Guide
Entrepreneur's personal salary: when it pays off and how it is calculated
A personal salary pays off most when profit is high and steady, because you pay contributions only on the salary you set, while the remaining profit is taxed at 10%.
A personal salary pays off when profit is high and regular, because the 35.05% contributions are then charged only on the salary you set, not on your whole profit. On small or irregular profit it usually does not, because contributions on the minimum base fall due even in months with no payout. Below we compare the three regimes, flat-rate tax, self-taxation and a personal salary, work through two examples with 2026 figures, and set out the deadlines, the monthly duties and what changes in your bookkeeping. You can check the numbers for your own salary right away in the salary calculator.
What you should know
- A personal salary is only for entrepreneurs who keep business books, not for flat-rate traders. It is a monthly wage you pay yourself, booked as a business expense.
- The key difference is contributions. Without a personal salary you pay 35.05% in contributions on your whole taxable profit; with one, only on the salary you take, and the profit above it is taxed at just 10%. That is why a personal salary saves most when profit is high and steady. On top of that, under self-taxation money withdrawn from the business is not a deductible cost, while a paid personal salary is a business expense.
- Example 1, what the lowest personal salary costs. If you set the salary at the minimum base of 51,297 dinars, the tax is 10% of the difference between 51,297 and 34,221, that is 10% of 17,076, or 1,708 dinars, and contributions are 35.05% of 51,297, or 17,980 dinars. The state takes 19,688 dinars a month, about 39,381 dinars reaches your pocket (51,297 less 1,708 of tax less 10,208 of employee contributions at 19.9%), and the total cost is about 59,069 dinars (the gross plus 7,772 dinars of employer contributions at 15.15%).
- Example 2, how much you save on a higher profit. Take a profit of 300,000 dinars a month, simplified, with no other costs. Under self-taxation you pay 35.05% in contributions and 10% in tax on the whole profit, so 45.05% of 300,000, or 135,150 dinars. With a personal salary on the minimum base you pay 19,688 dinars on the salary, plus 10% tax on the remaining 248,703 dinars of profit, or 24,870 dinars, so 44,558 dinars in total. The gap is about 90,600 dinars a month in favour of the personal salary. Assumptions behind the sum: only the gross personal salary is treated as an expense, and contributions stay under the maximum base.
- There is no point setting the salary below the minimum base. You owe contributions on at least 51,297 dinars anyway, so a lower salary does not cut your contributions, only your net pay. In practice most people settle on an amount around the minimum base.
- The main downside: you pay contributions on the minimum base, about 17,980 dinars, every month, even when you pay no salary or have no income, which matters for seasonal work.
- Your money is not locked in. On top of the salary you can freely withdraw the firm's profit to your account with no extra tax at the moment of withdrawal, and a documented monthly salary also helps with loans, a mortgage or a visa. The election is filed by 15 December, effective from the following year.
- A personal salary comes with full bookkeeping: business books, a monthly payroll calculation and a PPP-PD return before every payment. So count the accountant's fee into the sum too, as our package for entrepreneurs who keep books starts at 18,500 dinars a month.
- No single model is best for everyone. The right choice depends on how high and how regular your income is, on your deductible costs and on your personal circumstances, for example whether you are already insured on another basis or plan to take a loan. Work out both options before the deadline, or leave bookkeeping for entrepreneurs to us and we will do it for you.
| Item | Flat-rate tax | Self-taxation | Personal salary |
|---|---|---|---|
| Base | Flat-rate income set in the Tax Administration's decision | The actual profit earned | The salary you set, plus the remaining profit |
| Tax | 10% on the flat-rate base | 10% on the whole taxable profit | 10% on the salary above 34,221 RSD and 10% on the remaining profit |
| Contributions | 35.05% on the flat-rate base | 35.05% on the whole taxable profit (up to the max base) | 35.05% on the salary only, on at least 51,297 and at most 732,820 RSD |
| Bookkeeping duties | The KPO book | Business books, single or double-entry | Business books plus a monthly payroll calculation |
| Returns and deadlines | A monthly payment under the decision, as a rule by the 15th | An annual tax return and monthly tax advances by the 15th, with no PPP-PD | PPP-PD before every payment, plus the annual calculation |
| When it is available | Turnover up to 6,000,000 RSD a year and an eligible activity | The default regime for an entrepreneur on books | An entrepreneur on books who files the election by 15 December |
| Who it suits | Smaller income with few costs, while you stay under the limit | Smaller or irregular profit, when the minimum base would be a burden | Higher, steady profit, when contributions on the whole profit turn expensive |
How we handle it
- 01 Analysis and cost-benefit check We compare your expected profit, costs and take-home income in both scenarios, with and without a personal salary, to determine which option is more favorable for you.
