New Rules for the Calculation of Natural Persons’ Income (Serbia)
New Rules for the Calculation of Natural Persons’ Income Based on a Temporary Employment Contract and Founders’ Contributions Entering Into Force on January 1, 2022
The reduction in the PDI contribution rate from 25,5% to 25% that entered into force on January 1, 2022 resulted in the reduction of a liability which is paid on this ground at the moment of payment of different types of contracted compensations to natural persons, for which the obligation to pay PDI contributions is prescribed (service contract, copyright contract, secondary employment agreement, contract specifying the rights and obligations of the general manager…).
If such an income is the result of work ended on December 31, 2021 and the payment is made after January 1, 2022, PDI contributions are calculated at the 25% rate.
In terms of the income which gross amount was contracted in 2021 but it shall be paid in 2022, the prescribed PDI contribution reduction will result in the contribution reduction, while the net compensation paid to a natural person will be increased at the same time, i.e. the gross amount structure will be modified. The prescribed reduction in the PDI contributions paid to the contracted net income that shall be paid in 2022 will result in the contribution reduction while the net compensation will remain unchanged.
The coefficients for the conversion of net to gross income received based on a temporary employment contract that shall be paid after January 1, 2022 are modified due to the reduction in PDI contribution rate to 25%. The reduction refers to the income based on royalties and service contracts, other income based on other contracts, cost reimbursements and other expenditures paid to the entities which are not employed by the payer, compensation paid to the manager, who did not enter into labour agreement, income gained by the entities employed based on a share in profit, secondary employment, rewards and other payments made to natural persons, who are not employed by the payer, athletes’ income and the income gained based on the sale of agricultural products and timber crops and services).
Temporary and Periodical Jobs (TP jobs) After January 1, 2022
As of January 1, 2022, the novelties in the calculation of compensations based on TP jobs are as follows:
– PDI contributions debited to the employer – 11%;
– the new lowest monthly base for the social contribution calculation amounts to 30,880 dinars, while the highest amounts to 441,140 dinars.
Calculation of the Contributions of Employed Founders Who Did Not Conclude Labour Agreement with Their Company Starting From January 1, 2022
The provision of the Article 23 Paragraph 1 of the Law on Mandatory Social Insurance Contributions stipulates that the contribution base for the founders who did not conclude labour agreement with the company is at least the lowest monthly base stipulated by the Article 37 of that Law. According to this article, the lowest monthly contribution base is 35% of the average monthly salary in the Republic of Serbia, which shall be paid in the current year for the previous 12 months, starting from September. The founder appoints a decision on the social contribution base amount.
If the founder has social insurance based on other grounds, the company calculates only PDI contributions to the determined base. If the founder does not have social insurance based on other grounds, the company calculates PDI, health and unemployment insurance contributions. These contributions shall be paid no later than the 15th day of the month for the previous month.
In order for the contributions to be calculated, it is necessary to submit the electronic PP OD-O form to the Tax Administration.