Tax residency in Serbia for digital nomads is something people question me about from time to time.
Serbia is situated in South-eastern Europe / the Balkans. In the past, Serbia was part of the Republic of Yugoslavia. Up till 2006 Serbia and Montenegro still formed a union. As from that moment, Serbia became a fully independent country.
You might know Serbia because of its capital Belgrade or the historical cities of Novi Sad in the north and Nis in the south. If you are a fan of nature, you might already know Serbia has a lot of mountains providing you with scenic landscapes.
Living in Serbia
Most citizens of a Western country can go to Serbia for 90 days without the need of a specific visa. Yet, if you plan to stay longer, you will need to apply for a visa. As a freelancer working from Serbia, you will also need to register yourself with the authorities in order to be compliant. Obtaining the right documents for your visa is always a hassle. Luckily, the Serbian government put a detailed contact form on their website in order to help you out.
However, Serbia also offers a digital nomad visa which is valid for up to one year. Yet, if you want to apply you should know you should have an income of at least €3.500 per month for the last six months.
Another thing to think about is that in Serbia you are obliged to register yourself with the local police within 24 hours of your arrival. An exemption applies if you are staying at a hotel who takes care of this for you.
Serbian tax rules
If you plan to spend some time in Serbia or establish some other connections with the country, you should be aware of the Serbian tax rules.
Tax residency in Serbia
If you decide to spend 183 or more days in Serbia during a twelve month period, Serbia will consider you a tax resident. This days-test is quite easy to assess as you will just need to count the days you spend in the country.
Apart from the aforementioned days-test, Serbia has another way to qualify you as a tax resident. They do this by assessing if you have your residence or your centre of vital business and personal interests in the country. This is not that straight forward and is assessed based on practical stuff as where you hold your bank accounts, own real estate and have your social life.
Tax residency in Serbia for digital nomads: tax rates
In Serbia the personal income tax rate amounts ranges from 10-20%.
Tax residency in Serbia for digital nomads: social contributions
The exact percentage of social contributions depend on your personal situation. However, they tend to amount to 26%. However, contributions are capped as the tax basis is maximum five times the average monthly salary. Nevertheless, the average monthly salary exceeds €1.000 which means that you will pay social contributions up to a tax base even above €5.000.
Thus, social contributions tend to be at the higher end in Serbia. Therefore, it might be interesting to not do business in your personal name but through a Serbian company.
Setting up a company in Serbia
Serbian corporate income tax on company profits amounts to 15%. Yet, when working with a company, you should also think about the withholding tax. You pay withholding tax once you take out profit of the company as a dividend. The basic withholding tax rate is 20%.
Tax residency in Serbia for digital nomads: conclusion
Serbia’s income taxes aren’t too bad. However, when doing business in your personal name you also need to account for social contributions which are rather high.
Another option is to set up a company in Serbia. In this way you could benefit of a corporate income tax rate of only 9%. Nevertheless, on top of that, you will need to take into account a withholding tax of 15%.