On 16 June 2022, the Government of the Republic of Serbia adopted a Decree on the Criteria for Granting Incentives to the Employers who employ Newly Settled Individuals in the Republic of Serbia (“Decree”). The Decree was published in the Official Gazette of the RS no. 67/22 and entered into force on 18 June 2022.
New incentive encompasses possibility for eligible employer to receive a refund of 70% of calculated and paid salary tax and 100% of calculated and paid pension and disability social contributions.
Eligible employers are domestic and foreign individuals, domestic legal entities, and entrepreneurs, as well as branches and representative offices of foreign legal entity who:
- have a registered business activity in Serbia, and
- employ individuals who were not residing in Serbia before employment (“Newly Settled Individuals”)
Newly Settled Individual is a person with qualifications not easily satisfied on the domestic labour market, and who:
- 24 months before concluding the employment contract has not resided on the territory of Serbia for more than 180 days,
- concluded an employment agreement with Qualified Employer for indefinite period on full-time by 31 December 2023,
- has a salary of at least RSD 300,000.
Refund is granted once a year based on application submitted to the Ministry of Economy which should approve it within 120 days.
Deadline for submission is between 15 and 30 September. Refund may be realised for salaries paid to Newly Settled Individuals from 1 July 2022 to 31 December 2028.
To apply for incentive the following conditions must be met:
- Number of employees on the day application for refund is submitted must be the same or higher than number of employees on the date Decree came into force increased for the number of Newly Settled Employees.
- Newly Settled Individuals must remain employed with employer in the period between the day application for refund is submitted and 31 December, which will be checked ex officio by the Ministry of Economy.
- Employer should not pay out the dividends in the periods it uses incentive, except for dividends paid from the part of profit higher than refund received.
- Employer must not be beneficiary of any other state aid based on which it has obligation to employ individuals.
- Employer cannot use this incentive in relation to the salaries of Newly Settled Individuals for whom it used the right to reduce the tax base in line with incentive prescribed by the tax law.
The above conditions should be confirmed with number of documents employer needs to prepare and submit to Ministry of Economy together with the application.
Before applying for the incentive, it is advisable to check state aid aspects as well, since incentive falls within the scope of state aid legislation.
The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.