According to the provisions of the Law on Personal Income Tax (the “Law”), certain taxpayers are obliged to report and pay the annual income tax in the current calendar year for income earned in 2021. Starting from 1st January 2022, one amendment to the Law, i.e. tax relief, applies to the category of taxpayers under the age of 40.
Who are the taxpayers of the annual personal income tax?
The Law stipulates that the annual personal income tax is paid by persons who earned in the calendar year more than three times the amount of the average annual salary per employee paid in Serbia in the year for which the tax is determined. Therefore, if the annual net income of a certain individual earned in 2021 exceeds the non-taxable amount of three (3) average annual gross salaries in Serbia, that person will be taxed in this calendar year by the annual personal income tax.
It should also be pointed out that the taxpayers of this tax are both, residents in regard with the income earned on the territory of Serbia and in another country (worldwide income), and non-residents for income earned on the territory of Serbia.
Since the competent state body for statistics has not yet published official data on the exact amount of the average annual gross salary in Serbia for 2021, according to currently available data the non-taxable threshold for this year should be cca. RSD 3,200,000. dinars (cca. EUR 27,215).
To which taxpayers does the amendment to the Law apply?
For the category of individuals under the age of 40 the non-taxable limit is doubled, but only in relation to net income from: (i) salaries, (ii) entrepreneurial business activity, or (iii) copyright and related and industrial property rights. The Law specifies that these are individuals who were younger than 40 on 31st December 2021. Therefore, if they have earned a total annual net income in the amount of less than RSD 6,400,000 (cca. EUR 54,430) on the above bases from points (i) to (iii), they will be completely exempt from paying the annual personal income tax. Otherwise, they will eventually pay the annual income tax only for the amount of income that exceeds the double non-taxable limit – RSD 6,400,000 (cca. EUR 54,430).
On the other hand, taxpayers who do not belong to the previously described category of individuals under the age of 40, pay an annual income tax that exceeds the non-taxable amount of RSD 3,200,000 (cca. EUR 27,215).
It should certainly be noted that the Law already stipulates that the amount of taxable income from 2021, and thus the basis for taxation, is reduced by personal deductions – for the taxpayer and for each dependent family member, in amounts that are for each year separately determined by the competent state authorities.
What is the deadline for filing a tax declaration?
Tax declaration for determining the annual personal income tax based on the income earned in 2021 should be submitted on Monday, 16th May 2022, at the latest.
The implementation of this amendment to the Law was explained by the state authorities in a way to promote youth employment in Serbia, as well as to motivate talented people under 40 to start their own business and/or stay and work in Serbia.
Author: Goran M. Ćiraković, attorney-at-law
Photo: Pixabay