On 9 December 2022, Serbian Parliament adopted the Law on Amendments to the Law on personal income tax, which has been published in the “Official Gazette of the Republic of Serbia”, no. 138 as of 12 December 2022.

One of the main changes which have been introduced to the current Law on personal income tax (“Law”) relates to the manner of taxation of the income of freelancers, i.e. income from services fees on which tax is paid via self-assessment taxation.

The Law now provides two possible models of taxation of the income of freelancers.

Taxation of the income of individuals who generate income from copyright and related rights, on which the tax is paid through self-taxation, as well as on the basis of the agreed remuneration for the work performed, on which the tax is paid through self-taxation, is regulated in a way that enables persons who generate the income in question to opt for one of two alternative ways of recognizing normalized costs in the dinar amount and, accordingly, determining the tax base based on the personal income tax.

The first taxation model includes standardized costs and a lower non-taxable income amount. The second taxation model requires a higher non-taxable amount without recognizing standardized costs.

Individuals can choose the manner of determining the taxable income and consequently the amount of tax liabilities:

  1. Model A – fixed statutory deductible costs in the amount of RSD 96,000 (approx. EUR 820) per quarter, in which case applicable tax rate is 20%; or
  2. Model B – fixed statutory deductible costs in the amount of RSD 57,900 (approx. EUR 500) increased by 34% of quarterly gross income, in which case applicable tax rate is 10%.

In connection with the payment of personal income tax, the novelties give the possibility for taxpayers to determine and pay personal income tax separately for each quarter by choosing one of the two available taxation models. It means that the taxpayers can choose for the current quarter the taxation model different from the taxation model chosen for the previous quarter.

It is expected that the new taxation models as described above will enable the freelancers to plan and optimize their tax liabilities, and to pay the tax in the simplified procedure.

The application of the adopted amendments to the Law will start as of 1 January 2023.