The new regime of taxation of freelancers in the Republic of Serbia, which came into force at the beginning of 2023, brings significant changes in the way they will report and pay tax on their income.
The key tool designed for this purpose is the “Freelancers” portal, through which all freelancers will be able to submit tax returns and pay taxes on income from their business activities. This digital platform aims to facilitate easy and intuitive form filling, thereby simplifying the tax reporting process.
However, since the mentioned portal is not yet operational, freelancers are entitled to self-assess and submit tax returns based on the new rules using the existing PP-OPO forms, either in paper or electronic format. According to the latest information from competent bodies, the new portal will enable tax return submissions for the second (2nd) quarter of 2023, meaning that the portal should be fully operational from 1st July 2023.
Regarding the new taxation regime for freelancers, two (2) models have been introduced, between which freelancers can choose.
I. MODEL A
Under Model A, the taxable base is derived by deducting recognized expenses in the amount of RSD 96,000 from the gross income earned in the quarter. Therefore, RSD 96,000 is the non-taxable amount for each quarter under this model.
The taxable base is then subject to: (i) income tax at the rate of 20%, (ii) pension and disability insurance contributions at the rate of 24%, and (iii) health insurance contributions at the rate of 10.3%.
II. MODEL B
The tax base for model B is obtained when recognized expenses in the amount of RSD 57,900, increased by 34% of the gross income earned in the quarter, are subtracted from the amount of the realized gross income in the quarter. Thus, the total non-taxable amount consists of the sum of RSD 57,900 and 34% of the gross income earned in that quarter.
The taxable base is then subject to: (i) income tax at the rate of 10%, (ii) pension and disability insurance contributions at the rate of 24%, and (iii) health insurance contributions at the rate of 10.3%, with the minimum amount for pension and disability insurance contributions being RSD 23,160, and RSD 4,206 for health insurance contributions.
After choosing one of these two models for a specific quarter, freelancers are not obliged to apply the same model in the future. Instead, they can apply the model that is more favorable for the taxation of their income each time.
The introduction of the new taxation regime for freelancers and the related dedicated portal aims to increase transparency, enhance the efficiency of taxing freelance activities, and prevent potential abuses.
Authors: Dušan M. Jevtić
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