Taxes (Paušal) in Serbia: A Complete Guide for Entrepreneurs

Fundamentals of Lump-Sum Taxation in Serbia

For those considering opening a sole proprietorship in Serbia, understanding the local tax system is a top priority. Lump-sum taxation (paušal) is the most convenient and simplest regime for sole proprietors. Its main advantage is that the Tax Administration (Poreska uprava) independently calculates a fixed amount of taxes and issues a ready-made decision, eliminating the need for monthly calculations with an accountant.

After successfully registering a sole proprietorship and activating a bank account, the tax decision is usually available within a week. It's important to remember the deadline for the first payment: it must be made by the 15th of the month following the month of registration. For example, if the sole proprietorship is opened in October, the tax for October must be paid by November 15. The amount of the first tax is calculated proportionally to the days of business activity in the opening month.

Frequently Asked Questions about Sole Proprietor Tax Obligations

New entrepreneurs in Serbia often face the same questions regarding their tax obligations. It is important to understand that the obligation to pay taxes does not depend on financial activity.

• Taxes must be paid regardless of whether there was any turnover in the account.
• The payment obligation remains even if you don't have an open bank account.
• It is possible to pay taxes in advance for several months or even a year by simply summing up the monthly payments.

Methods for Obtaining a Tax Decision

Obtaining a tax decision (poreško rešenje) is a critical step after registering a sole proprietorship, as the document contains all the details and amounts for payment. There are several ways to obtain it.

1. In the personal account of the Tax Administration. This method is available if you have a Serbian residence permit and requires an electronic signature, ConsentID, or a foreigner's ID card.

1. Through an accountant or an intermediary with a digital signature. You can hire a specialist for a one-time service to submit the request for you. For those who do not yet have a residence permit, this method, along with a personal visit, is the only option. Obtaining the decision through an intermediary can take from a few days to a month.

1. In person at the tax office corresponding to the sole proprietorship's registration address. This requires a passport and the registration document from the Serbian Business Registers Agency (APR). However, experience shows that in Belgrade, they often refuse and direct you to the online portal, whereas in Novi Sad or New Belgrade, they may be more accommodating.

Visiting the Tax Office: Addresses and Rules

If a personal visit to the tax office is necessary, you must choose the branch strictly according to the business's legal registration address. It is also important to adhere to the established dress code: entry is only permitted in trousers. Shorts, skirts above the knee, track pants, flip-flops, and headwear are prohibited for everyone, including children.

• Belgrade (districts of Stari Grad, Rakovica, Savski Venac, Vračar): Zeleni Venac 16.
• Zemun (serves New Belgrade): Cara Dušana 145.
• Novi Sad (serves Bački Petrovac, Žabalj, Srbobran, and Vrbas): Bulevar Mihajla Pupina 14.

How to Read a Tax Decision and Understand Your Obligations

The tax decision specifies four types of taxes with their amounts and payment details. If the document only lists two taxes, it may mean that the entrepreneur is also employed by a Serbian company, and the employer pays part of the contributions. After leaving the job, it is necessary to file a PPDG-1R application for recalculation.

Taxes are paid monthly by the 15th. Since 2023, significant fines of up to 50,000 dinars can be imposed for late payments, and two late payments can be grounds for closing the sole proprietorship. Even a short delay results in late payment interest.

Payment slips are located on the last pages of the decision. When paying, it is important to pay attention to the payment code.

Annual Recalculation and Additional Taxes

Each year, the tax amounts for lump-sum entrepreneurs are recalculated. Along with the amounts, the unique payment identifier — Poziv na broj — also changes. The tax for December (paid by January 15) is paid using the old details. At the end of January, you must obtain a new tax decision, and starting with the January payment (due by February 15), use the updated amounts and the new Poziv na broj.

It is worth noting that lump-sum entrepreneurs are not required to file an annual report with the tax authorities. Their only obligation is the timely payment of taxes.

• Cleaning tax (Čistoća): relevant for businesses registered in Novi Sad. In 2023, its amount was 740 dinars per month.
• Environmental tax: paid from the second calendar year of business activity.

Offline Tax Payment: Instructions and Risks

Paying taxes in cash at a currency exchange (menjačnica), post office, or from a personal bank account is a temporary measure, permissible only while opening a business account. By law, all tax payments for a sole proprietorship must be made from the business account to ensure financial transparency.

Consistently paying from a non-business account carries the risk of an inspection by the tax authorities and the imposition of fines. Although the probability is low due to the department's workload, this risk exists.

• Uplatilac (payer): indicate your first name, last name, and address, as the payment is made on behalf of an individual.
• Svrha uplate (purpose of payment): it is recommended to specify the tax name and payment period, for example, "Doprinos za PIO za Jun 2023".
• Šifra plaćanja (payment code): change from 253 (online) to 153 (cash).
• Iznos (amount): enter the exact tax amount.

Online Tax Payment via Popular Banks

Modern Serbian banks offer convenient tools for online tax payments. The easiest method, introduced in 2023, is to scan the QR code from the tax slip using the bank's mobile business app. This feature automatically fills in all the details.

In the Raiffeisen Bank app, go to Domestic payments → IPS payment to scan. In the Alta Bank app, go to Payments → Scans. When using a QR code, it's important to ensure you are paying taxes for the correct year, as the decision may also contain slips for the following year.

If filling out the payment manually, for example, in the Poštanska Štedionica online portal or the Alta Bank desktop application, you must carefully transfer all data from the tax decision. After the first payment, it is recommended to create templates to avoid re-entering all the information in the future.

Monitoring Debt and Checking Payment Status

Regularly checking your account status with the tax authorities helps to avoid unpleasant surprises and fines. There are three main ways to ensure you have no outstanding debt.

1. Independently in the personal account of the Tax Administration. Access requires an electronic signature, ConsentID, or a foreigner's ID card with a residence permit.

1. Through an accountant or an intermediary with a digital signature. A specialist can make a request on your behalf, which is a convenient option, especially in the initial stage.

1. In person at the tax office. This method is becoming less relevant as most operations have moved online, and you will most likely be directed to your personal account.

Maintaining the KPO Book for Lump-Sum Entrepreneurs

The KPO book (Knjiga prihoda i rashoda) is a mandatory document for sole proprietors on the lump-sum regime. It is a register of all incoming transactions. This book does not need to be submitted anywhere, but it must be maintained and stored as a file to be provided upon request from a bank, tax authority, or other regulatory bodies.

When filling out the KPO book, foreign currency income is converted to dinars at the middle exchange rate of the National Bank of Serbia on the invoice date. It is important to record the full amount from the invoice, even if a smaller amount was received in the account due to bank fees.

• Redni broj: Serial number of the entry.
• Datum i opis knjiženja: Date from the invoice and client's name.
• Od izvršenih usluga: Amount for services rendered in dinars.
• SVEGA PRIHODI: Total income for the transaction.