Engagement of foreigners as legal representatives in companies in Serbia: Social security contribution obligations

The engagement of foreigners as legal representatives in companies in Serbia introduces specific obligations regarding the payment of social security contributions. The obligation to pay contributions for pension and disability insurance, as well as health insurance, depends on several factors. These include the director’s citizenship, the place of their insurance, and the existence of an international social security agreement.

When a foreigner is engaged as a director in a Serbian company and is insured based on an employment relationship in a foreign country, there is a possibility of exemption from the obligation to pay contributions in Serbia. It is required that there is a social security agreement between Serbia and the country where the foreigner is insured. Additionally, the director must be insured abroad and registered for mandatory pension and disability insurance with the relevant social security body in their home country. In this case, there is no obligation to pay contributions in Serbia, as these contributions have already been paid in the foreign country where the foreigner originates from.

However, if the foreign director is a pensioner from another country, the obligation to pay contributions in Serbia is not exempt. It is not exempt regardless of the existence of a social security agreement. The Serbian company must pay contributions for pension and disability insurance at a rate of 26%, as well as for health insurance at a rate of 10.3%. It is also important for the director to check the legislation of their home country. In some cases, re-investment in insurance may affect the suspension of the foreign pension during the period of insurance in Serbia.

If the director is engaged based on a compensation agreement in a foreign country, the entrepreneur in Serbia is obligated to pay contributions for pension and disability insurance and health insurance. The taxable income is used as the basis for these contributions. This obligation applies even when there is no social security agreement between Serbia and the other country.

When a foreigner performs the duties of a director as an entrepreneur or a self-employed worker, they must adhere to legal obligations in Serbia and pay contributions based on the agreed compensation. This also applies to entrepreneurs who perform director functions in companies but have not established an employment relationship.

The obligation to pay contributions for foreign directors in Serbia depends on specific circumstances. These include the type of social security agreement with the home country, the type of insurance, and the director’s status. Domestic companies and foreign directors must be aware of all legal regulations to avoid disputes and potential sanctions due to incorrect payment of contributions.

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