Americans living in Serbia: what you owe in which country
Moving to Serbia does not end your US tax duties. A US citizen files a US return every year wherever he lives, and after enough time in Serbia he also becomes a Serbian tax resident. There is no income tax treaty between the two countries, so the overlap is handled by credits and exclusions, not by treaty rules.
Author: Srđan Bogićević, attorney at law, founder · Law checked:
Two systems that both claim you
The United States taxes its citizens on income from anywhere in the world, and the IRS expects a return from a citizen living abroad just as from one living in Ohio. Serbia taxes its tax residents on worldwide income too.
You become a Serbian tax resident if you live here or have the centre of your business and personal interests here, or if you spend 183 days or more in Serbia in a 12-month period. One test is enough, and a visa-free stay of 90 days does not protect you once the days add up. A residence permit and tax residence are separate questions, but in practice most Americans who rent a flat and work from Serbia for a year end up resident.
No treaty, so no tie-breaker
The Serbian Ministry of Finance lists 64 double tax treaties. The United States is not among them. With Italy, Germany or the UAE a treaty decides which country may tax a given income. With the United States nothing does, and both countries can tax the same income.
Relief comes from each country's own law. Serbia gives a credit for tax already paid abroad, capped at the Serbian tax on that income. The United States lets you exclude part of your foreign earned income or claim a credit for foreign tax paid. Which route is better depends on your income, so it is a question for a US-qualified tax preparer, not something to guess.
What the US side asks of you
The earned income exclusion applies to wages and professional fees, if you pass either the bona fide residence test or the physical presence test of 330 full days abroad in 12 months. It is claimed on Form 2555. It does not cover pensions or Social Security benefits, and for self-employed people it reduces income tax but not self-employment tax. The annual limit is adjusted for inflation, so take the current figure from the IRS.
Foreign accounts need a separate report. If your foreign accounts together exceeded 10,000 US dollars at any time in the year, you file an FBAR (FinCEN Form 114) electronically through FinCEN's BSA E-Filing System. It is due on 15 April of the following year, with an automatic extension to 15 October, and it is not filed with the tax return. A Serbian current account counts, and so does a company account where you only have signing authority.
Americans abroad also get an automatic two-month extension for the return itself, but interest runs from April. FATCA reporting on Form 8938 has its own thresholds and may apply on top of the FBAR.
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What the Serbian side asks of you
A Serbian resident reports foreign income in Serbia, including a salary from a US employer and fees from US clients. You file in Serbia even if the US tax on that income has already been paid. The foreign tax credit is only given against proof of the tax paid, so keep the US return and the IRS confirmation.
Income from a foreign employer follows a special self-assessment procedure, and social contributions can apply too. The rules and the fixed amounts change each year, so we calculate them for your case on the current figures instead of quoting numbers that may be out of date by the time you read this.
Typical situations
A remote employee of a US company is the simplest case on paper: salary arrives from abroad, the employer does not withhold Serbian tax, and you report and pay in Serbia. A freelancer with US clients has the extra question of whether to register as a sole trader, which changes both the tax and the contributions.
If you rent out or sell Serbian property, Serbia taxes it first and the United States taxes the same gain or rent again, with the Serbian tax credited on the US return. A US pension is outside the earned income exclusion, so it is taxed in the US and needs separate planning in Serbia.
Order of steps that avoids trouble
Work out the date you become a Serbian tax resident before you sign a lease or accept a long contract. Keep proof of every tax payment in both countries. List every account you hold or sign on, in either country, and check the FBAR threshold once a year. Ask a US tax preparer who works with expats to prepare the US return, and tell us in the same conversation what you earn, from whom and where it is paid.
We advise on the Serbian side: residency, the Serbian return, contributions, a Serbian company or sole trader, bank accounts and the paperwork around property. The US return itself belongs to a US-qualified preparer, and we coordinate with him so that the two returns tell the same story.
Frequently asked questions
Is there a tax treaty between the United States and Serbia?
No. The Serbian Ministry of Finance list of double tax treaties does not include the United States, so relief comes from credits and exclusions under each country's own law.
When do I become a Serbian tax resident?
When you live here or have the centre of your business and personal interests here, or when you spend 183 days or more in Serbia in a 12-month period. One of the tests is enough.
Do I still file a US return if I live in Serbia?
Yes. A US citizen files wherever he lives. Americans abroad get an automatic extension to 15 June, but interest runs from April.
Does a Serbian bank account have to be reported to the US?
If your foreign accounts together exceeded 10,000 US dollars at any time during the year, you file an FBAR with FinCEN. Signing authority over a company account counts as well.
Does the foreign earned income exclusion cover my pension or Social Security?
No. It covers earned income such as wages and professional fees, not pensions or Social Security benefits, and it does not reduce self-employment tax.
If I paid US tax on my salary, do I still report it in Serbia?
Yes, if you are a Serbian tax resident. Serbia then credits the tax paid abroad against its own tax, up to the Serbian tax on that income, and asks for proof of payment.
This guide provides general information and is not legal advice for your specific case. Send us your question for an assessment.
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