Guide
Tax incentives for new employees
Biro Vision checks whether you qualify for new-employee incentives, handles the filings through CROSO and the Tax Administration, and through precise payroll calculations makes sure you actually realize the refund of part of the taxes and contributions.
Hiring new workers is one of the biggest costs an employer faces, but the state encourages job creation through several measures. An employer who establishes an employment relationship with a newly hired person may qualify for a refund of part of the calculated payroll tax and mandatory social insurance contributions, and under certain other bases for an exemption from part of those obligations. The size of the reduction and how long the measure lasts depend on the specific basis, the profile of the employee, and the date the employment began, so it is important to check in advance which conditions apply to you. Keep in mind that some incentives are time-limited by regulation, so the deadline for using them can change. Correct and timely filing through CROSO and the Tax Administration is decisive, because the right is lost if the payroll calculation and tax return are not entered accurately.
What you should know
- The incentive is not automatic. The reduction in taxes and contributions is granted only if the employee and the employer meet the legally prescribed conditions and the filing is submitted correctly.
- The most common condition is that, before the employment began, the newly hired person was continuously registered as unemployed with the National Employment Service for at least six months, or at least three months in the case of an intern.
- The reduction is, as a rule, realized through a refund of part of the paid payroll tax and the related contributions, and the refund percentage depends on the number of new hires and the chosen incentive basis, with especially favorable conditions provided for micro and small legal entities and entrepreneurs.
- The measures are time-limited and tied to the date employment began, so the incentive lasts only for a defined period and ends if the employee leaves the company or the conditions are not met during the period of use.
- Some incentives are mutually exclusive, so you cannot use more than one basis for the same employee at the same time, nor combine an incentive with a subsidy for the same person. The one that brings the largest saving is chosen.
- The right is realized through the PPP-PD tax return, where the correct income type label and incentive code are entered for the employee. An error in the code means the incentive will not be recognized.
How we handle it
- 01 We analyze the employee profile We check the status of the newly hired person, the length of prior registration on the NSZ unemployment records, and the other conditions to determine which incentives you are entitled to.
- 02 We choose the most favorable basis We compare the available measures and select the incentive basis that brings the largest legally permitted saving for the specific employee.
- 03 We prepare the insurance registration We handle the unified registration for mandatory social insurance through the CROSO portal, no later than before the employee starts work, because missing this deadline can jeopardize the right to the incentive.
- 04 We calculate the salary with the incentive In the payroll calculation we apply the correct percentage of tax and contribution reduction, that is refund, and enter the proper income type label and incentive code in the PPP-PD tax return.
- 05 We track deadlines and the duration of the measure We keep records of how long each incentive lasts and notify you in time when conditions change or when the right to the reduction expires.
- 06 We keep documentation for inspections We prepare and store evidence that the conditions are met so that, in the event of a Tax Administration audit, you can confirm your right to the used incentives without difficulty.
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