In the Official Gazette of the Republic of Serbia no. 138/2022 of December 12, 2022, amendments to the Law on Contributions for Mandatory Social Insurance (“the Law”) were published. Below is a brief overview of the most significant changes.

Change in the contributions base for individuals who collect a contracted remuneration

It is prescribed that the contributions base for individuals who collect the contracted remuneration is the taxable income from this remuneration in accordance with the Law on Personal Income Tax.

Exceptionally:

• contributions base for mandatory pension and disability insurance for the quarter, for persons referred to in Article 57, paragraph 2 of the Law (who receive an agreed compensation from a person who, when paying that compensation, is not obliged to calculate and pay contributions), which in accordance with provisions of the Law on Personal Income Tax pay tax through self-taxation, on the taxable income, which is the gross income realized in the quarter minus the sum of standardized costs determined in RSD amount and 34% of the gross income realized in the quarter, is at least three times the amount of the lowest monthly contributions base (which is stipulated in Article 36 of the Law); whereas
• contributions base for mandatory health insurance for the quarter, for the aforementioned persons (from Article 57, paragraph 2 of the Law), who, in accordance with provisions of the Law on Personal Income Tax, pay tax through self-taxation, on the income generated in the quarter, is at least three times the amount of the base from Article 35b of the Law (which prescribes that the contributions base for compulsory health insurance of persons for whom funds for the payment of contributions are provided in the budget of the Republic of Serbia is the monthly contributions base, i.e., the amount of 15% of the average monthly salary in Serbia paid per employee in the previous year, according to data published by the Republic Statistical Office).

If the abovesaid contributions bases are lower than the taxable income, the contributions base is the taxable income.

Change in the rates at which contributions are calculated and paid

In addition to the above, certain rates at which contributions are calculated and paid have been changed, namely:

• for mandatory pension and disability insurance, which was reduced from 25% to 24%; and
• for mandatory pension and disability insurance, which is applied to the employer, i.e., the other payer of income to the persons referred to in Article 7, paragraph 1, items 1-5 of the Law (employees; elected and appointed persons who exercise the difference in earnings, i.e., salary; persons who perform temporary and occasional work under a contract concluded directly with the employer, i.e., through a cooperative, except for persons up to the age of 26 if they are on education; persons receiving salary compensation according to the Law on Financial Support for Families with Children; and persons receiving salary compensation according to the Law on Health Insurance), which was reduced from 11% to 10%.

Extended validity of benefits for newly employed persons

An employer – a legal entity, an entrepreneur, a flat rate tax entrepreneur or an agricultural entrepreneur, who hires a new employee, is entitled to a refund of part of the paid contributions for mandatory social insurance, both at the expense of the employee and at the expense of the employer, based on the salary for this newly employed person paid up and until December 31, 2023.

Also, an employer – a legal entity that, in terms of the law governing accounting matters, is classified into micro and small legal entities, as well as an entrepreneur, a flat rate tax entrepreneur or agricultural entrepreneur, who establishes an employment relationship with at least two new persons, is entitled to a refund of 75% of the paid contributions for mandatory social insurance, at the expense of the employee and at the expense of the employer, based on the salary for a newly employed person paid up and until December 31, 2023.

Entry into force and commencement of application

These amendments to the Law entered into force on the eighth day from the day of publication, i.e., On December 20, 2022, and will be applied from January 1, 2023.

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