Tax in Serbia for non-residents, and when you stop being one

When Serbia treats you as resident

The Personal Income Tax Act has two tests, and one is enough. The first asks where you live and where your business and personal life is centred. The second counts days: 183 or more in Serbia, continuously or with breaks, in any 12-month period that begins or ends in the tax year.

Every day you spend part of in Serbia counts as a full day, except days in transit. Someone who was not in Serbia at all during the year, and has neither a domicile nor a centre of interests here, is not a resident for that year.

A residence permit and tax residence are separate questions. You can hold a Serbian permit and still be a tax resident elsewhere, or the other way round. Your home country applies its own rules at the same time, which is where treaties come in.

What a non-resident is taxed on

A non-resident is taxed in Serbia only on income earned in Serbia. The law names work performed here and the use or sale of rights here, and the Tax Administration applies the same logic to rent from Serbian property and gains on its sale.

There is a narrow exemption for short stays. If you spend no more than 90 days in Serbia in a 12-month period and are paid by a foreign client who does not do business in Serbia, that income is not taxed here. The same applies if the foreign client does business in Serbia but your work is not for that business.

Renting out a flat you own in Serbia

Rental income is taxed at 20%. For leases longer than 30 days, 25% of the rent is deducted as standard costs, so the tax is in effect 15% of the gross rent. Short stays of up to 30 days follow different rules.

Who pays depends on the tenant. If the tenant is a company, a sole trader or a farmer, the tenant withholds the tax from each payment and pays it. If the tenant is a private person, the owner files the return on form PP OPO within 30 days of receiving the rent and pays the tax.

A non-resident who lets to a private person does this through a tax representative in Serbia, and must tell the Tax Administration who that is within 10 days of first receiving rent. A non-resident who lets to a company does not file at all and needs no representative.

Selling property

A gain on the sale of Serbian real estate is taxed at 15%. There is no tax if you owned the property continuously for at least ten years, if you inherited it in the first order of succession, or in certain transfers between spouses and close relatives. A Serbian tax treaty with your country of residence can change how the gain is taxed, if you can prove your residence there.

The seller also owes 2.5% transfer tax on the price, unless the sale is subject to VAT. A non-resident seller must appoint a tax representative and notify the Tax Administration within 10 days.

Treaties and residence certificates

The Ministry of Finance lists 64 double tax treaties, including those with Italy, the United Arab Emirates, Germany, Austria, Switzerland and the United Kingdom. There is no treaty with the United States.

A treaty helps only if you prove where you are resident. A non-resident gives the Serbian payer a certificate of residence on form POR-2, issued by the tax authority of the treaty country. Without it, the payer must withhold tax under Serbian law, and treaty relief has to be claimed later.

Going the other way, a Serbian resident who needs to prove Serbian residence to a foreign payer asks the local Tax Administration branch for form POR-1. The branch issues it within eight days. A resident who has already paid tax abroad on foreign income gets a credit in Serbia, capped at the Serbian tax on that income.

Foreigners working as a sole trader

Foreigners who live in Serbia on a residence and work permit sometimes register as a sole trader (preduzetnik). A sole trader whose turnover in the previous year did not exceed RSD 6,000,000 may ask to be taxed on a lump-sum basis (paušal), with the amount set by the Tax Administration.

The catch is the independence test. It has nine criteria, such as working hours set by the client or the client providing the equipment. If at least five are met with one client, the income from that client is taxed as other income, and the client must withhold the tax. Freelancers with one foreign employer-like client should look at this before they register.

Frequently asked questions