- 02 Filing the election If the personal salary pays off, we prepare and electronically file the election notice with the Tax Administration, mindful of the 15 December deadline, with effect from the following year.
- 03 Setting the salary amount Together we set the monthly personal salary amount, checking the non-taxable portion and the prescribed minimum and maximum contribution bases.
- 04 Monthly calculation and PPP-PD Each month we calculate the tax and contributions on the personal salary, prepare and electronically submit the PPP-PD return before payment, and obtain the filing identification number.
- 05 Orders and deadlines We prepare the payment orders for the personal salary, tax and contributions and track the deadlines, so obligations are settled no later than the payment date.
- 06 Bookkeeping and annual review We book the personal salary as an expense, reconcile it with the annual tax on income from self-employment, and recommend changing your election in good time when it becomes more favorable.
Frequently asked questions
Personal salary or just tax on my whole profit, which costs less?
It depends on your profit. Without a personal salary you pay 35.05% in contributions plus 10% tax on your entire profit, so 45.05%. With a personal salary you pay contributions only on the salary you set (at least the minimum base), and just 10% tax on the profit above it. So the higher and steadier your profit, the more a personal salary saves you. If your profit is small (roughly 30,000 RSD a month or less), it usually is not worth it.
How much will a personal salary cost me each month in 2026?
On the salary you pay 10% income tax on the part above the non-taxable 34,221 RSD, plus contributions of 35.05% (PIO 24%, health 10.3%, unemployment 0.75%). Contributions are calculated on at least the minimum base of 51,297 RSD and at most 732,820 RSD. On the minimum base that is 1,708 RSD of tax (10% of the difference between 51,297 and 34,221) and 17,980 RSD of contributions, so 19,688 RSD a month, even if you pay yourself less. If you are already insured elsewhere, only the 24% PIO applies. You can check your own figure in the salary calculator.
When does a personal salary not pay off?
When profit is small or irregular. Contributions on the minimum base are a fixed 17,980 dinars a month, plus 1,708 dinars of tax, and they run even in a month with no payout. On a profit of around 30,000 dinars a month those 19,688 dinars swallow almost two thirds of it, so self-taxation is usually cheaper. The same goes for seasonal work, where several months with no turnover still carry the full monthly obligation.
By when do I have to decide, and can I change it later?
You notify the Tax Administration through the ePorezi portal by 15 December, and it applies from 1 January of the next year. New entrepreneurs can choose at registration. Once you opt in it stays in force until you file a notice to stop, also by 15 December for the following year. You cannot switch back and forth during the year.
What changes in the bookkeeping, and what are the annual obligations?
You can only pay a personal salary if you keep business books, single or double-entry bookkeeping. Each month a PPP-PD return is filed before the payment, and the salary paid is booked as a business expense. At the end of the year it is all reconciled through the annual calculation of tax on income from self-employment. The election holds for the whole year, so your monthly calculation and records do not change mid-year.
If I set a low salary, can I still take money out of the business?
Yes. Beyond the salary you can withdraw the firm's profit (from the current or earlier years) to your personal account, and that profit withdrawal is not taxed again at the moment you take it. So a low salary keeps your contributions low without locking your money inside the business.
Can a flat-rate (paušal) entrepreneur pay a personal salary?
No. Personal salary is only for entrepreneurs who keep business books (single or double-entry). A flat-rate trader pays a fixed monthly amount set by the Tax Administration and does not use this option. To use a personal salary you first have to be on the book-keeping regime, which we cover in the guide on switching from flat-rate to books. If you are checking whether you still qualify for flat-rate, use the flat-rate calculator.
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