How is salary calculated in Serbia?
Salary calculation is a seemingly complex process consisting of several standardized steps. Although the exact rates differ, the sequence of operations is almost identical.
Basic calculation steps
1. Determining the Gross base
Everything starts with your agreed Gross salary. This is the amount from the employment contract, which can be increased by allowances such as overtime work, work on holidays, or meal and holiday allowances.
2. Deduction of contributions "from salary"
The first step is deducting contributions borne by the worker. These are contributions for pension (PIO), health, and unemployment.
Income = Gross - Contributions (worker's share)
3. Application of personal deduction (Tax-free part)
Not all of your income is taxed. The state guarantees a monthly tax-free minimum. In Serbia, this is a fixed base that is regularly adjusted every year.
Tax base = Income - Tax-free amount
4. Tax calculation
The tax rate (currently 10% in the Republic of Serbia) is applied to the calculated Tax base. The Tax Administration prescribes exact procedures for the collection of this tax.
5. Final Net
Your final salary is calculated by the last operation:
Net salary = Income - Income tax
Who performs this calculation?
For employees, this process is legally performed by the employer during each payment. The employer pays contributions and taxes in your name and pays the remaining Net amount to your account.