How Taxes Work When You Move to Serbia: A Complete Guide for Expats and Business Owners

Relocating to Serbia has become increasingly popular among individuals, families, entrepreneurs, retirees, and digital nomads from countries such as Canada, the United States, the UK, Australia, and across Europe.

One of the biggest drivers behind this migration trend is taxation.

Prospective residents frequently ask:

• Where will I be taxed?

• How do I withdraw money from a Serbian company?

• What happens to my foreign income?

• Can Serbia reduce my global tax burden?

This guide provides a general overview of how taxation works in Serbia for foreign residents and business owners. Individual circumstances vary, so professional consultation is always recommended before implementing any tax strategy.

While lifestyle factors such as cost of living, safety, and freedom play a major role, taxation remains one of Serbia’s strongest advantages.

Common motivations include:

• Flat tax rates instead of progressive systems

• Lower corporate taxes

• No wealth tax

• No exit tax

• Lower cost of compliance

• Predictable financial planning

Many Western countries apply progressive tax brackets, meaning the more you earn, the higher percentage you pay. Serbia uses a flat-rate model, creating clarity and often significantly lower effective taxation.

Tax residency determines where your worldwide income is taxed.

In Serbia, you become a tax resident if you meet either of the following:

• Spend 183 days or more in Serbia within a 12-month period

• Establish your center of life (home, family, business activity)

This is why temporary residency holders are typically required to maintain physical presence in the country. The government wants residency status to reflect genuine ties — not just paperwork.

Once you are a Serbian tax resident:

• Your worldwide personal income becomes taxable in Serbia

• Income source location becomes less relevant

• Passport citizenship does not determine tax liability

If you are a Serbian tax resident, personal taxation applies regardless of where income originates.

This includes:

• Foreign company income

• Dividends

• Interest

• Pension payments

• Rental income

• Consulting income

However, taxation depends on income classification and treaty protections.

Double Tax Treaties

Serbia maintains numerous double taxation treaties. These agreements prevent individuals from being taxed twice on the same income.

For example:

• Pension income may be taxed only in the source country

• Investment income may receive preferential rates

• Some capital gains can be exempt

Each treaty is country-specific, requiring case-by-case analysis.

Serbia’s flat tax structure is one of its most attractive features.

Key personal tax elements include:

• Salary tax: 10% flat rate

• Dividend tax: 15%

• Corporate tax: 15%

• Bonus withdrawals: ~10%

• No wealth tax

• No exit tax

Compared to Canada, the UK, or Australia — where combined personal tax rates can exceed 40–50% — Serbia offers a far lighter burden.

The most common legal entity for foreign entrepreneurs is a DOO (Društvo sa Ograničenom Odgovornošću) — Serbia’s equivalent of an LLC.

Corporate Tax Rate

• 15% on net profits

This flat corporate rate is among the most competitive in Europe.

VAT / PDV Considerations

Companies must monitor revenue thresholds.

Once a business exceeds the VAT registration threshold, it must charge:

• 20% PDV (VAT) on applicable goods/services

Strategic structuring can manage VAT exposure, depending on:

• Ownership structure

• Revenue distribution

• International invoicing models

There are four primary ways to extract funds from a Serbian company.

1) Salary

A salary provides:

• Proof of income

• Immigration substance

• Loan eligibility

• Banking credibility

However, it carries social contributions.

Social Contributions

Employer + employee contributions total roughly 46% on top of net salary.

These contributions fund:

• Healthcare

• Pension system

• Social insurance

While this may sound high, it is still often lower than Western equivalents.

Dividends are one of the most tax-efficient withdrawal methods.

• Taxed at 15%

• No social contributions

• Paid from net profits

Many high earners prefer dividends over salary for large withdrawals.

Legitimate company expenses reduce taxable profit.

Examples include:

• Office rent

• Internet

• Equipment

• Cameras, laptops

• Software

• Utilities

• Coffee, supplies, furnishings

If used primarily for business, these costs lower corporate tax exposure.

Proper bookkeeping documentation is essential for compliance.

Serbian companies may issue bonuses up to twice per year.

Characteristics:

• Lump-sum payments

• Taxed ~10%

• No recurring payroll burden

Some owners structure personal income around two annual bonuses to fund living expenses.

For individuals earning €150,000 to seven figures annually, advanced structuring becomes critical.

Common frameworks include:

• Serbian operating company

• Foreign holding company

• International invoicing structures

• Dividend routing strategies

In some cases, entrepreneurs maintain:

• A Serbian company for employment and operations

• A foreign entity for invoicing or IP ownership

This allows global tax optimization while maintaining Serbian residency.

Compliance, treaty alignment, and substance rules must always be respected.

U.S. citizens are taxed on worldwide income regardless of residence.

However, relief mechanisms exist.

Foreign Earned Income Exclusion (FEIE)

U.S. citizens living abroad may exclude foreign income up to a set threshold (approximately $120K–$135K+ depending on tax year).

If structured properly:

• Income below the threshold may avoid U.S. taxation

• Serbian taxes may still apply

• Double taxation can be mitigated via treaties and credits

Given regulatory complexity, U.S. clients require specialized planning.

Most foreign residents fall into one or more categories:

• Pension recipients

• Dividend investors

• Remote business owners

• Digital consultants

• Mixed income earners

Each requires a tailored tax structure to balance:

• Compliance

• Efficiency

• Residency requirements

A critical distinction:

Serbia is not a zero-tax jurisdiction.

Tax optimization only works when:

• Serbia is your genuine residence

• You spend sufficient time in country

• Your structure reflects real substance

Opening a company alone does not shift personal taxation if you live elsewhere.

Residency drives personal tax liability.

To recap, Serbia offers:

• Flat personal income tax

• 15% corporate tax

• No wealth tax

• No exit tax

• Treaty protections

• Flexible withdrawal methods

• Lower compliance costs

For many expats, this creates a simpler, more predictable financial environment compared to progressive Western systems.

Serbia offers one of the most attractive tax environments in Europe for expats, entrepreneurs, and investors — but only when structured correctly.

Residency, income type, corporate setup, and treaty alignment all influence your effective tax rate.

There is no one-size-fits-all approach.

If you’re planning to move to Serbia and want a clear, compliant tax strategy tailored to your situation, the next step is a professional consultation.

A structured review of your residency plans, income streams, and corporate framework ensures you optimize taxes legally while building a sustainable life in Serbia.

Your Move, Our Mission.