Although it is not yet clear to freelancers how will the Tax Administration calculate their foreign income tax, the Administration states that the penalties are clear and range from 5,000 dinars up to 10 years in prison plus a fine.
This, however, is not all. According to the current Law on Personal Income Tax, Serbian tax authorities can demand not only self-employed persons, but also Serbian citizens working and living abroad to pay taxes and salary contributions (for health and pension insurance).
Therefore, all citizens of Serbia who are also residents are obliged to pay taxes and contributions under the law.
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According to Article 7 of the Law, the payer of personal income tax is resident in the Republic of Serbia, for income earned in the territory of the Republic of Serbia and in another country. A resident of the Republic of Serbia, under this law, is a natural person who:
1) has a residence or performs an economic activity or lives on the territory of the Republic, or
2) resides on the territory of the Republic, continuously or intermittently, for 183 days or more for a period of 12 months beginning or ending in the respective tax year.
This means that it is sufficient to meet one of the above criteria to be treated by law as a resident who has to pay taxes and contributions.
For example, a Serbian citizen moved to Germany ten years ago and worked there, but did not cancel its place of residence in Serbia or they worked temporarily in an EU country for 90 days, came back to Serbia and then went back to work in the EU, they are eligible to pay personal income tax regardless of whether they earned their salary abroad, says the Association of Free Professionals and Entrepreneurs of Serbia.
The income tax is 10% on the taxable base and the contribution for health and pension insurance is 25.5% or 10.3% of the total salary.
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