Serbia's tax regime is highly conducive to doing business. The corporate profit tax is among the lowest in Europe, while the Value Added Tax is among the most competitive in Central and Eastern Europe.
Value Added Tax
The VAT rates are as follows:
- The standard VAT rate - 20% (for most taxable supplies);
- The lower VAT rate - 10% (for basic food stuffs, daily newspapers, utilities, etc.).
Source: National IPAs, 2019
Corporate Profit Tax
Corporate profit tax is paid at the uniform rate of 15%. Non-residents are taxed only based on their income generated in Serbia.
Source: OECD, 2019
The withholding tax is not applied to dividend payments between Serbian entities. For non-residents of Serbia, a 20% withholding tax is calculated and paid on certain payments such as dividends, shares in profit, royalties, interest, capital gains, lease payments for real estate and other assets.
Personal Income Tax
The personal income tax rate is 10% for salaries.
Source: KPMG, 2020
Annual Income Tax
The annual income is taxed if exceeding the amount of threefold the average annual salary in Serbia. The tax rate is 10% for the annual income amounting up to 6 times the average annual salary in Serbia, and 15% for the part of the annual income exceeding 6 times the average annual salary in Serbia.
Taxes and Contributions
The rates for mandatory social security contributions are:
- 14% for pension and disability insurance,
- 5.15% for health insurance, and
- 0.75% for unemployment insurance.
The total sum of social security contributions and income taxes that are calculated on the net income, amounts to about 65% of net earnings.