decisions on living and working on its territory.

The tax system in Serbia includes expenditure, income and property. Therefore, foreign natural persons in Serbia encounter the following:

– Property Tax;

– Inheritance and Gift Tax;

– Absolute Rights Transfer Tax;

– Annual Income Tax;

– Dividends and

– Income from Foreign Sources.

Foreign nationals who have chosen to invest in real estate in Serbia will be required to transfer ownership of the immovable property to their name after making a purchase. Thus, Absolute Rights Transfer Tax is paid when purchasing real estate.

Property Tax includes non-resident natural persons who have immovable property on the territory of the Republic of Serbia, the value of which is greater than 400,000 dinars.

Your liabilities are determined by the Individual Income Tax in cases when you are hired based on management contracts or employment contract, or if you are merely the founder of the company registered in Serbia.

A non-resident can be the following:

• a natural person residing and working (generating income) on the territory of the Republic of Serbia;
• a natural person residing on the territory of the Republic of Serbia, whether continuously or intermittently (183 days or more), within a 12-month period.

Non-residents are foreign nationals who generate income on the territory of the Republic of Serbia. They are also liable for the individual income tax, although only for the income generated in Serbia. Beginning on January 1, 2023, the tax return for the annual individual income tax (PPDG 2R form) must be submitted only in the electronic form, via the Tax Administration portal.
Please bear in mind that in order to submit an electronic annual tax return it is necessary to have a qualified electronic certificate for accessing the Tax Administration’s portal E-Porezi or to grant authorization to another person via the PEP form.

Failure to submit and untimely submitting of a tax return, as well as failure to calculate and pay, and untimely payment of taxes, are regulated by the Law on Tax Procedure and Tax Administration.

Fines are not insignificant at all. For example, a natural person will be fined for misdemeanor with a fine between 5,000 and 150,000 dinars if they do not notify or do not notify within the prescribed period the Tax Administration about a non-resident whom they have authorized to carry out tasks related to tax liabilities.

Taxpayer – a natural person, shall also be fined for a misdemeanor with a fine equal to 3% of the market value of the unreported property, if they fail to submit an informative tax return to the Tax Administration or fail to disclose all of their property in it.

Taxpayer – a legal entity that provides a supply of goods or services in the Republic of Serbia in accordance with the tax law, and does not have a registered office or a permanent business unit in the Republic of Serbia, or has a permanent business unit but provides supply of goods or services outside its permanent business unit, shall be fined for misdemeanor in the amount of 100,000 to 2,000,000 dinars if, in accordance with the tax law, it does not appoint a tax representative and is not registered for the obligation to pay taxes.

Taxpayer – a natural that provides supply of goods or services in the Republic of Serbia in accordance with the tax law, and does not have domicile, or residence, in the Republic of Serbia, shall be fined for a misdemeanor in the amount of 50,000 dinars if, in accordance with the tax law, it does not appoint a tax representative and is not registered for the obligation to pay taxes.

Tax returns are submitted digitally via the portal of the Tax Administration, using the E-porezi application.

If you are one of the many foreigners who have chosen Serbia as their place of investment, residence and employment, then you have come to the right place to learn about your tax liabilities, as well as how to pay them so that you do not encounter any situations that could result in penalties, and the Creative Finance team is here to help.