Serbia offers a highly valuable payroll tax relief for individuals who relocate (or return) to Serbia and become “newly-settled taxpayers.” If structured correctly, the incentive can materially increase the employee’s net salary and reduce the employer’s total payroll cost—often making Serbia a significantly more competitive location for senior hires and specialized profiles.

The key point: this relief is not automatic. Eligibility must be confirmed and the prescribed documentation must be assembled before the first salary payment for the month in which the incentive is used. If you miss that timing, you generally cannot apply it retroactively for salaries already paid.

What is the Newly-Settled Taxpayer Incentive (in plain English)?

The incentive works by reducing the tax base and the social contributions base used in payroll calculations.

In practice, it means that only 30% of the relevant base is taxed / subject to contributions, which is why it’s commonly described as a “70% base reduction” incentive.

Who is this relevant for?

This incentive is most commonly used by:

• Foreign specialists relocating to Serbia (tech, finance, engineering, senior management, etc.).
• Serbian citizens returning after working abroad.
• Individuals relocating to Serbia for a long-term role (including founders hired by their own Serbian company, in certain structures).
• Serbian companies hiring international talent and wanting a compliant payroll setup from day one.

2026 minimum gross salary thresholds (critical condition)

To qualify, the employee’s agreed monthly gross salary must exceed the statutory minimum threshold for the relevant category.

For 2026, the published thresholds are:

• RSD 439,692 (Category A)
• RSD 293,128 (Category B)

This is not a “nice to have”—it is a hard eligibility condition. Also important: the salary generally needs to be above the threshold from the start, not “increased later” to fit the rule.

Key commercial benefits

When implemented correctly, the incentive can deliver:

• Higher net salary for the employee (same gross → higher net).
• Lower total employer cost (reduced contributions base can lower employer contributions as well).
• Long duration: the benefit can apply for up to five years, subject to maintaining conditions.
• Continuity across employers: in many cases, the individual may continue using the incentive even after changing employers, within the five-year window (subject to conditions and documentation).

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Eligibility overview: two categories of “newly-settled taxpayers”

Serbian rules broadly recognize two pathways to qualify:

Category A (24-month rule)
You may qualify if, in the 24 months before signing the Serbian employment contract, you did not predominantly stay in Serbia (with specific day-count limitations in the lookback period).

Category B (under-40 education/professional development rule)
You may qualify if you are under 40 at the time of signing and, in the 12 months before signing, you were predominantly outside Serbia for education or professional development, again subject to day-count limitations.

In both categories, the individual must also genuinely relocate and “settle” in Serbia, and must meet residency-related requirements (including, in practice, alignment with treaty residence where relevant).

Employer-side conditions (often overlooked)

Even if the individual meets the personal conditions, the employer setup must also be compliant. Key points typically include:

• The employer must be a Serbian resident employer (and meet the “qualified employer” criteria under the rules).
• The employment is generally expected to be open-ended / indefinite-term (this is a common practical issue for foreign nationals due to permit timelines—structure must be checked carefully).
• The role should reflect a profile where Serbia has a real market need for specialized skills—the minimum salary threshold is the proxy test the law uses for this condition.

How the incentive is applied in payroll

When the incentive is used:

• The payroll reporting requires correct coding in the monthly withholdings return (PPP-PD) and correct tax/contribution bases.
• Employers typically need internal alignment between HR, legal (employment contract terms), and payroll.

This is exactly why it should be handled as a structured project—not as a last-minute payroll adjustment.

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Documentation and timing: the make-or-break factor

The rules require the employer to obtain and retain a prescribed set of documents supporting eligibility, and to have them in place no later than the first salary payment for the month in which the incentive is applied.

In practical terms: if you want the incentive to start with the first salary, you should treat documentation collection as a pre-boarding deliverable.

A typical documentation pack may include (depending on category and fact pattern):

• Proof of prior residence / stay outside Serbia (official confirmations, employer confirmations, social insurance confirmations, etc.).
• Written statements required by the rulebook (employee statements, and employer statements where applicable).
• Evidence of settling in Serbia (lease/ownership, residence registration, permits for foreign nationals, and supporting family-related documents if relevant).
• Contract and payroll setup confirmations (ensuring the salary threshold and contract terms meet the conditions).

Common pitfalls (and how to avoid them)

• Starting payroll before documentation is complete (and then trying to “fix it later”).
• Salary below the threshold at contract signing, with an attempt to qualify later via an amendment.
• Misalignment on contract type for foreign nationals (permit-driven contract terms vs. incentive requirements).
• Employer qualification issues, especially when the employee previously worked for a related entity abroad (group/related-party considerations can matter).
• Incorrect payroll reporting (wrong bases or missing incentive coding).

How I help (service scope)

At Tax Advisor Serbia, I provide a fast, structured process for both individuals and companies:

1. Free eligibility check (no charge): You send a few key facts (timeline abroad, age category, planned start date, expected gross salary, employer background). I confirm whether you are likely eligible and what category applies.
2. Documentation roadmap + checklist: I provide a tailored checklist and templates for all required statements and confirmations.
3. End-to-end implementation before first payroll: I coordinate the documentation package with the individual and the employer, confirm contract/payroll settings, and ensure the incentive is implemented correctly before the first salary payment for the month it will be used.
4. Ongoing compliance support: Where needed, I support employers with follow-up documentation obligations during the benefit period.

Next step

If you are relocating to Serbia—or hiring someone who is—message me on LinkedIn or contact me via my website.

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I’ll confirm eligibility free of charge, and if you qualify, I’ll prepare the full documentation package and payroll implementation plan so you can use the incentive correctly from the start.

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