As you expand your company to Serbia, you’ll need to navigate Serbia payroll options and set up a management process to ensure compliance in the country.

Taxation rules in Serbia

Serbia’s social security program includes pension and disability, health insurance, and unemployment insurance. Employees and employers contribute to all 3 areas at varying rates:

  • Pension and disability: Employees contribute 14%, and employers contribute 10%.
  • Health insurance: Employers and employees contribute 5.15%
  • Unemployment insurance: Employees contribute 0.75%

Employers have to withhold all employees’ income tax as part of Serbia payroll. All employees get taxed 10% (income tax) whether they are nationals from other countries or locals. Income tax is calculated as per the formula: (Gross salary – RSD 21,712)*10%. In regards to social and health contributions for employees and employers, there is a threshold for individuals making up to RSD 500,360.

Serbia payroll options for companies

Before you set up your Serbia payroll, you need to decide which option is best for your company. The 3 main Serbia payroll options include:

  • Internal: Larger companies with a long-term commitment to Serbia may want to establish their own internal payroll. This option will require hiring a larger HR team to run payroll and ensure compliance.
  • Serbia payroll processing company: A Serbia payroll processing company will take care of outsourcing your payroll, but you will still be held responsible for all payroll regulations and employment compliance laws.
  • Employer of Record: Finally, you can leverage G-P’s Employer of Record services to streamline payroll in Serbia and remain compliant. With us, you can rest assured that all employees will be paid on time, freeing you to focus on other important aspects of your business.

How to set up a payroll in Serbia

The most important thing you need before setting up your Serbia payroll is a subsidiary. Establishing a subsidiary in Serbia allows you to operate legally in the country and start hiring employees and adding them to a Serbia payroll option. However, establishing a subsidiary can take weeks or months. Fortunately, you don’t have to go through this process with G-P. With our global entity infrastructure, you can begin hiring in Serbia quickly and compliantly, without setting up new entities.

Entitlement/termination terms

It’s best practice to outline entitlement and termination terms in an employment contract before you hire team members and set up your payroll since termination can be tricky in Serbia. You should include the exact duration of notice in your contract and give the employee a warning before terminating them for violating work duty or discipline.

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