Updated: 21 October 2026

Flat-rate taxation (paušalno oporezivanje) is a way of taxing entrepreneurs in Serbia under which tax and contributions are not paid on actual profit, but on income set in advance by the Tax Administration. A flat-rate entrepreneur (paušalac) does not keep business books and does not prepare annual financial statements, and knows the monthly amount of tax and contributions in advance for the whole year.

It is the simplest way for an entrepreneur to operate, but it is not available to everyone and it is not always the most favourable option. In this guide we explain who can be taxed on a flat-rate basis, how to become a flat-rate entrepreneur, what you pay and what your obligations are, and when you lose the right to flat-rate taxation.

What flat-rate taxation means

Under the Serbian Personal Income Tax Law, an entrepreneur has the right to flat-rate taxation if, given the circumstances, they are not in a position to keep business books, or if keeping them makes it difficult to run the business.

An entrepreneur who keeps business books pays tax on the difference between income and expenses, that is, on actual profit. A flat-rate entrepreneur does not. The Tax Administration issues a decision setting the flat-rate income for the calendar year, and tax and contributions are paid on that amount, regardless of how much the entrepreneur actually earns. If you earn more than the flat-rate income, you pay nothing extra. If you earn less, or nothing at all, the obligation under the decision stays the same.

This is where both the advantages and the disadvantages come from. Administration and accounting costs are minimal, and the amount you owe is known in advance. On the other hand, business expenses are not recognised, so a flat-rate entrepreneur with high costs or irregular income may pay more than they would if they kept books.

Who can and who cannot be taxed on a flat-rate basis

Flat-rate taxation cannot be granted to an entrepreneur:

1. engaged in advertising and market research;
2. engaged in wholesale or retail trade, hotels and restaurants, financial intermediation or real estate activities;
3. whose business has other investors;
4. whose total turnover in the previous year, or planned turnover when starting the business, exceeds RSD 6,000,000;
5. who is registered for VAT, either because they have exceeded the mandatory VAT registration threshold or because they have registered voluntarily.

There is an exception for trade and catering: an entrepreneur who runs a trade or catering business from a kiosk, trailer or similar temporary or mobile structure may, on request, be granted flat-rate taxation.

The activity is determined by the code of the principal activity registered with the Serbian Business Registers Agency (APR). This is why choosing the activity code at registration matters: it determines both whether flat-rate taxation is possible at all and how much you will pay.

What counts towards the RSD 6,000,000 limit

The limit includes total turnover from self-employment, from both domestic and foreign clients. The fact that a client is abroad and pays in foreign currency does not exclude that income from the limit.

Income from a client for whom the entrepreneur fails the independence test does not count towards the limit, because it is taxed as other income rather than as income from self-employment (see below).

The limit applies to the calendar year. The simplest way to monitor it is to keep the turnover ledger up to date.

How to become a flat-rate entrepreneur

A newly registered entrepreneur

An entrepreneur who is just starting out chooses flat-rate taxation when registering with APR. In that case, planned turnover is used instead of the previous year’s actual turnover, and it must not exceed RSD 6,000,000.

An existing entrepreneur

An entrepreneur who currently keeps business books and wants to switch to flat-rate taxation from the following year submits a request to the Tax Administration electronically, through the ePorezi portal, by 31 October of the current year.

An entrepreneur who is already taxed on a flat-rate basis does not need to apply again each year. The status remains in place for as long as the conditions are met.

The flat-rate tax decision

The Tax Administration issues a decision setting the flat-rate income and the amounts of tax and contributions for the year. Decisions are delivered electronically to the taxpayer’s inbox on the ePorezi portal, usually in January for the current year. A decision is considered delivered on the day it is posted to the inbox, whether or not the entrepreneur has opened it. It is therefore important to have access to ePorezi and to check the inbox regularly.

How much you pay

A flat-rate entrepreneur pays income tax on self-employment income and contributions for pension and disability insurance and for health insurance. The base for all of these is the flat-rate income set in the decision.

The Tax Administration sets the flat-rate income according to the criteria in the Personal Income Tax Law and the Government decree on flat-rate taxation. The most important are:

• the principal activity, as activities are grouped with different coefficients;
• the municipality or city where the business is registered, as the base is linked to the average salary in that area;
• years in business, as new flat-rate entrepreneurs receive a reduction in their first year;
• the entrepreneur’s age and other circumstances provided for in the decree.

As a result, two entrepreneurs in the same activity may pay very different amounts if they work in different municipalities, and vice versa. For this reason we do not give examples: the amount should be checked for your specific situation. For an estimate, the Tax Administration provides a flat-rate tax and contributions calculator (in Serbian), where you enter the activity, municipality and other details.

Reductions and limits on increases

Entrepreneurs who started their business and chose flat-rate taxation in 2025 or 2026 receive a 50% reduction of the base in their first year of business. The Tax Administration applies the reduction automatically in the decision, and no separate request is needed. The reduction is not available to an entrepreneur who was previously registered as a flat-rate taxpayer.

