Frequently asked questions

If you have already paid tax on income earned abroad in the country of the source of income (the country from which the income was paid, i.e. in which that income was earned), you are entitled to a tax credit, i.e. a reduction in the amount of tax liability for the amount of tax paid abroad, up to the amount of tax you would have paid in Serbia.

A paid tax credit is recognized to a resident of the Republic of Serbia, regardless of whether Serbia has concluded an agreement on avoiding double taxation with the country where the tax was paid. The following link contains a list of countries Serbia has signed an agreement on avoiding double taxation with: https://mfin.gov.rs/propisi/ugovori-o-izbegavanju-dvostrukog-oporezivanja.

A tax credit is recognized only for the payment of taxes, while contributions for pension and disability and health insurance are paid for the full amount. The tax credit is calculated on realized income from abroad, on which tax has been paid abroad. There are two categories of income for which the tax credit is calculated separately - income of residents earned on the territory of the Republic of Serbia, from a domestic or foreign payer, and income of residents earned on the territory of another country. The right to a tax credit is recognized based on the tax paid on income generated in the territory of countries Serbia has concluded an agreement on avoiding double taxation with, as well as on the income generated on the territory of the countries we do not have an agreement on avoiding double taxation with.

If you earned 200,000 dinars from abroad (on which tax was paid) and 500,000 dinars in the Republic of Serbia, the amount of the tax credit is determined separately for income that was earned in the Republic of Serbia from foreign payers, and income that was earned abroad. A resident documents the amount of income on which tax was paid abroad, as well as the amount of tax paid on this income, with a corresponding certificate from the competent authority of another country.

(Option 1): Starting from the amount of 200,000 dinars (all income from abroad, regardless of the number of payments, the amount of tax rates), we deduct the amount of 110,647 dinars. The basis for tax payment is 89,353 dinars, to which a tax rate of 20% is applied. This brings us to the maximum amount of tax credit of 17,870 dinars. This is the amount of tax you would have paid if you had earned your income in the Republic of Serbia. If you paid a higher amount of tax abroad, a maximum of 17,870 dinars will be recognized as a tax credit.

Further on, the total income from abroad and from Serbia (700,000 dinars) is added together, and standardized expenses in the amount of 110,647 dinars are deducted. Thus, reach at a tax base of 589,353 dinars, to which a rate of 20% is applied, which means that the tax liability is 117,870 dinars. From the tax calculated in this way, you deduct the amount of the tax credit (17,870 dinars), thus reaching the amount of tax you need to pay based on all the income generated in the given quarter, which is 100,000 dinars.

In line with the above, if you earned 50,000 dinars from abroad, since the standardized expenses are higher (110,647 dinars) than the realized income, you are not entitled to a tax credit, even though you paid taxes abroad.