Employment tax incentives valid until the end of 2025

There have been various tax and social relief measures for employers hiring specific categories of workers in Serbia for several years now.
In general, the Personal Income Tax Act, the Social Security Contributions Act, and other by-laws define the conditions and procedures for claiming one of these seven tax relief measures. They extend two of them on a yearly basis, one is valid until the end of 2025, while four are unlimited.
Notably, an individual with whom an employer has signed an employment contract and who is registered for mandatory social security in the CROSO system is called a “newly employed person”. Nevertheless, if an employer affiliated with the current employer previously employed the person or the person is working for a currently existing affiliated entity, such employee is not a newly employed person.
According to tax advisor Svetlana Serafijanović, it is possible to use only one of the available tax incentives at a time throughout the entire duration of the measure.
Particularly, they apply tax incentives for hiring individuals from the National Employment Service (NES) to employers hiring individuals who were previously unemployed and registered with the NES.
Then, founders of companies engaged in innovation who employ themselves within their own enterprise can use tax incentives for hiring founders of innovation companies. The founders’ own company must employ them, and they must hold at least a five percent ownership stake. Moreover, legal entities must not have been affiliated by the employer or they must not generate more than 30 percent of their revenue.
This incentive fully exempts the employer from payroll tax and social security contributions for 36 months from the date of company establishment, with a maximum gross salary exemption of 150,000 dinars per month.
To use incentives for employees engaged in research and development (R&D), the employee must directly conduct research and development activities, excluding administrative or supervisory roles.
As tax advisor Serafijanović explains, the employer who is a legal entity conducting research and development within its operations for its own needs gets a 70 percent exemption from payroll tax and a full exemption from pension and disability insurance contributions till the end of the research project.
Next, highly qualified professionals relocating to Serbia for employment who have not predominantly resided in the country in the past two years and have a monthly gross salary exceeding 393,855 dinars can use incentives for newly relocated employees.
Finally, employees under the age of 40 returning to Serbia after studying abroad with the minimum gross monthly salary of 262,570 dinars get a 70 percent reduction in the tax and social security contribution base for five years from the date of signing the employment contract.

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