Serbia: Employer Tax Benefits for Hiring Foreigners and Returnees

Serbia continues to offer one of the region’s most attractive relocation tax incentives for internationally mobile talent. Under Article 15v of the Serbian Law on Personal Income Tax, qualifying employers benefit from a 70% reduction of the salary tax base for certain foreign employees and returning Serbian nationals. The incentive applies directly through payroll for five years and can significantly reduce employment costs for businesses relocating specialist personnel to Serbia.

Our affiliate employment law team in Serbia regularly advises international companies on employee relocation structures, payroll compliance, affiliated employer analysis, and annual salary threshold reviews.

What the Incentive Provides

Where the conditions of Article 15v are satisfied, Serbian employers calculate payroll tax and mandatory social security contributions on only 30% of the standard taxable salary base. The remaining 70% of the salary tax base is exempt for payroll purposes.

The incentive applies at source during payroll calculation and does not require advance approval from the Serbian Tax Administration.

Key features include:

• 70% reduction of the salary tax base
• Applies to payroll income tax and mandatory social security contributions
• Available for five years from the employee’s start date
• Portable between Serbian employers during the five-year period
• No refund application or separate approval process required

Importantly, the annual personal income tax reconciliation of the employee is still calculated on the employee’s full salary amount.

Employer Eligibility Requirements

To qualify for the incentive, the employer must:

• Be a Serbian tax resident entity or registered entrepreneur
• Employ the individual under Serbian payroll
• Not be affiliated with the employee’s previous employer

Affiliation rules are interpreted broadly and may arise through:

• Direct or indirect ownership or control of at least 25%
• Common controlling shareholders or voting rights
• Certain family relationships between controlling persons
• Connections with entities located in recognised tax haven jurisdictions

An important exception applies where the employee has resided in Serbia for at least three years at any point during the previous 25 years.

Because affiliation issues can result in retroactive payroll reassessments and underpaid tax exposure, employers should conduct a detailed eligibility review before employment begins.

Who Qualifies as a Newly-Settled Taxpayer?

Article 15v recognises two categories of qualifying employees.

Category 1: Foreigners and General Returnees

This category applies to individuals who have not predominantly resided in Serbia during the 24 months immediately preceding the employment contract.

For 2026, the minimum gross monthly salary threshold is:

• RSD 439,692 gross per month

This category typically covers:

• Foreign nationals relocating to Serbia
• Serbian citizens returning after working abroad
• Senior international specialists and executives

Category 2: Young Returnees

This category applies to individuals who:

• Are under 40 years of age on the contract date; and
• Predominantly resided outside Serbia during the previous 12 months for education or professional training purposes

For 2026, the minimum gross monthly salary threshold is:

• RSD 293,128 gross per month

This category is commonly used for younger professionals returning to Serbia following postgraduate study or international training programmes.

Employment Contract and Position Requirements

The employment contract must be concluded for an indefinite period. In practice, foreign employees are commonly employed under indefinite contracts linked to work permit renewals.

The role must also require specialised expertise that is not readily available within the Serbian labour market. Although the legislation refers to professional qualifications and labour market scarcity, the salary thresholds effectively operate as the practical benchmark for satisfying this requirement.

Positions commonly qualifying include:

• IT and software development roles
• Engineering positions
• Life sciences specialists
• Senior finance professionals
• Technical and highly specialised management roles

Employers should also ensure salaries continue to meet annually updated thresholds throughout the five-year incentive period.

Payroll Application and Compliance

The Article 15v reduction is applied directly through the employer’s monthly payroll process and recorded in the Serbian PPP-PD payroll filing using the designated incentive code.

No separate application or ruling request is required.

Employers should nonetheless maintain supporting documentation, including:

• Residency evidence
• Prior employment history
• Affiliation analysis
• Employment agreements
• Salary threshold monitoring records

Because thresholds are updated annually, employers should conduct yearly compliance reviews to confirm continued eligibility.

Practical Considerations for International Employers

The Serbian Article 15v regime can substantially reduce employment costs for businesses relocating skilled personnel into Serbia. However, careful structuring is essential, particularly where:

• Employees move within multinational groups
• Serbian entities are newly established
• Employer affiliation issues may arise
• Employees transfer between Serbian employers
• Salary thresholds may fluctuate annually

The incentive is only available where the employer is a Serbian tax resident entity or registered entrepreneur. Foreign companies without a Serbian presence cannot apply the regime directly and may need to establish a Serbian subsidiary or utilise a locally registered employer-of-record structure.

How We Can Assist

Our affiliate employment law team in Serbia advises international employers on:

• Article 15v eligibility assessments
• Employment contract structuring
• Affiliated employer analysis
• Payroll and compliance implementation
• Cross-border employee relocation
• Work permit and residence coordination
• Annual threshold reviews and amendments

By Zunic Law, Serbia, a Transatlantic Law International Affiliated Firm. 

For further information or for any assistance please contact serbia@transatlanticlaw.com

Disclaimer: Transatlantic Law International Limited is a UK registered limited liability company providing international business and legal solutions through its own resources and the expertise of over 105 affiliated independent law firms in over 95 countries worldwide. This article is for background information only and provided in the context of the applicable law when published and does not constitute legal advice and cannot be relied on as such for any matter. Legal advice may be provided subject to the retention of Transatlantic Law International Limited’s services and its governing terms and conditions of service. Transatlantic Law International Limited, based at 84 Brook Street, London W1K 5EH, United Kingdom, is registered with Companies House, Reg Nr. 361484, with its registered address at 83 Cambridge Street, London SW1V 4PS, United Kingdom.