Incentives for Employment of New Residents in Serbia

Incentives for Employment of New Residents in Serbia

October 19, 2022

On 18 June 2022, the Regulation on Criteria for Awarding Incentives to Employers who Employ New Residents in the Republic of Serbia, published in the Off. Gazette of RS no. 67/2022 (“the Regulation”), entered into force.

Content of the Regulation

According to its title, the Regulation prescribes the criteria for awarding incentives to employers who employ new residents in the Republic of Serbia for whom there is a need that cannot be easily fulfilled in domestic labour market.

By virtue of the Regulation, the employer is a domestic or foreign natural person or legal entity, or an entrepreneur registered for performing its business activity in the Republic of Serbia, as well as a branch or a representative office of a foreign employer registered in the Republic of Serbia, while the new resident for whom there is a need that cannot be easily fulfilled in domestic labour market is a natural person who has not, in a period of 24 months prior to the conclusion of the employment agreement with the employer, stayed in the territory of the Republic of Serbia for more than 180 days and with whom the employer concluded a full-time employment agreement for an indefinite period of time, for a base monthly salary amounting to at least RSD 300.000,00.

Conditions for awarding incentives

The right to incentives shall be enjoyed by the employer whose number of full-time employees engaged for indefinite time on the day of applying for incentives is equal or larger than the number of full-time employees engaged for indefinite time on the day of entry into force of this Regulation, increased by the number of employed new residents encompassed by the application. The right to incentives shall be enjoyed by the employer at most for a number of new residents employed which, along with the number of full-time employees engaged for indefinite time which cannot be considered the employed new residents on the day of filing the application, is higher than the number of full-time employees engaged for indefinite time on the day of entry into force of this Regulation.

The right to incentives for new resident employed shall be exercised if the new resident is continuously employed with the employer in the period between the day of filing the application and 31 December of in which the application was filed, whereby the right to incentives shall only be exercised for new residents employed by the employer up and until 31 December 2023.

The Regulation prescribes the special requirements regarding the employers that are registered for performing their business activity in the Republic of Serbia following the entry into force of the Regulation, as well as with respect to the applications filed starting from 2024.

The right to incentives shall not be granted to employers who:

  • in the period as of submission of the initial application and up and until the end of the calendar year when the final incentives payment is received, pay dividend or acquired profit, except for the dividend or profit paid from the part of the profit that exceeds the amount received as the incentive;
  • is a state aid beneficiary in relation to which it is obliged to employ, except for subjects who already fulfilled such obligation until 1 July 2022; and
  • for the employed new resident with respect to whom it exercises the incentives under the Regulation uses or has used the right to reduce the base in accordance with Article 15v of the Law on Personal Income Tax and Article 15a of the Law on Contributions for Mandatory Social Insurance.

Incentives

The incentives are paid in the amount of 70% of calculated and paid income tax for one or several employed new residents, in terms of the regulation on personal income tax, and 100% of calculated and paid contributions for mandatory pension and disability insurance, in terms of the regulations on mandatory social insurance, for the payments made with respect to the employed new resident in the period of maximum 60 months, starting from 1 July 2022 until 31 December 2028.

Application

Employer shall once a year apply to the Ministry of Economy, i.e., up to eight times at most, in the period from 15 September and 30 September for payment of the incentives referring to the salaries of new residents paid from 1 July 2022 to 31 December 2028, inclusive, whereby each application shall be filed for the salaries paid in the period prior to the application of not more than 12 months. The application shall be filed on a form printed along with the Regulation, which represents an integral part thereof.

Provision of temporary protection to persons displaced from Ukraine

In the context of current situation and in accordance with the Decision on Provision of Temporary Protection in the Republic of Serbia for Displaced Persons from Ukraine (Off. Gazette of RS no. 36/2022), which was enacted by the Government of the Republic of Serbia and which has been in force since 19 March 2022 (and shall be valid until 19 March 2023) (“the Decision”), temporary protection in the Republic of Serbia shall be granted to displaced persons from Ukraine, i.e., to the persons who were forced to leave Ukraine as their country of origin or habitual residence or were evacuated in Ukraine and may not return to permanent and safe living conditions due to the current situation in that country.

Displaced persons, in terms of the Decision, shall mean:

  • citizens of Ukraine and members of their families who stayed in Ukraine;
  • asylum-seekers, persons without citizenship and foreign citizens, who were granted asylum in Ukraine or equivalent national protection and members of their families who were granted residence in Ukraine;
  • foreign citizens who had been granted permanent or temporary residence in Ukraine and who cannot return to their country of origin under permanent and long-lasting circumstances.

Temporary protection is also granted to citizens of Ukraine and their family members who legally stayed in the Republic of Serbia at the time of adoption of the Decision, but whose right to stay expired before the cancellation of the decision on temporary protection, while the family members shall be deemed persons considered as family members under the Law on Asylum and Temporary Protection.

The Decision further stipulates that the Ministry of Interior shall, under the provisions of the Law on Asylum and Temporary Protection, register the persons granted temporary protection and for each person individually it shall pass a decision granting temporary protection, while the persons granted temporary protection shall have the access to all rights under Article 76 of the Law on Asylum and Temporary Protection, the enforcement whereof shall be ensured by the relevant authorities under the law. The person granted temporary protection shall be entitled to:

  • stay in the period of validity of temporary protection;
  • document proving their status and right to stay;
  • health protection, under the regulations on health protection of foreign citizens;
  • access to the labour market during the validity of temporary protection, in accordance with the regulations on employment of foreign citizens;
  • free elementary and secondary education in public schools, in accordance with special regulations;
  • legal aid under the terms prescribed for asylum-seekers;
  • freedom of religion under the same terms as the citizens of the Republic of Serbia;
  • collective accommodation in facilities designated for such purposes;
  • relevant accommodation in cases of persons that require special acceptance guarantees in accordance with Article 17 of this law; and
  • right to claim asylum.

As indicated above, temporary protection shall last one year after the day of entry into force of the Decision.

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