If you're an expat working in Serbia or earning income from Serbian sources, you may be subject to the annual personal income tax — a separate obligation from the regular monthly income taxes withheld from your salary. Understanding this tax helps you avoid surprises and potential penalties.

This guide explains who must file, what income counts, available deductions, and how to submit your annual tax return.

Who Must File an Annual Return?

The annual personal income tax applies to individuals whose total taxable income exceeds three times the average annual salary in Serbia. For the 2024 tax year, this threshold is approximately RSD 4.87 million (around EUR 41,500).

If your combined income from all taxable sources exceeds this amount, you're required to file an annual return — regardless of whether taxes were already withheld during the year.

Two categories of taxpayers exist:

- Tax residents must report worldwide income — meaning income earned both in Serbia and abroad. You're considered a Serbian tax resident if you have permanent residence or your center of personal and business interests in Serbia, or if you spend 183 or more days in Serbia within any 12-month period.

- Non-residents report only income earned from Serbian sources.

What Income Is Taxable?

The annual tax applies to the combined total of several income categories:

- Employment income including salaries, wages, and personal earnings of entrepreneurs.

- Self-employment income for both lump-sum (paušalci) and bookkeeping entrepreneurs.

- Author fees and intellectual property income from copyrights, related rights, and industrial property.

- Rental income from real estate located in Serbia.

- Income from renting movable property.

- Income of athletes and sports professionals.

- Income from hospitality services (short-term rentals).

- Other taxable income as defined by law.

- Income earned and taxed abroad is also included for tax residents, though foreign tax credits may apply.

What Income Is NOT Included?

Certain income types are specifically excluded from the annual tax calculation:

- Capital income such as interest, dividends, and investment fund distributions — these are taxed separately and don't enter the annual calculation.

- Capital gains from selling property, securities, or cryptocurrency — also taxed separately.

- Gambling and lottery winnings.

- Insurance proceeds.

These exclusions mean that even high earners focused primarily on investment income may not trigger annual tax obligations.

How Is Taxable Income Calculated?

The annual tax isn't simply applied to your gross income. Several adjustments reduce your taxable base:

- Deduction for taxes and contributions: Income from employment, self-employment, author fees, and similar sources is reduced by the amount of income tax and social contributions you already paid during the year.

- Non-taxable threshold: The first three times the average annual salary is completely exempt. For 2024, this means approximately RSD 4.87 million is tax-free.

- Special relief for taxpayers under 40: If you're younger than 40 on December 31 of the tax year, you receive an additional deduction equal to three times the average annual salary on employment, self-employment, and author income. This significant benefit can substantially reduce or eliminate annual tax liability for younger workers.

- Social contribution refunds: If you received a refund of excess social contributions during the year (from having multiple employers or exceeding contribution caps), this amount is added back to your taxable income.

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Personal Deductions

After calculating your adjusted income and subtracting the non-taxable threshold, you can claim personal deductions that further reduce your tax base:

- Taxpayer deduction: 40% of the average annual salary — approximately RSD 650,000 for 2024.

- Dependent family members: 15% of the average annual salary per dependent — approximately RSD 244,000 per person for 2024.

Qualifying dependents include minor children, adult children in full-time education or unemployed (if living with you), grandchildren not supported by their parents (if living with you), spouse, and parents you're legally obligated to support.

Important limitation: Total personal deductions cannot exceed 50% of your taxable income after the non-taxable threshold.

If multiple family members owe annual tax, only one can claim deductions for shared dependents.

Tax Rates

Serbia applies progressive rates to the annual personal income tax:

- 10% on taxable income up to six times the average annual salary (approximately RSD 9.75 million for 2024)

- 15% on taxable income exceeding that threshold

In practice, most taxpayers subject to annual tax will pay at the 10% rate. The 15% rate only applies to very high earners.

Practical Example

Consider an expat earning RSD 8 million in 2024 from a combination of salary and consulting income:

- Starting income: RSD 8,000,000

- Less taxes and contributions already paid: approximately RSD 2,800,000

- Subtotal: RSD 5,200,000

- Less non-taxable threshold: RSD 4,874,508

- Income subject to annual tax: RSD 325,492

- Less personal deduction for taxpayer: RSD 649,934

- Result: No annual tax due (deductions exceed taxable amount)

If this same taxpayer is under 40, the additional three-salary deduction would apply before reaching this calculation, potentially eliminating any liability even at higher income levels.

Filing Requirements

The annual tax return is filed electronically using form PP-GPDG through the Serbian Tax Administration portal.

Key deadline: May 15 of the current year for the previous tax year. This is both the filing deadline and the payment deadline.

For 2024 income, you must file and pay by May 15, 2025. For 2025 income, you must file and pay by May 15, 2026.

The Tax Administration provides pre-populated returns based on reported income data. However, you should verify all information carefully — errors in employer or payer reporting can affect your calculation.

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Common Situations for Expats

Several scenarios commonly trigger annual tax obligations for expatriates:

- High base salary: Senior executives and specialists often exceed the threshold through employment income alone.

- Multiple income sources: Combining salary with consulting, author fees, or rental income can push total earnings above the limit.

- Signing bonuses or equity: Large one-time payments in a single year may create obligations even if regular income wouldn't.

- Self-employment income: Freelancers and entrepreneurs with successful practices frequently exceed thresholds.

Planning Opportunities

Understanding annual tax rules creates planning opportunities:

- Under-40 benefit: The additional deduction for younger taxpayers is substantial. If you're approaching 40, consider timing major income events while this benefit still applies.

- Income timing: Where legally possible, spreading large payments across tax years may reduce peak annual tax exposure.

- Proper expense documentation: For self-employment and author income, ensuring all legitimate deductions are claimed reduces the base subject to annual tax.

- Dependent documentation: Maintain records supporting dependent claims — these deductions are valuable and should be properly documented.

Penalties for Non-Compliance

Failing to file when required results in penalties. The Tax Administration has access to income data from employers, banks, and other payers — they know if you should be filing.

Common problems include:

- Not realizing the obligation exists

- Assuming employer withholding covers all obligations  

- Missing the May 15 deadline

- Incorrect calculation of taxable base

Avoiding these issues requires understanding your total income picture and filing proactively when thresholds are exceeded.

How Tax Advisor Serbia Can Help

The annual personal income tax calculation involves multiple income sources, various deduction rules, and specific filing requirements. For expats unfamiliar with Serbian tax law, navigating this independently creates unnecessary risk.

At Tax Advisor Serbia, we help expatriates with:

- Determining whether you're subject to annual tax obligations

- Calculating your taxable base and available deductions

- Maximizing legitimate deductions including the under-40 benefit

- Preparing and filing your PP-GPDG return electronically

- Coordinating with your employer's payroll reporting

- Handling Tax Administration correspondence if questions arise

We work with expats across all industries — from tech executives to diplomatic staff to freelance consultants. Our senior-level team understands both the technical rules and practical realities of expat tax situations.

Need help with your Serbian annual tax return? Book a consultation to review your situation before the May 15 deadline.

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