Anyone who earns 200 euros a month should be exempt from paying taxes, and if it is a higher salary, then he must be taxed at a higher tax rate.
Why would a freelancer who works for a salary of 800 euros with an employer abroad be exempt from taxes, and I, as an entrepreneur who employs two or three people and pay the same amount of workers, would be taxed – asks Marko Mudrinic, founder and director of the site Netokracija, business-technological medium dealing with the digital economy and the first workers on the Internet.
– It is high time that people, who usually work over the Internet, ie workers in the digital economy, understand that they can not only sit in Serbia and do work for some foreign companies, but that they are taxpayers of Serbia and have to pay taxes here. In most cases, tax and contribution freelancers should give about 44 percent of their earnings. That is a high tax, and if they have to pay for the past five years, most of them will probably give up that way of working because they will understand that it does not pay off for them – Mudrinic thinks.
Asked whether they would fare better if they registered business entities, he said that he did not advocate that freelancers should open companies, but explained that if they register a company in 2020, in the first three years they have a reduction of taxes and contributions by 70% and back by 60 percent. Their obligation in that case is to pay income tax.
– Everywhere in the world, the status of freelancers is a little better regulated than in our country, because today the labor market and digital economy provide more models of business and engagement than it was 30 years ago when it was only possible to work for an employer in Serbia. The labor law will not change on its own if we do not have an association of citizens that will deal with it. I blame the freelancers for the fact that most of them are relaxed when it comes to the fact that they are citizens of Serbia who have some first obligations here – our interlocutor states.
He emphasizes that the Tax Administration has only recently had an advisory role. So far she has only been in the controller. But everyone who works over the Internet should have been informed by a tax advisor or bookkeeper about what follows from the tax if they operate according to that modality.
Mudrinic emphasizes that the status of freelancers must be resolved and that their work must be introduced into legal channels where they would have different tax rates, so that someone who earns 200 euros a month will be exempt from taxes. Then, that some higher amounts are taxed with the second, and even higher with the third rate. It is about progressive taxation. This requires a change in a whole range of laws.
It is estimated that about 100,000 people in Serbia make money this way. There is no precise number, because there is no association that would gather them and fight for their rights.
– Some earned more than 2,500 euros a month, without dinars of tax paid. That’s really not right. If they worked and founded a company in the meantime, that is certainly an indicator that they want to introduce their business into legal flows, and that is, in the end, the goal of the Tax Administration. But if they continue to do so, they are in a serious criminal offense. Technically speaking, someone who sells smuggled goods on the market and someone who sits at home and works on the Internet for the state and the Tax Administration have the same status and operate in the gray zone – says Mudrinic.
George Pap, a tax expert, states that progressive taxation is a story for the future and it is a matter of the tax policy of one country. We did not have progressive rates except for the annual income tax of citizens.
– It may make sense to introduce proportional rates, but now is not the time to say that another type of tax policy should be provided when the state demands that taxes be paid for something that has happened in the past five years. Yes, progressive rates may need to be introduced, but that does not absolve them from applying the existing regulation. There are also good suggestions from people who have found themselves in some kind of trouble. One of the acceptable proposals is not to pay taxes on the minimum amount of 100 to 200 euros, which is a good idea. But it is a story for the future. And we can’t talk now about when there is income and a regulation that regulates what should be paid on that income – Pap explains.
Asked how it is now, our interlocutor answered that there are two articles in the Law on Personal Income Tax that regulate this matter.
– One is a tax on copyright, and the other is a tax on other income. Both are taxed in the same way in the sense that the recipient of income from abroad is obliged to report and calculate the tax himself. The rates are the same, but the deduction is different. The state recognizes a lump sum deduction ranging from 20 to 50 percent. If someone earns a thousand euros of income and if he earned it from some kind of copyright, for example for a sculptural work, the deduction will be 50 percent, and if it is realized from creating a database which can also be considered income similar to the copyright work, then that deduction is 34 percent, and if it is earned under a work contract, then the deduction is 20 percent – he says.
– Another thing that depends on whether you will pay lower or higher taxes is whether you are employed when you earn income. If so, you do not pay for health insurance, and if you do not, you pay for that as well. If you look at the net income, then that tax is from 30 to a maximum of 80 percent (if you received from abroad under an employment contract and are unemployed) – adds Pap.
Asked whether the registration of economic entities is an alternative for freelancers, he said that they can register different types of economic entities and legalize their activity.
– They do this as natural persons and the tax policy is like that, and when they register an activity, then depending on the type of activity, they pay other taxes as a company. The question is why many did not register companies but generate income in this way. Probably the state did not control them much and that was a bit of a swing. The state simply saw that a lot of money is realized in that way and wants to include it in taxes – says Pap.
Regulate the status of freelancers by law
The Association for the Protection of Constitutionality and Legality announced yesterday that after the announcement of the tax collection of freelancers, which means that some will be deprived of up to 80 percent of income, they will ask for their status to be legally regulated, and then determine a tax model that will enable and stimulate business people from this sector.
– Nobody thinks you shouldn’t pay taxes. But the tax must be realistically justified. It is very important that we recognize the specifics of this community and understand that these are jobs and money that can easily leave Serbia, and with them probably the people who deal with these jobs – it is stated in the statement, Politika reports.
