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Why would a freelancer who works for a salary of 800 euros with an employer abroad be exempt from taxes, and I, as an employer who employs two or three people and pay the same number of workers, would have to pay taxes? – asks Marko Mudrinic, founder and director of the site “Netokracija”. Business-technological medium that deals with the digital economy and the first workers on the Internet.
– It is high time that people, who normally work on the Internet, that is, workers of the digital economy, understand that not only can they sit in Serbia and work for some foreign companies, but that they are Serbian taxpayers and have to pay taxes here. In most cases, self-employed tax and contribution workers must contribute about 44 percent of their earnings. It is a high tax, and if they have to pay during the last five years, most of them will probably leave that way of working because they will understand that it does not compensate them, thinks Mudrinić.
When asked if they would do better if they registered business entities, he said that he did not advocate that freelancers should open companies, but explained that if they register a company in 2020, in the first three years they have a reduction of taxes and contributions by 70 percent, then 65 and back at 60 percent. Your obligation in that case is to pay income tax.
– Throughout the world, the situation of self-employed workers is a little better regulated than in our country, because today the labor market and the digital economy offer more business models and commitment than 30 years ago when it was only possible to work for one employer in Serbia. Labor legislation will not change on its own if we do not have a citizens’ association in charge of it. I blame the self-employed for the fact that most of them relax when it comes to the fact that it is the citizens of Serbia who have a first and a few obligations here, says our interlocutor.
It emphasizes that the Tax Administration has only recently had an advisory role. So far it has only been in the controller. But all those who work on the Internet should have been informed by a tax or accounting consultant about what is derived from the tax if they operate in accordance with that modality.
Mudrinić emphasizes that the self-employed status must be resolved and that their work must be introduced into legal channels where they would have different tax rates, so that someone who earns 200 euros a month will be exempt from tax. Then that some higher amounts are taxed with the second, and even more with the third rate. It is a progressive taxation. This requires a change in a whole range of laws.
An estimated 100,000 people in Serbia earn money this way. There is no precise number, because there is no association that brings them together and fights for their rights.
– Some earned more than 2,500 euros a month, without paying tax dinars. That really is not cool. If they worked and founded a company in the meantime, it is certainly an indicator that they want to introduce their business into the legal flows, and that is, in the end, the objective of the Tax Administration. But if they continue to do so, they are in a serious crime. Technically speaking, someone who sells contraband products on the market and someone who sits at home and works on the Internet for the state and the Tax Administration have the same status and operate in the gray zone, says Mudrinić.
George Pap, a tax expert, claims that progressive taxation is a story for the future and is a matter of a country’s tax policy. We did not have progressive rates except for the annual tax on citizens’ income.
– It may make sense to introduce proportional rates, but now is not the time to say that another type of tax policy should be provided when the State demands that taxes be paid for something that has happened in the last five years. Yes, it may be necessary to introduce progressive rates, but that does not exempt them from the application of the existing regulation. There are also good suggestions from people who have found themselves in some kind of trouble. One of the acceptable proposals is not to pay taxes on the minimum amount of 100 to 200 euros, which is a good idea. But it is a story for the future. And now we cannot talk about when there is income and a regulation that regulates what must be paid on that income, explains Pap.
Asked how it is now, our interlocutor replied that there are two articles in the Personal Income Tax Law that regulate this matter.
– One is a tax on copyright and the other is a tax on other income. Both are taxed in the same way in the sense that the foreign income earner is obliged to declare and calculate the tax himself. The rates are the same, but the deduction is different. The state recognizes a lump sum deduction that ranges from 20 to 50 percent. If someone earns a thousand euros of income and if they have obtained them from some type of copyright, for example for a sculptural work, the deduction will be 50 percent, and if it is made by creating a database that is also you may consider income similar to copyright. That deduction is 34 percent, and if it’s earned under an employment contract, then the deduction is 20 percent, he says.
– Another thing that depends on whether you will pay lower or higher taxes is whether you are employed when you earn income. If so, it doesn’t pay for health insurance, and if it doesn’t, it pays too. Add sum, if you look at the net income, then that tax is 30 to a maximum of 80 percent (if you received it from abroad under an employment contract and you are unemployed), adds Pap.
Asked if the registration of economic entities is an alternative for the self-employed, he said that they can register different types of economic entities and legalize their activity.
– They do it as natural persons and the tax policy is like that, and when they register an activity, then depending on the type of activity they pay other taxes as a company. The question is why many did not register companies but generated income in this way. The state probably didn’t control them much and that was a bit tricky. The state simply saw that a lot of money is made that way and wants to include it in taxes, says Pap.
Regulate the situation of the self-employed by law
The Association for the Protection of Constitutionality and Legality announced yesterday that after the announcement of the tax collection of the self-employed, which means that some will be deprived of up to 80 percent of income, they will ask for their status to be legally regulated , to then determine a tax model that enables and stimulates entrepreneurs in this sector.
– Nobody believes that you should not pay taxes. But the tax must be realistically justified. It is very important that we recognize the specifics of this community and understand that these are jobs and money that can easily come out of Serbia, and with them probably the people who take care of these jobs, the statement said.
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