Employer who establishes an employment relationship with a newly employed person starting from March 1, 2022 - is exempt from the obligation to pay: 70% of calculated and suspended tax from the salary of the newly employed person and 100% of contributions for mandatory pension and disability insurance (PIO), at the expense of the employee and at the expense of the employer. This new payroll tax credit aims to encourage new employment.

Amendments to the Law on Personal Income Tax (PIT Law) and the Law on Contributions for Compulsory Social Insurance (Law on Contributions) made changes and amendments regarding reliefs to employers regarding taxes and contributions on employees' salaries. Namely, from March 1, 2022, two new tax reliefs for employers will be applied:

  • For an employer who establishes an employment relationship with a newly employed person and
  • For an employer who, within the scope of his activity on the territory of the Republic of Serbia, performs research and development.

Salary tax relief for a newly employed person

This is a new tax relief for newly employed persons who in the period from January 1, 2019 to February 28, 2022:

  • did not have the status of an employee's insured,
  • did not have the status of an entrepreneur,
  • did not have the status of a founder employed in their own company.

The tax relief on salaries can be used only if the prescribed conditions are met. Employers will be able to use it from March 1, 2022. The goal of the relief is to encourage new employment.

An employer who establishes an employment relationship with a newly employed person starting from March 1, 2022 - is released from the obligation paying:

  • 70% of calculated and suspended tax on the salary of a newly employed person and
  • 100% of contributions for compulsory pension and disability insurance (PIO), at the expense of the employee and at the expense of the employer,

based on the salary of the newly employed person paid as of December 31, 2024.

Contributions for mandatory pension and disability insurance for a newly employed person, for whom the right to exemption from paying contributions is exercised, are paid from the budget of the Republic of Serbia. For the purposes of exercising the rights from the PIO, these contributions are considered paid at the time of maturity.

A general rule is that an employer is obliged to contribute to the compulsory social insurance calculation and payment at the same time as the payment of wages. This should be done according to the regulations in force at the time of payment of these incomes.

Therefore, with this relief, and for the needs of exercising the rights from the PIO, the contributions at the expense of the employee and at the expense of the employer are considered paid at a moment of payment of the salary.

Who is entitled, who is not entitled to relief?

An employer who establishes an employment relationship with a newly employed person has the right to relief. An employer is a legal entity, an entrepreneur, a lump sum entrepreneur, an entrepreneur entrepreneur, a representative office and a branch of a foreign legal entity.

However, an employer who uses for a certain person any type of incentives regulated by the relevant law, including benefits paid by the National Employment Service within the framework of active employment policy programs and measures in accordance with the law governing employment and unemployment insurance, on the basis of establishing an employment relationship with that person, he has no right to obtain this relief for that person.

Who is the new employee?

A newly employed person is considered to be a person for whom the following three conditions are met:

  1. A person who in the period from January 1, 2019 to February 28, 2022 did not have the status:
  • Employee's insured,
  • Insured of independent activities as an entrepreneur, and
  • Insured of independent activities who is the founder, ie. a member of a company who is employed by a company whose founder is i.e. member.
  1. In the period from March 1, 2022 to December 31, 2022, the person acquired the status of an insured employee, ie the status of an insured person of independent activities who is the founder, ie. a member of a company who is employed by a company whose founder is i.e. member, by establishing an employment relationship with the employer (in terms of Article 21z paragraph 1 of the PIT Law and Article 45h paragraph 1 of the Law on Contributions). A person who has not acquired the status of an insured employee in the specified period, ie. the status of an insured person of independent activities who is the founder / member of a company who is employed in the company whose founder / member he is, cannot be considered a newly employed person.
  2. A person earns a monthly salary of more than 76,500 dinars. Under the salary is considered gross 1 salary, according to the Labor Law.

When it comes to the highest amount of salary of a newly employed person, such a limit is not set.

Who is not considered a new employee?

A person who, as of January 1, 2019, had the status of a beneficiary of an old-age, early old-age or disability pension. Beneficiaries of survivors' pensions are not excluded from the notion of a newly employed person.

Article 21z of the Law on Personal Income Tax and Article 45ž of the Law on Contributions for Compulsory Social Insurance prescribe a restriction. The restriction is that an employer who uses for a certain person any type of incentives regulated by the relevant law - including benefits paid by the National Employment Service under active employment policy programs and measures in accordance with the law governing employment and unemployment insurance - on the basis of establishing an employment relationship with that person, he is not entitled to obtain tax exemption from this Article for that person.

Period of using this relief

Salary tax relief is applicable to salaries paid to a newly employed person in the period starting March 1, 2022 and ending December 31, 2024.