Difference between Gross 1 and Gross 2
Both terms sound similar, and both amounts differ significantly from your Net salary, but the difference between them is crucial for the functioning of the tax and pension-health system.
Gross 1 (Your Salary)
The amount from which all deductions belonging to the worker (such as pension contributions) are calculated.
- Written in the employment contract
- Pension contributions are paid from it
- State taxes are paid from it
- After these deductions, the Net salary remains
Gross 2 (Employer Cost)
The amount that includes Gross 1 salary plus levies that directly burden the employer.
- Not necessarily written in the contract
- Includes Gross 1 + Contributions "ON" the salary
- Includes health insurance and part of PIO at the employer's expense
- Represents the actual money the employer allocates from the company's account
Simple difference formula
The easiest way to remember it:
GROSS 2 = GROSS 1 + Employer contributions
Note on insurance: In Serbia, contributions for PIO and health are shared – one part you pay from your Gross 1 amount, while the other part the employer pays on top of that same Gross 1, forming the total cost known as Gross 2.