Personal Income Tax Law Amended | KPMG | RS

Adopted amendments to the Personal Income Tax Law

Personal Income Tax Law Amended

On 29 of December 2015 Serbian Parliament has adopted amendments to the Personal Income Tax (PIT), which were published in the Official Gazette of the Republic of Serbia no. 112, dated 30 December 2015.

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Application of the adopted amendments

Amendments are applicable as of 1 January 2016, except the provisions related to the taxation of income from real estate, which will be applicable as of 1 January 2017.

The most significant amendments are the following.

Income exempt from taxation

The PIT Law amendments now deal more precisely with the taxpayer’s income that is exempt from the tax:

  • welfare payments paid by the National employment service, as a part of the active employment program and measures;
  • redundancy payments paid if the employment was terminated:
    • through the cut-down of the number of civil servants in accordance with the law regulating the maximum number of employees in the public sector – up to the amount set by that law;
    • as a measure in the process of privatization – up to the amount set by the regulation of the Government. Specifically, for persons above 50 years of age, maximum non-taxable amount has been introduced and is equal to the one specified in the regulation of the Government;
  • awards for school and university students awarded in the international competitions that are organized as a part of the educational system;
  • compensation for the work of the voting committee members as well as the fee for the population census administrators – up to RSD 5,000 during the same election period or the census period.

The exemptions from taxation now do not include any more consideration for the collection and sale of secondary raw materials and waste that have been paid to the seller’s bank account. This income is now taxable as ‘other income’ with the 40% reduction of the calculated tax.

Adjustment of the amounts in RSD

The PIT Law amendments provide for the consumer price index adjustment of the

  • individually derived income from games of chance
  • cash assistance and other benefits paid to the persons that are not employed by the payer during the calendar year.

Salary tax base for employees seconded abroad

For employees seconded abroad, the PIT Law amendments reinforce the rule that was applicable before the amendments of the PIT Law made in 2013. This means that the tax base is the salary the employee would have earned in Serbia if he/she was employed on the same or similar job position, and not the amount the employee actually received, as the case was until now.

Tax exemptions

Per diems

Non-taxable amount of per diem allowances for business trips for employees other than public servants is increased to EUR 50 per day, no matter the destination of the business trip. This interpretation is derived from the explanation that followed as an addition to text of the PIT Law amendments.

We emphasize that the provision in the PIT Law has not been clearly drafted, having in mind that it was not stated precisely whether the special Government regulation dealing with the per diem allowances will be applicable only to the public sector.

Moreover, it is now stated that, for the purpose of calculating the tax on salary, the amount of the per diem allowance above the untaxable amount will be converted into RSD according to the National Bank of Serbia exchange course, applicable on the day of the conversion from foreign currency to RSD.

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