Serbia’s economy relies heavily on the service sector. It has accounted for 51.5% of the country’s GDP and has provided jobs for 57% of their workforce in 2021. Tourism is seen as the main driver for the service sector. Moreover, the IT industry in Serbia has been drastically growing and has made up 6.9% of the country’s GDP.

Major Economic Hubs:

Belgrade, Novi Sad, Niš

Skills in Demand:

Computer Science And IT Jobs, (Java And JavaScript Developer, Net Developer, And PHP Developer) Sales, And Engineering

Resident Tax Information

Resident individuals of Serbia are taxed on their worldwide income. Non-residents are taxed on

• Their income derived from work in Serbia and :

• Worldwide income from work in Serbia.

Income tax in Serbia follows a flat rate of 10% for all income types, ranging from 10% on the first 457 thousand dinars (RSD) up to 20%.

Employers must withhold the taxes from an employee's salary.

Social Security

All employers must enroll their employees in Serbia in the Serbian social security. The social security covers —

• Pensions

• Disability benefits

• Health insurance

• Unemployment

Employers must withhold employee contributions as a part of the payroll process.

Statutory Benefits

The benefits of working for a company are not limited to salary alone. In fact, there's plenty more you can get from your employer that will make life better - like vacation time and health insurance. The statutory benefits in Serbia include —

The law requires employers to provide disability and injury insurance for their employees.The law ensures individuals have

Benefits in the event of old age, include

• Old-age pensions and  
• Early retirement.

Benefits in the event of disability -  

• Disability pension  

Benefits in cases of death -

• Family pension and Reimbursement of funeral expenses
  

The employer and employee contributions toward pension and disability insurance are 11% and 14%, respectively.

Serbian citizens are entitled to a retirement pension at the age of 65 and early with fifteen working years.

Employers must also provide group personal accident insurance for all their employees for occupational and work-related diseases. This type of insurance policy covers permanent disability and deaths due to accidents.

The state scheme also covers long-term and short-term disability due to work-related accidents.

A workweek in Serbia includes forty hours a week that spans around eight hours a day and five days a week.

Employers requiring their employees to work additional hours over forty hours a week must pay overtime salary.

The overtime pay is 126% of an employee's average salary, and any overtime hours performed on a public holiday must be compensated at 110% of an employee's average salary

Fringe Benefits

Fringe benefits are employee benefits in addition to the annual paycheck, statutory benefits, social security contributions, and statutory leaves.

Commonly provided fringe benefits in Serbia include —

• Additional paid days off
• Meal vouchers or office canteens
• Flexible working hours
• Office equipment
• Reimbursement of commute expenses
• Gym membership
• Company equipment such as laptops,  mobile phones, etc
• Remote-work expenses

Exempt Benefits

Certain employee benefits in Serbia are exempt from local income tax. The exempt

benefits include —

• 40% of the annual employment income for a taxpayer

• 15% of the yearly income in cases of a dependent family member

The exempt amount cannot exceed 50% of the total annual income.

The exemptions apply to residents and foreign nationals.

Long-term Incentives

Long-term incentives (LTIs) are a great way to keep your most valuable employees happy and motivated. These types of benefits provide key personnel with an incentive that's worth waiting over twelve months or one year for, which makes them more likely than others.

Commonly provided long-term incentives include —

• Employee stock options

• Health insurance

• Employer-sponsored pension plans

• Private life insurance plans

Termination Process

Termination of employment in Serbia may occur in the following scenarios:

• Contract reaches its expiration;
• Employees reach the age of 65 and have rendered the required minimum 15 years of retirement insurance.
• Employer and employee mutual agreement
• Employment contract has been terminated by either party
• Death of the employee

Notice Period

An employee’s notice period is generally 15 days. But for employees under probation period, a 14-day notice period is observed.

Severance Pay

Severance pay in Serbia is as follows: