Serbia Payroll and Benefits Guide

What global businesses need to know about payroll in Serbia

Serbia’s corporate tax rate of 15% is one of the biggest drivers of foreign business and investment into this landlocked country in the Balkans. As services only make up just over half of its economy by GDP, it’s heavy industry that has perhaps benefitted the most from this pro-business attitude. Cars, machinery, chemicals and pharmaceuticals are all major trades in this country of around 6.6 million people.

Serbia has had a turbulent past in the last few decades, through communist rule, the civil war in the 1990s when it was part of the former Yugoslavia, and the long-standing question over whether it will join the European Union. However, there’s lots to love about business in Belgrade or further afield: a skilled workforce, low wages compared to many European countries, and strong trade links worldwide.

This guide tells you the key facts about employment law and running payroll in Serbia, and what you need to do to make sure your business stays compliant.

Getting Started

Limited liability companies are the most common choice for businesses starting up in Serbia, especially as the minimum share capital is a nominal RSD 100 (approx. £0.75; $0.95; €0.85). The process of doing so is mostly straightforward and can be completed largely online in as little as five days, plus the time it takes to open the bank account.

Start by drafting a Memorandum of Association, and getting it registered with the Business Register Agency; this will then generate a company number and a tax ID number. With these identifiers, it’s then possible to register for VAT, and register with the other relevant authorities. Crucially, it will also enable the opening of an in-country bank account, which generally takes between four and five weeks, and may be difficult to do without a native Serbian speaker. 

Employment Considerations

Written employee contracts are required and need to state the official title, description of work, and basic salary. Contracts are required to be written in Serbian, though additional versions in other languages are allowed. Collective bargaining is practiced in Serbia and is regulated by the Labor Code. However, due to general disorganization among the major sectors, there has been an erosion of collective bargaining in recent years.

Like many European countries, Serbia practices a standard working week of 40 hours: eight hours a day, Monday to Friday. The statutory overtime pay rates are 126% of normal salary, with a further 10% premium on public holidays. There are also limits on working overtime of four hours per day and eight per week. Collective bargaining, however, can have an influence on some of these levels.

Notice periods are eight days on the employer’s side (although only five during a probationary period) and 15 days on the employee’s side. This extends to 30 days in cases of redundancy. Probation periods run for a maximum of six months.

Compensation, Bonuses & Severance

As of the start of 2024, the minimum wage in Serbia has been increased to RSD 271 per hour (approx. £2.00; $2.50; €2.30). This rate has almost doubled since 2019, so expect further increases to come. Every employee is also automatically entitled to a pay rise from their employer of at least 0.4% each year.

There is no requirement to give 13th-month bonuses in Serbia, but the giving of discretionary bonuses is permitted.

Severance pay is fairly high in Serbia, although it only applies in cases of redundancies. Employees are entitled to four months’ salary per year of service in these circumstances.

Tax and Social Security

Serbia’s income tax regime is both simple to understand and relatively low in terms of rates. As of 2024, the first RSD 2,470,644 earned per year (approx. £18,000; $22,900; €21,000) is exempt, after which a rate of 10% applies. A higher rate of 15% applies to earnings over RSD 4,941,288 per year (approx. £36,000; $45,700; €42,100).

Corporation tax in Serbia is 15%, and there are no further corporate taxes at local or municipal level. The standard VAT rate is 20%.

There are three main types of social security contribution:

  • Pension and Disability: 10% employer, 14% employee
  • Health insurance: 5.15% employer, 5.15% employee
  • Unemployment insurance: 0.75% employee

Holidays and Leave

Paid leave entitlement in Serbia is 20 days per year, as long as an employee has at least one year’s service. Unused holiday days can be carried over into the first half of the following year. Serbia only has six public holidays a year that are designated as time off, although these are moved to the following weekday if they fall on weekends. 

Comparatively, maternity leave entitlement is exceptionally long in Serbia. It runs for a minimum of three months and can run for a full year, which can extend to two years for a third or subsequent child. It should begin between 28 and 45 days prior to the due date. The employer pays the first month of leave at full salary, and social security picks up the tab thereafter. At the time of writing, there are discussions about extending the maximum leave entitlement in Serbia to 15 months for a first child and 18 months for a second child.

Paternity leave is five days, paid in full by the employer, while non-birthing partners can assume some of the maternity leave entitlement from the mother in some specific circumstances.

Medically-certified sick leave is paid for up to 30 days a year, by employers at 65% of normal salary. Any sick leave beyond this is covered by social security. There are also leave entitlements for family bereavements (five days), getting married (five days), or donating blood (two days).

In Summary

Low taxes, low wages by European standards and an increasingly high-quality labor force make Serbia a great place to do business. However, like any country, there are some complexities and challenges to navigate along the way, which may require country-specific expertise. That’s why we strongly recommend you access the insights and expertise of a global payroll partner, who can keep your organization up-to-date and compliant.

This article is for informational purposes only and not intended to convey or constitute legal or any other advice. It is not a substitute for advice from a qualified professional.

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