The Law on Personal Income Tax: Adoption of new changes

Exemption from salary tax for securities, stock options and shares of the employer or employer’s related entity received by employee

On December 7, 2018 Serbian National Assembly adopted the Law on Amendments to the Law on Personal Income Tax (hereinafter: The Law on Amendments), which came into force on December 16, 2018 and introduced many changes in Serbian legal system. Here you can find the most important ones.

One of the important changes introduced by the Law on Amendments concerns exemption from salary tax for securities, stock options and shares of the employer or employer’s related entity received by employee free of charge or at a discounted price from the employer and employer’s related entity. According to the adopted amendments, these securities, stock options and shares will be exempted from salary tax if conditions set down in the Law are met. However, they will not be exempted in the following situations:

1. if employee alienates such securities before the expiration of 2 years from the moment he or she acquires full ownership rights,
2. if employer or employer’s related entity redeems such securities, or
3. if employment terminates before the expiration of 2 years from the moment of the employee acquires full ownership rights.

Salary tax relief in cases of recreational and team building activities of employees

Next important change was introduced with an aim to increase employees’ motivation. In that sense, the Law on Amendments introduced an exemption from salary tax in cases of recreational and team building activities of employees.

Tax income and tax rate for accommodation services provided by natural persons in home craft facilities

Additionally, focusing on the suppression of the grey economy in the field of providing accommodation services by natural persons in the home craft facilities or the facility of a rural tourist household, the Law on Amendments introduced novelties regulating tax treatment of the income realized by natural persons in such situation by defining taxable income and tax rate.

Tax relief from salary tax for the founder of the newly established legal entity, a newly registered entrepreneur and entrepreneur farmer

Next important change introduced by the Law on Amendments prescribes that founder of the newly established legal entity, a newly registered entrepreneur and entrepreneur farmer, has a right to a tax relief from salary tax for a period of 12 months from the moment of establishment or registration, and for an amount of monthly net salary up to 37,000 dinars, if conditions set down in the Law are met.

Additional important amendments (transfer of shares or securities by shareholder, child birth solidarity aid, write-off of a part of the bank’s claim against the debtor) In the end, some of the additional amendments concern the removal of a tax relief that was available in situations where a shareholder transfers shares or securities or a part of the shares or securities held in the company and based on that transfer the company acquires its own shares or securities, introduction of tax relief for solidarity aid in case of birth of a child and introduction of tax relief on other income in the event of the write-off of a part of the bank’s claims against the debtor on the basis of a loan, when, in accordance with mutual out-of-court settlement, the debtor pays a part of the claim that the bank holds towards him and the bank writes off the remainder of the debt.