For existing flat-rate entrepreneurs, the amount in the decision cannot increase by more than 10% compared with the previous year. This limit no longer applies if the entrepreneur changes the activity code or moves the business to another municipality or city. A move within the same city does not affect the limit.

Payment deadline

Tax and contributions are paid monthly, by the 15th of the month for the previous month. If the 15th falls on a non-working day, the deadline moves to the next working day. The payment details, including the reference number valid for that year, are provided with the decision.

Obligations during the year

Turnover ledger (KPO)

A flat-rate entrepreneur does not keep business books, but must keep a turnover ledger (knjiga o ostvarenom prometu, KPO). Every sale, that is, every invoice issued, is entered in it. The KPO is the basis for monitoring the RSD 6,000,000 limit and the first document a tax inspector will ask for.

Issuing invoices

A flat-rate entrepreneur issues an invoice for every sale. The invoice must contain the required details of the issuer and the customer, a description of the supply and the amount. Since a flat-rate entrepreneur is not registered for VAT, no VAT is charged on the invoice.

Fiscalisation

Flat-rate taxation does not exempt you from fiscalisation. A flat-rate entrepreneur who sells goods or provides services to individuals must record sales through an electronic fiscal device, unless their activity code is expressly exempt from fiscalisation. An entrepreneur who works only with companies and other entrepreneurs, and receives payments into the business account, has no fiscalisation obligation.

Electronic invoicing system (SEF)

A flat-rate entrepreneur who is not registered for VAT is not required to use the Serbian electronic invoicing system (Sistem elektronskih faktura, SEF), unless they do business with the public sector. If you invoice public enterprises, government bodies or other public-sector entities, you must register with SEF and send them invoices through it.

Even when not required, a flat-rate entrepreneur may register with SEF voluntarily, for example if it makes working with clients who use SEF easier.

Business account and withdrawing money

An entrepreneur operates through a business bank account. Once tax and contributions have been paid, a flat-rate entrepreneur may freely use the money in the business account and transfer it to a personal account, with no additional tax.

The independence test

The independence test also applies to flat-rate entrepreneurs. It checks whether the relationship between the entrepreneur and a client is, in substance, an employment relationship. If at least five of the nine statutory criteria are met in the relationship with the same client, the entrepreneur is considered not to be independent.

The criteria concern whether:

• the client sets working hours, breaks and leave;
• the entrepreneur works at the client’s premises or at a place the client determines;
• the client organises training for the entrepreneur;
• the entrepreneur was engaged following a job advertisement or through a recruitment agency;
• the client provides the equipment and manages the work process;
• at least 70% of the entrepreneur’s income over a 12-month period comes from one client;
• the entrepreneur performs the client’s business activity without the usual business risk;
• the contract prohibits or restricts working for other clients;
• the entrepreneur works for the same client for 130 or more working days over a 12-month period.

If the test is failed, the entrepreneur does not lose the right to flat-rate taxation, but income from that client is taxed as other income, at a tax rate of 20%, together with pension and disability insurance contributions. Where the client is a Serbian business, the client pays the tax and contribution. Where the client is foreign, the entrepreneur calculates and pays them. Income from other clients continues to be taxed on a flat-rate basis.

The independence test is particularly important for an entrepreneur who works mainly or exclusively for one foreign client.

When you lose the right to flat-rate taxation

Exceeding the limit

A flat-rate entrepreneur whose turnover during the year exceeds RSD 6,000,000 ceases to be taxed on a flat-rate basis and must start keeping business books. If the limit is exceeded in the first half of the year, the change applies from 1 July of the same year. If it is exceeded in the second half, the change applies from 1 January of the following year.

VAT registration

An entrepreneur who becomes registered for VAT also loses the right to flat-rate taxation. This happens when turnover over the last 12 months exceeds RSD 8,000,000, which is the mandatory VAT registration threshold, or when the entrepreneur registers for VAT voluntarily.

Personal salary after losing the right

From 1 January 2027, an entrepreneur who loses the right to flat-rate taxation may, within 15 days of losing it, choose to pay themselves a personal salary (lična zarada). What then changes in terms of taxes and deadlines is explained in our article on the PPDG-1S advance tax return.

Flat-rate taxation or business books

Flat-rate taxation usually suits an entrepreneur with stable income, low costs and turnover comfortably below the limit. In that case it is simple and inexpensive.

Keeping business books is the better choice when turnover is close to or above the limit, when business expenses are high, or when you plan to grow. An entrepreneur who keeps books can pay themselves a personal salary, deduct business expenses and does not have to worry about the RSD 6,000,000 limit. The taxes and contributions in that case are explained in our article on personal salary for entrepreneurs in Serbia.

If you are not sure which option suits you better, contact us before registering or before 31 October, and we will compare both options for your situation.