Serbia, The law on personal income tax was recently amended

Published on 29. March 2023., News

The law on personal income tax was recently amended, so as of January 1 this year, new rules apply to individual taxpayers who are taxed in this way.

Those entrepreneurs who decide to change their business, for example the taxation model or decide to stop doing business, no longer have to submit the PPDG-1R tax return, which they had to until the end of last year.

It is estimated that there are 150,000 lump-sum payers in Serbia, and all of them are affected by the changes to the Income Tax Act that have recently entered into force.

Also, the changes apply to all natural persons applying for business activity.

Deleted deadlines

Certain deadlines that existed within the Law on Personal Income Tax no longer apply.

One of the cases in which the deadline has ceased to exist is registration when starting a new activity.

Therefore, natural persons who do not register their activity with the Business Register Agency (APR), and who decide to pay a flat tax, when starting their activity, do not need to submit a PPDG-1R tax return with the basis of submission “mark 2 – the beginning of self-employment”.

Individuals who do not register their companies in the APR are, for example, lawyers who are registered in the Directory of Lawyers, which is maintained by the Bar Association of Serbia.

However, they are obliged to submit a request for approval of flat-rate taxation within five days of registration with the Tax Administration, i.e. from the day they receive a tax identification number (TIN), and no later than December 31 of the current year.

This deadline applies to those taxpayers who will be assigned a PIB after December 26.

Another case in which deadlines are changed is when reporting termination, interruption and continuation of activities.

Therefore, lump sum workers, when reporting cessation and interruption, as well as continuation of activities, do not submit the PPDG-1R report with the basis of submission “label 3 – cessation of independent activity”, “label 4 – interruption of independent activity” and “label 16 – continuation performance of independent activity after termination of performance of activity”.

Also, another group of entrepreneurs who do not submit this tax return are those who pay self-employment tax on actual income. They do not submit this report when changing taxation from self-taxation to flat rate taxation.

The basis for submitting the application, which is no longer needed, is marked with code 17 – “transition from taxation on real income to flat taxation”.

When is PPDG-1R not tolerated?

The PPDG-1R tax return does not have to be submitted by lump-sum payers, and that is if the mentioned changes are made for the period after January 1 of this year.

Therefore, those lump-sum taxpayers who register a company outside the APR this year or are just now switching to this method of taxation, do not have the obligation to submit this application.

In the mentioned cases, the Tax Administration will determine the entrepreneur’s tax liability with a decision based on the data it receives from the relevant registration authority.

However, those entrepreneurs who made any of the above-mentioned changes before January 1st still have to submit a tax return, just like before the adoption of the amendments to the Personal Income Tax Act.

By the way, the personal income tax is paid once a year by all those who in one year earn more than three times the average annual salary in Serbia, in the amount of 10 to 15 percent, depending on how much income they earn.

In addition to lump-sum income, earnings, taxable income from copyright and related rights, taxable income from the sale of movable property, as well as real estate, and the like are also taxed in this way.

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