How to start your own business in Serbia

from a legal-tax viewpoint (2008) - updated April 2011
Author – Ljubiša Lazarević, graduate economist

Preface

Serbia Tax System

Net salary, gross salary

Social security contributions

Fields for starting bussines

Net salary, gross salary

We all like to know how much we have earned and how much of net profit we have after all expenses. The calculation varies depending on what we earn on. Is it only salary (pension), or do we lease something, do we have some other additional job, did we make fixed-term deposits at the bank, do we trade in shares at the stock exchange, are we the owners of our own business or do we have a share in some third business.

When talking about salaries, what is one man`s (employee) income, it is another man`s (employer – owner, company) expense. However, these two values, salary on one side and expense on the other, are not equivalent. Namely, company`s expenses are bigger than just paying for the worker`s salary. The difference consists of tax and contributions paid both by the employee (through his salary) and the employer. Hence terms: net and gross salary. There is one more value called total employee cost. The following table shows elements of a supposed net salary in Serbia for three cases: minimal salary RSD 17.748, average salary in Serbia RSD 35,362 in May 2011 and average salary in Belgrade RSD 44.376 in May 2011.

Table 2. Example of salary calculation in Serbia

No.	Description	Rate	Minimal nett salary (102 RSD per hour x 174 hours) no benefitions	Average nett salray in Serbia May 2011	Average nett salray in Belgrade May 2011
1.	Net salary		17.748	35.362	44.376
2.	Income tax (tax relief included)	12.0%	2.011	5.026	6.826
3.	Contributions on the behalf of the employee	17.9%	4.308	8.806	11.107
4.	Gross salary (1+2+3)		24.067	49.194	62.052
5.	Contributions on the behalf of of the employer	17,9%	4.308	8.806	11.107
6.	Total employee cost (4+5)		10.627	22.637	28.784
7.	Total cost for the employee		28.375	57.999	73.160
8.	Index - 6 : 1 (in %)		59,88%	64,02%	64,86%

Therefore, when a worker asks his/her employer for a monthly net salary of RSD 35,362 (company-paid meal, holiday cash grant and years of service included), then the Employer has in his head a figure of RSD 58,000 (plus paid leave and other paid for days*).

Here, I would like to mention that the major part of the payment to the government administration budget is done by the citizens, primarily by providing from their salaries. Therefore, by paying for goods and services from their (taxed) salaries, citizens additionally pay VAT at the rate of 18% (or rarely 8%), and, in smaller amount, excize and customs duties contained in the final price of products and services.

In Table1 - Consolidated public revenues and expenses of the Republic of Serbia, it is clear what are the main revenues of the government administration budget (these are VAT, excize duties – for fuel, tobacco, alcohol, etc. and income tax). Contributions represent the income of certain funds, but this topic will be discussed in the following chapter.

Serbia Salary Calculator

Legal forms of business entities

Registering a Limited Liability Company

Registering an Entrepreneur

Registering an NGO

Taxes and Tax Service

VAT - Value Added Tax

Founder`s compulsory social insurance

Corporate income tax - profit tax

Lump sum taxation

Comparative overview

Fiscal kassa

Tax Service Reporting

Municipal Tax

Accounting

Banks

Money to Start

Poslovanje sa inostranstvom

Staff (workers)

Annual personal tax

The maximum contribution base		check up to date amount
The minimum contribution base		check up to date amount
Tax relief		check up to date amount
		Net salary:
	Tax base:
Tax rate:	%	Tax amount:
Pension contribution rate on the behalf of the employee:	%	Pension contribution amount:
Health insurance contribution rate on the behalf of the employee:	%	Health insur.contrib.amount:
Unemploy.insur. contrib.rate on the behalf of the employee:	%	Unemploy. ins. cont. amount:

Gross salary (contribution base):

Pension contribution rate on the behalf of the employer:	%	Pension contribution amount on the behalf of the employer:
Health insurance contribution rate on the behalf of the employer:	%	Health insur.contrib.amount on the behalf of the employer:
Unemploy.insur. contrib.rate on the behalf of the employer:	%	Unemploy. ins. cont. amount on the behalf of the employer:

		Total Salary Cost:

Put values in yellow fields and click Calculate

Average salaries and wages per employee by activities and Statistical Territorial Units, April 2011 - source Statistical Office of the Republic of Serbia -CLICK

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