The new incentive for employment of newly settled persons
Tax Alert, June 2022
On June 16, 2022, the Government of Serbia passed a Regulation on the criteria for granting incentives to employers who employ newly settled persons in Serbia (hereinafter: “The Regulation”).
The Regulation, in line with the Law on Investments, determines the criteria for granting incentives to employers who employ newly settled persons in Serbia for whom there is a need, since the workers of similar profiles cannot be easily found in the domestic labor market (hereinafter: “newly settled person”).
The employer may be a domestic or foreign legal or natural person, entrepreneur, branch, or representative office of a foreign employer.
For the purposes of the Regulation, a newly settled person is a natural person who has not resided in the territory of Serbia for more than 180 days in the period of 24 months preceding the day of concluding an employment contract and with whom the employer has concluded an employment agreement for an indefinite period of time, with a monthly salary (gross 1) of at least RSD 300,000.00 (hereinafter: “newly settled person).
The Regulation envisages incentives by paying the employer 70% of the paid salary tax and 100% of the paid contributions for mandatory pension and disability security for one or more newly settled employees, for payments made for the newly settled employee for a maximum period of 60 months.
● It is necessary for the employer, by employing a newly settled person, to increase the total number of employees in relation to June 17, 2022, and before submitting the application for incentives did not reduce the number of employees compared to June 17, 2022.
● The right to receive incentives is exercised by the employer if the newly settled person is continuously employed by the employer in the period between the day of submission of the application and 31.12. the year in which the application was submitted.
● The right to receive incentives is exercised by the employer only for the newly settled person who is employed no later than 31.12.2023.
The Regulation prescribes which categories of employers and under which conditions are not entitled to the award of incentives.
Furthermore, the Regulation prescribes when the employer loses the right to the entire amount of incentives and when he is obliged to return the received funds in the name of incentives.
Finally, it should be noted that the payment of funds in the name of incentives is made up to the amount of available budget funds in line with the Law on Budget for the years in which the payment of incentives.
Pavle Kutlešić, LL.M.
Dr. Marko Novaković, LL.M., PMP