Abolition of the Decree on Incentives for Employment of Newly Settled Individuals – What Employers Need to Know?
The Decree on the Criteria for Granting Incentives to Employers Hiring Newly Settled Individuals in the Republic of Serbia (“Official Gazette of RS”, Nos. 67/22 and 71/23) will cease to be in force as of June 13, 2025.
We remind you that a newly settled taxpayer is a natural person who, in the 24 months prior to the conclusion of the employment contract, did not predominantly reside in Serbia, or is under 40 years of age and predominantly resided outside Serbia in the 12 months prior to the conclusion of the employment contract for the purpose of education or professional development.
According to the Government of the Republic of Serbia, the reason for repealing the Decree is a sudden increase in the number of newly settled individuals and, consequently, in employer applications, which has made it difficult to plan budget funds for future years.
Key Consequence for Employers:
With the repeal of the Decree, employers will no longer be entitled to incentives in the form of 70% reimbursement of the calculated and paid payroll tax, and 100% reimbursement of the calculated and paid pension and disability insurance contributions for payments made to a newly settled individual, for a period of up to 60 months.
Employers can still benefit from tax reliefs under the Personal Income Tax Law (“Official Gazette of RS”, Nos. 24/2001 to 19/2025, the “Law”) in the form of a 70% reduction of the salary tax base for newly settled taxpayers. As a reminder, the salary tax base is the employee’s salary reduced by the non-taxable amount of RSD 28,423, and for newly settled taxpayers, the base is further reduced by 70% under the Law.
This relief can be used by employers for a period of five years from the date of concluding the employment contract.
For additional information or consultations, the Tasić & Partners team is at your disposal.