Freelance and Copyright Contracts in Serbia
The Copyright Contract and the Service Contract in Serbia are governed by the Copyright and Related Rights Act (Official Gazette RS 104/09) and the Personal Income Tax Act (Official Gazette RS 24/01). Copyright royalties receive special tax treatment including a 34% notional expense deduction.
Copyright Contract – tax treatment
In Serbia, income from copyright contracts is taxed at a rate of 20% of the tax base. The tax base is calculated as income reduced by notional expenses of 34%. The effective tax rate is 13.2% (20% × 66% = 13.2%) of gross income. In addition to tax, pension insurance (PIO) contributions of 25.5% and health insurance of 10.3% are payable – but only if the author is not already insured under an employment relationship or other status.
Service Contract – differences and contributions
A Service Contract (for services not protected by copyright) has notional expenses of 20%, meaning the tax base is 80% of income and the tax is 20% = effectively 16%. The payer must calculate and remit tax and contributions at source upon payment. If the recipient is not in employment, the payer also accounts for PIO and health insurance contributions. A Copyright Contract (34% deduction) leaves the author with a higher net amount than a Service Contract (20% deduction).
Registration and special cases
Freelancers who regularly receive fees in Serbia can register as entrepreneurs (sole traders) with the APR (Business Registers Agency). This entitles them to lower lump-sum tax and contribution rates, and the right to VAT deductions. Foreign authors receiving fees from Serbian legal entities are subject to withholding tax – the rate is 20% or lower depending on the double taxation avoidance treaty between Serbia and the author's home country.
Frequently Asked Questions
What is the effective tax rate on a copyright fee in Serbia?
The nominal tax rate is 20%, but it is applied to 66% of income (after the 34% notional expense deduction). Effectively: 20% × 66% = 13.2% of gross income. In addition, PIO (25.5%) and health insurance (10.3%) contributions apply if the author is not otherwise insured.
What is the difference between a copyright contract and a service contract in Serbia?
A copyright contract (34% deduction) is for original works (software, writing, music, translation). A service contract (20% deduction) is for other services. The copyright contract is more tax-favourable due to the higher deduction.
Do I need to register with the APR if I regularly receive freelance fees in Serbia?
If this is your main activity, registering as an entrepreneur with the APR is recommended. Registered entrepreneurs can benefit from lump-sum taxation and are entitled to VAT deductions. Consulting a tax advisor is advisable.