Taxes and payrolls: diving into the peculiarities of the Serbian labour market
Each labour market has some peculiarities. It may be tricky for foreigners to understand fully the payment methods, the taxes and other benefits related. In TalentUp we are starting a series of different blog articles, one for each country. This article analyses the Serbian labour market.
Even if the national currency is the Serbian Dinar (RSD), the whole article is in EUR to compare easily across countries and exchange rates
General data about the Serbian labour market
| Minimum wage per hour | 1.96€ |
| Minimum wage per month | 341.68€ |
| Payment basis | Monthly |
| Maximum working hours a week | 40h |
| Maximum overtime hours a day | 4h |
| Maximum overtime hours a week | 8h |
| Working hours compensation | 126% of the employee’s average salary rate110% of the employee’s average salary rate if they are performed on a public holiday |
Payroll taxes in Serbia
Social security contributions are made by the employer and the employee and are used for funding unemployment, pension, maternity/paternity leave, and sickness or injury.
| Contingencies | Employer % | Employee % |
| Pension and Disability Insurance (maximum earnings 3,460.56€) | 10% | 14% |
| Health Insurance | 5.15% | 5.15% |
| Unemployment Insurance | 0.75% | |
| Total | 15.15% | 19.90% |
Once contributions are paid, if the annual income is more than 2,224.44€ employees need to pay an income tax that is 10%.
Contingencies from self-employees
Free lancers in Serbia pay 24% rate for pension contribution and 10.3% for health contribution.
Freelancers are able to choose between two different ways of paying taxes. They can switch between the two options every quarter.
The first option, Model A, has a tax rate of 20%. Freelancers can earn up to 272.91€ per month tax-free. They will also have to pay contributions for pensions and health insurance, starting at a minimum of 11.96€ per month.
The second option, Model B, the stadardized cost will be 164.6€ per month plus 34% of the realized income during the quarter. the tax rate will be 10%. And the minimum amount to pay contributions is 197.52€ per month.
If a freelancer’s income is low, Model A may be more profitable. However, if their income grows, Model B may be more profitable.
Example of net salary in Serbia
As a reference, we use the average salary of a software engineer. In Serbia, on average, software engineers earn annually 26,200€.
| Employer | Employee | |||
| % | € | % | € | |
| Gross salary (annually) | 26,200 | |||
| Pension and Disability Insurance (maximum earnings 3,460.56€) | 10% | 2,620€ | 14% | 3,668€ |
| Health Insurance | 5.15% | 1,349.3€ | 5.15% | 1,349.3€ |
| Unemployment Insurance | 0.75% | 196.5€ | ||
| Total | 15.15% | 3,969.3€ | 19.90% | 5,213.8€ |
| Income tax | 10% | 1,876.18€ | ||
| Net salary (annually) | 19,110.02€ |
The employer contributes 3,969.3€ to social security and the employee 5,213.8€.
After paying the income tax, the employee has a net salary of 19,110.02€ coming from a gross salary of 26,200€.
Unemployment regulation in Serbia
Employers must give a notice period of 8 days, and employees must give a notice period of 15 days. 30 days are required for layoffs.
A 5 days notice can be given during the probation period, which can last no longer than 6 months.
Severance pay is only paid in case of layoffs. It equals at least one-third of the employee’s regular salary for each year of service.
Different kinds of leaves in Serbia
Employees that have worked for over a year, are entitled to paid annual leave of 20 days. If an employee has worked for less than one year, they get 1 day per month.
There are 12 public holidays.
Employees are allowed to take 30 days of paid sick leave, which will be paid at 65% of their standard salary. If the employee gets sick due to a work-related injury or illness, the employer must pay them their full salary during the sick leave. If the employee takes more than 30 days of sick leave, the state will pay for the additional leave, not the employer.
Both wedding and bereavement leaves last for 5 days.
Employees have two days of leave if they are voluntarily donating blood.
Paid parental leave
Employees are eligible for both maternity and childcare leave, which together can total up to 365 days. The leave can begin between 28 and 45 days before the estimated date of birth.
During this period, employees will receive compensation based on the average of their salary over the past 12 months, up to a maximum of five times the national average wage.
The father/partner is entitled to five days of Paternity leave after the child’s birth. And if the mother is unable to care for the baby, fathers can get to share the childcare leave.
Adoptive parents are entitled to take eight months of leave after the child they have adopted is placed in their care until the child reaches five years of age. They are allowed to take leave when the child is less than three months old until the child reaches 11 months of age.
Other common Serbian benefits
| Benefit | % of companies with this benefit |
| Work-life balance | 30.4 |
| Company events | 27.1 |
| Flat hierarchy | 26.3 |
| Health insurance | 3.5 |
| Professional development | 2.7 |
How to employ a Serbian worker
Companies hiring in Serbia must either own a local legal entity or work with a global employment platform that can legally provide employment services in the country.
Some platforms (Papaya Global among them) offer the Employer of Record (EoR) service helping companies hire countries where they do not have any office.
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