A number of freelancers have asked questions about paying taxes in Serbia on their Upwork earnings. Upwork doesn't have any official information about Serbia's tax laws, we've reached out to local experts in the field and here is the advice Moja Firma web portal shared.
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Serbia's tax system is quite complex. Questions about which specific tax rate applies and in what way it will be paid depends on a number of factors, but certainly one of the most expensive forms of work is the one performed under the copyright contract (rad po ugovoru o autorskom delu). The situation is further complicated in case a freelancer is receiving payment from a foreign company, because in that case the freelancer is obliged to calculate and pay the tax and contributions on the received payment, and submit a report to the Tax Administration (the so-called self-taxation).
The tax, which is paid annually only for amounts above the established threshold (usually a little more than 2,000,000 dinars) is an additional, annual income tax, and it is paid if a natural person generates a total annual income on various bases over the defined threshold.
This certainly doesn’t mean that a natural person who receives payment on the basis of the work done in a lower income range is exempt from paying taxes. On the contrary, depending on the legal relationship with the payer, taxes and contributions are charged, which are generally quite high.
In most cases, it makes more financial sense to register as an entrepreneur and submit a request to the Tax Administration for getting a lump sum taxation status (status paušalnog obveznika).
This is especially true for people who have a continuous inflow of funds and a steady annual work flow. By contrast, individuals who perform only an occasional one-time job probably don’t have the same incentive and interest to register as an entrepreneur, since entrepreneurs are required to pay taxes each month.
You can find a lot of information and resources about entrepreneurs and tax rates in Serbia at mojafirma.rs. We suggest checking out following links:
What is lump sum taxation (paušalno oporezivanje)?
How to predict the amount of tax liability prior to receiving Tax Administration's decision?
An increasingly common dilemma – lump sum or employee status?
The differences between entrepreneurs and freelancers.
Finally, the process of registering as an entrepreneur.
Please find attached a copy of this post in Serbian.