Freelancer in Serbia: who can self-tax under this regime?

We will use the term "freelancer" in an informal manner, for natural persons who receive income from persons who, when paying income, does not calculate and does not pay tax and contribution obligations in the Republic of Serbia.

Freelancers (Eng. freelancers), i.e. "freelancers" are colloquially called abroad natural persons who are not employed by the employer, but perform work for him based on and in accordance with a written or oral employment contract.

Amendments to the Law on Personal Income Tax and the Law on Contributions for Mandatory Social Insurance from December 2022 regulate the issue of tax treatment of income and exercising the rights of freelancers based on the work performed

In order to clarify who is considered a "freelancer" who can report and tax income under the new self-tax regime, we offer a more detailed explanation below.

Three categories of natural persons are considered freelancers in Serbia:

• domestic natural person – resident of the Republic of Serbia, generating income by working in the Republic of Serbia, with income paid by a payer abroad (legal entity, entrepreneur or a natural person) or a domestic natural person, or another person that is not subject to calculation and payment of taxes and contributions in the Republic of Serbia when paying income;
• domestic natural person - resident of the Republic of Serbia, generating income by  working in another country, from a payer from abroad (legal entity, entrepreneur or a natural person), or another person that is not subject to calculation and payment of taxes and contributions in the Republic of Serbia when paying income;
• foreign natural person – non-resident, generating income by  working in the Republic of Serbia, with income paid by a payer abroad (legal entity, entrepreneur or a natural person) or a domestic natural person, or another person that is not subject to calculation and payment of taxes and contributions in the Republic of Serbia when paying income.

We highlight that the term „freelancer“ is not a legally defined term, hence it will not be found in any official regulation.

Any adult natural person, resident and non-resident, can register on the portal, including:

• unemployed persons, regardless of whether or not they are registered with the National Employment Service records;
• old-age pension beneficiaries (pensionable employment);
• students;
• employed persons – for the part of income they are generating outside of their employment;
• owners or co-owners of a business entity – for the part of income they are generating as natural persons;
• employees on maternity leave and child care leave –  for the part of income they are generating outside of employment;
• entrepreneurs – for the part of income that is not included in the income based on self-employment in accordance with Articles 37v and 40 Paragraph 5 of the Law on Personal Income Tax under the condition that the real payer of this income is a person that does not have the obligation of paying withholding taxes and contributions in the Republic of Serbia, and that the basis for such payment is direct work performed for a person that is not obliged to pay withholding taxes and contributions in the Republic of Serbia. It should be noted that, if a person directly or indirectly reimburse the paid expenses from a person obliged to pay taxes and contributions in the Republic of Serbia, it shall not be deemed a real payer of income that is not obliged to pay taxes and contributions in the Republic of Serbia.

Please note that, in addition to your eligibility (as a natural person) for registering on the portal www.frilenseri.purs.gov.rs and reporting income, it is also important to check whether each individual income you intend to report meets the conditions to be subject to self-taxation according to this regime. For example, despite paying taxes and contributions for the income generated as a freelancer, you cannot report income earned through a youth or student cooperative on this basis.

Freelancer can submit a tax return for income paid to them by:

• a legal entity from abroad (a company; non-government organization; international organization; foreign country; foreign local government body, diplomatic or consular representation of a foreign country and international organization, etc.);
• an entrepreneur from abroad (a natural person who has a registered activity abroad: e.g. programmer; translator; lawyer, etc.);
• a natural person from abroad (foreign citizen, regardless of whether or not they reside in the Republic of Serbia);
• a domestic natural person;
• another person who, when paying income, does not calculate and does not pay withholding tax and contribution obligations in the Republic of Serbia.

The portal www.frilenseri.purs.gov.rs should not be used to submit tax application for the income a freelancer receives from entities that, according to Article 99 of the Law on Citizens' Income Tax, have the obligation to calculate and pay withholding taxes and contributions. These include the following types of payer::

• domestic legal entity (company, citizens' association, public administration body, state body, etc.);
• domestic entrepreneur (a natural person who has a registered activity in the Republic of Serbia, that is, an entrepreneur or a flat-rate entrepreneur);
• a branch or representative office of a foreign legal entity registered in the Republic of Serbia (permanent business unit), because that entity has the obligation to calculate and submit a withholding tax application according to tax regulations.

More information can be found in the Guide and the FAQ section.