New rules for freelancers

The new draft Law on Personal Income Tax of the Republic of Serbia (the „Law“) foresees the application of new tax rules for freelancers, who this time get a unique choice regarding the taxation model.

Namely, according to the new draft of the Law, the tax return for the income earned by a freelancer will be submitted in quarters, while the deadline for the return of income with calculated tax will be 30 days from the end of the quarter in which the income was earned.

The novelty is that freelancers will be able to choose one of the two taxation models offered in each quarter, which means that freelancers have the option to change the taxation model in each quarter.

According to one model of taxation, recognized costs in the amount of RSD 96,000 are deducted from the quarterly income, and tax is paid at the rate of 20% on the base thus obtained. This means that freelancers who earn RSD 96,000 per quarter (RSD 32,000 per month) do not pay taxes or contributions for pension and disability insurance. Health insurance is mandatory and amounts to RSD 1,402.17 per month or 10.3%. For incomes exceeding the amount of RSD 96,000, starting next year, contributions for pension and disability insurance will be 24%, health insurance 10.3%, and tax 20% on the base determined in the above manner. This model is favorable for freelancers with lower incomes, as well as for those freelancers who occasionally generate income in this way.

According to the second model of taxation, recognized expenses in the amount of RSD 57,900 increased by 34% of the gross income realized in the quarter are deducted from the quarterly income. A tax of 10% is payable on the difference thus obtained. PIO is paid at 24% of the taxable part of income or at least RSD 7,720 per month, and health insurance at 10.3% or at least RSD 1,402.17 per month.

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