5 tax deductions business owners often forget

Serbia’s tax system offers various reliefs and incentives to support entrepreneurs and growing companies — but in practice, many business owners fail to take advantage of them due to lack of information or proper guidance. Here’s a quick overview of 5 tax incentives that are frequently overlooked — and which could significantly reduce your tax burden.

1. Tax relief for hiring new employees

If you hire someone who was previously unemployed or belongs to a targeted category (e.g. individuals under 30 or over 50, long-term unemployed), you may qualify for partial reimbursement of paid taxes and social contributions.

📌 Example: If you hire someone registered with the National Employment Service for more than 6 months, you may get a refund of 65–75% of the taxes and contributions you paid over the first 12 months.

2. Incentives for returnes and foreign experts (“Newly settled taxpayers”)

Since 2020, Serbia has offered a major incentive for individuals relocating from abroad to work here — a 70% reduction of the tax base for personal income tax and social contributions, valid for up to 5 years.

📌 Important: To qualify, the individual must not have lived in Serbia for more than 180 days during the previous two years.

3. Corporate income tax relief for reinvested profit

If a company (such as an LLC) chooses to reinvest its profit instead of distributing it as dividends, it may reduce its corporate income tax base by the amount reinvested (e.g. in equipment, software, or R&D).

📌 Note: The reduction cannot exceed the actual profit and must be properly documented.

4. Tax relief for R&D expenses

Expenses related to research, development, or innovation (e.g. software development) can qualify for additional tax deductions of up to 100%, if properly recorded and reported.

📌 Tip: This is especially relevant for IT companies and startups and is part of Serbia’s broader innovation support system.

5. Flat-rate taxation for sole proprietors

While not a classical incentive, Serbia’s flat-rate taxation regime allows certain sole proprietors to pay fixed monthly tax amounts regardless of revenue. For many freelancers, consultants, designers, and IT professionals, this can result in significant savings.

📌 Note: Only businesses under certain revenue limits and not performing excluded activities are eligible for this regime.

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