Working for a foreign company from homeland
A common situation in the IT and consulting world: You live in Serbia, but you are hired by a foreign company that has no office in your country. How to legally receive salary and pay contributions?
1. Wrong model: Direct net payment to a private account
An "under the table" arrangement where a foreign firm sends only the net amount to your private account is a serious tax violation. Such payments are not visible to the contribution system and require immediate self-reporting and tax calculation.
2. Correct model 1: Employer of Record (EoR)
A foreign company hires an agency (like Deel, Remote.com) registered in Serbia. You become an employee of that agency, and your salary is calculated according to all local laws with all contributions and taxes paid.
3. Correct model 2: Self-taxation
The law allows you to take over the obligation of calculating and paying contributions yourself. You sign a contract with the foreign firm, then report the income to the Tax Administration and pay the contributions yourself.
Signing a contract that defines your obligation to pay contributions independently.
The foreign firm pays the full amount (Gross 2) to your foreign currency account.
Within the legal deadline from receiving the money, you fill out the tax return via the portal and pay contributions for PIO (PIO Fund (Pension and Disability Insurance)), health (NHIF (National Health Insurance Fund)), and tax.
B2B and opening a sole proprietorship
The most common way for international consultants is opening a sole proprietorship (e.g., flat-rate/paušalac) and sending invoices to the foreign company. However, one should be careful with the "independence test" conducted by the tax administration to prevent masking employment through entrepreneurial status.