In order to attract highly qualified professionals, especially in the field of IT and innovative technologies, different regulations have been adopted in Serbia that facilitate employment and introduce employment subsidies, some of which apply only to foreigners while others apply also to Serbian citizens. For the same reason, additional grounds for approval of temporary residence for certain categories of foreigners have been introduced. In the following lines, we provide a detailed review of these incentives and the criteria on the basis of which they can be realized.
New Incentives for the Employment of Foreigners in Serbia
In accordance with the Regulation on the criteria for granting incentives to entities employing newly-settled persons in Serbia, incentives are provided for employment of foreigners or Serbian citizens who have not lived in Serbia for more than 180 days in the two years preceding the conclusion of the employment contract, as well as those profiles which cannot be found on the domestic labor market.
In accordance with this regulation, incentives can be approved for persons who are employed for an indefinite period and whose salary is not less than RSD 300,000 net (about EUR 2,500). The incentives include employer's right to a refund of 70% of the calculated and paid employee income tax, as well as a refund of 100% of mandatory social security contributions (in other words, only 30% of the income tax is paid).
The condition for using these incentives, which are valid until 2028, is that the employer is not using other incentives, including those prescribed by the Law on personal income tax and the Law on mandatory social security contributions (which will be discussed in more detail in the next paragraph), that the employer did not reduce the number of employees before and during the use of the incentive and that no dividend is paid from the funds refunded to the employer.
Incentives for Employment Based on the Law on Personal Income Tax
The Law on personal income tax and the Law on contributions for mandatory social insurance provide different incentives for newly settled persons (foreigners and domestic citizens). In accordance with the aforementioned laws, incentives can be granted for those newly settled persons who have not predominantly resided in Serbia for two years prior to the conclusion of the employment contract and whose salary is greater than RSD 264,684 net (about EUR 2,250) or persons who are younger than 40 years and who mostly resided outside of Serbia during the period of one year before the conclusion of the employment contract, for the purpose of further education and professional development and whose salary is greater than RSD 176,456 net (about EUR 1,500).
These incentives can be realized for a period of 5 years from the day of employment, and they are realized in such a way that the base for calculating taxes and mandatory social contributions is reduced by 70%.
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Special Conditions for Obtaining Residency in Serbia
Apart from the general conditions for the approval of temporary residence for foreigners in Serbia, which are mostly similar to those in other countries (employment, foundation of company, family reunification, asylum seekers, etc.), the Regulation on criteria for determining the categories of foreigners for whom temporary residence in Serbia can be granted independently of the general criteria for granting temporary residence, prescribes additional grounds for obtaining temporary residence in Serbia for certain categories of foreigners. Namely, temporary residence may also be approved to the following persons:
- A foreigner who founded an innovative startup in Serbia that is recognized as such by one of the science and technology parks in Serbia (for which it is necessary to obtain a certificate issued by the science and technology park);
- A foreigner who makes an investment in an existing company in the Republic of Serbia, for which a certificate or a statement from a bank registered in Serbia is submitted as proof of the possession of funds in the amount of at least EUR 50,000 intended for that investment;
- A foreigner who is considered as talent - has a certificate of higher education recognized by the competent authority in Serbia;
- A foreigner with Serbian origin (a person whose ancestor is/was a Serbian citizen or a citizen of countries which are legal predecessors of Serbia or a person who nationally identify as Serbs) for which a birth certificate, other public document or a baptism certificate of the Serbian Orthodox Church is submitted as proof.
Temporary residence for the previously mentioned special categories of foreigners can be granted for a period from 6 months up to one year, and it can be extended for an additional year after meeting additional criteria such as proof of employment, proof of payment of a financial deposit, proof of business income, and other documentation.
DNVG Attorneys is a full-service law firm based in Belgrade. We provide complete assistance and guidance in immigration procedures and all accompanying matters for clients looking to set-up a business in Serbia (or relocate an existing one), as well as to all other individuals.
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