Do guest workers have to pay taxes? An official explanation has arrived from the Ministry of Finance.

They do not have to pay contributions Guest workers who pay contributions to social security, including pensions, health and unemployment, are amnestied by the laws that regulate this area. “Citizens of Serbia employed abroad with a foreign employer are not insured for compulsory social insurance on the basis of income earned from that foreign employer. For people who are not insured under national regulations, there is no obligation to calculate or pay contributions for compulsory social security. Citizens employed by foreign employers abroad are not required to pay contributions, “according to the Ministry of Finance

Since employees temporarily working outside their home country are entitled to a tax credit, and Serbia also has numerous agreements to avoid double taxation, in practice few are in favor of Serbian finance.

The right to a tax credit based on the tax paid on the earnings you earned, in practice means that the tax in Serbia should be paid only by a worker employed in a country that taxes earnings at a lower rate than Serbia. Our regulations specify that the amount of this fee is 10 percent. This means that those where this rate is lower are obliged to pay part of the taxes in Serbia. The law also stipulates an upper limit, such a loan cannot be higher than the tax that would be paid on such earnings in Serbia. Guest workers working in all countries are entitled to a tax credit.

“Residents of the Republic of Serbia are subject to income tax based on the income they earn in Serbia and abroad, which is the solution applied in most modern countries,” explained the Ministry of Finance, Novosti reports.

Accordingly, they add that wages earned by residents of Serbia on the basis of working with foreign employers abroad are taxed in Serbia.

“Regardless of whether Serbia applies the agreement to avoid double taxation with the state in which the resident is employed by a foreign employer, the resident is entitled to a tax credit based on the tax paid on the earnings he earned, provided that said loan cannot be higher than the tax that would be paid for such earnings in the Republic of Serbia ”, they claim.

When it comes to double taxation agreements, there are two models. Those signed in recent years generally provide for a tax credit, a solution of our law, while some older ones guarantee an exemption.

“There are also agreements to avoid double taxation that provide for the application of the exemption method. According to these agreements, our residents are not obliged to pay income tax in Serbia on the basis of wages earned by foreign employers in countries with those who enter into such agreements, “they said. Ministry of Finance.