If you have registered as an entrepreneur (preduzetnik) in Serbia, chosen to keep business books and opted to pay yourself a personal salary (lična zarada), one of your first obligations is to file an advance tax return on form PPDG-1S within 15 days of the date on which the Serbian Business Registers Agency (APR) issues the decision registering you as an entrepreneur.

In this return you state how much income and how many expenses you expect to have by the end of your first business year. Your estimate is the basis for the monthly advance payment of tax on income from self-employment, which you pay to the Tax Administration (Poreska uprava) every month.

At the start of your business you do not report an actual result, because none exists yet. You report what you realistically expect to earn by the end of the year.

For readers new to Serbia: what is a preduzetnik?
A preduzetnik is a sole trader: a private individual registered with the Serbian Business Registers Agency (APR) to run a business in their own name. It is not a separate legal entity, so the owner is liable for business debts with all their personal assets. A preduzetnik is taxed in one of two ways: as a flat-rate taxpayer (paušalac), where the Tax Administration sets the tax regardless of what you actually earn, or on actual profit, in which case you keep business books. This article covers the second option.

Who files the PPDG-1S advance tax return, and how?

This article applies to an entrepreneur who:

• keeps business books;
• pays tax on actual profit;
• has opted to pay themselves a personal salary; and
• starts doing business during the year.

The return is filed electronically through the Tax Administration’s ePorezi portal.

The deadline is 15 days from the date of the APR registration decision. Unless you specify a later start date when registering, this is also the date on which your business is considered to have started.

You can file the return yourself or through a person you authorise, most often your accountant.

For readers new to Serbia: ePorezi is the online portal through which all tax returns in Serbia are filed. Logging in requires a qualified electronic certificate. Most foreign entrepreneurs never deal with the portal directly; their accountant files returns on their behalf under a power of attorney registered in the system. Note also that the Serbian tax year is the calendar year, so your “first business year” ends on 31 December, however late in the year you register.

What do you report in the return?

In the advance tax return you estimate:

• the income you will earn from the date of registration to the end of the year;
• the business expenses you will have over the same period.

The difference between estimated income and estimated expenses is your estimated profit.

Tax is charged on the estimated profit at a rate of 10%.

The tax amount is divided by the number of months you will operate until the end of the year. The result is the monthly advance tax payment you make during your first business year.

When counting months, the month in which you registered counts as a full month, regardless of which day you registered.

For example, if an entrepreneur registers on 25 October, they are treated as having operated for three months that year (October, November and December).

If you have opted to pay a personal salary, this return does not include social security contributions. Tax and contributions on your personal salary are calculated separately, each time you calculate and pay the salary.

How do you estimate income and expenses?

The estimate is yours to make, based on the information you have when you file.

You can take into account, for example:

• contracts you have already signed;
• expected monthly income;
• the planned number of clients;
• office rent;
• the cost of your own personal salary (the gross amount of your personal salary is an expense that reduces the base on which the 10% tax is charged);
• accounting, software and bank fees;
• equipment;
• marketing;
• the cost of hiring other people;
• other expenses you expect in connection with the business.

Nobody expects you to predict your result to the end of the year precisely on the day you register. Still, the estimate should be reasonable and based on the information you have.

Amounts are entered in Serbian dinars (RSD). If you expect income in a foreign currency, convert it to dinars for the purposes of the estimate.

For readers new to Serbia: If you invoice clients abroad, this is the typical situation. For the estimate, the National Bank of Serbia’s middle exchange rate on the day you prepare the return is a sensible reference. Precision matters less here than reasonableness: the estimate is corrected at year-end anyway (see below).

Your personal salary is an expense that reduces your tax base

An entrepreneur who keeps business books may, but does not have to, opt for a personal salary: a monthly amount you pay yourself, which is taxed the same way as an employee’s salary.

In the advance return, the personal salary is included in expenses at its gross amount. This covers the salary you plan to pay yourself each month plus tax and mandatory social security contributions: pension and disability insurance 24%, health insurance 10.3% and unemployment insurance 0.75%, a total of 35.05% (rates for 2026).

This amount reduces your estimated taxable profit and, with it, your monthly advance tax.

However, to be able to pay yourself a personal salary, you must opt for it when you register as an entrepreneur with the Serbian Business Registers Agency (APR).

For readers new to Serbia: Paying yourself a personal salary means you are insured in the Serbian pension and health insurance system on the basis of that salary. Contributions are calculated on at least the statutory minimum base, which changes every year; see our article on minimum and maximum contribution bases. If you are also insured in another country, it is worth checking whether Serbia has a social security agreement with that country before you register.

Example: calculating the monthly advance tax

Example 1 – average monthly figures

Example 2 – registration on 25 October

The entrepreneur expects to earn RSD 2,000,000 and spend RSD 400,000 between the date of registration and the end of the year.

Tax is paid by the 15th of the month for the previous month

If, for example, you started doing business in September, you pay the first monthly advance by 15 October. The next instalment is due on 15 November. The November instalment is paid by 15 December, and the December instalment by 15 January.

All payment details stay the same for the whole calendar year.

When the year changes, only the payment reference number changes slightly.

Your accountant can give you the exact payment instructions for your advance tax.

For readers new to Serbia: Taxes in Serbia are paid by bank transfer to a designated Tax Administration account, with a payment reference number (poziv na broj odobrenja) that links the payment to your tax identification number. A payment without the correct reference number may not be credited to your tax account, so it is worth getting these details right from the first instalment.

What if your actual result differs from the estimate?

The estimate in the advance return is not the final tax calculation for your first business year.

After the year ends, the actual result is determined from your business books. Your accountant then prepares a tax balance sheet (form PB) and file the final PPDG-1S return, by 15 April of the following year.

If your actual profit turns out to be higher than estimated, you will pay the difference.

If your actual profit is lower, the final return will show a lower liability. You can use the overpaid amount to settle future liabilities or request a refund, in accordance with tax regulations.

So the fact that your actual result differs from your initial estimate does not mean you have committed an offence. The difference is settled through the final calculation.

From the second business year onwards, monthly advance payments are no longer based on an estimate but on the result achieved in the previous year.

Can the estimated profit be zero?

Yes.

If, based on the information you have, you expect your income and expenses to be equal, your estimated profit will be zero and no monthly advance tax will be set.

It is important, however, to understand the consequence.

If you do make a profit during the year, you will have to pay the full tax determined in the final calculation in one go after the year ends. A zero estimate may reduce your monthly obligations now, but it can lead to a large one-off tax payment the following year.

Advance tax and personal salary are two separate obligations

One of the most common points of confusion with this tax model is how the personal salary relates to the tax on income from self-employment.

They are two separate obligations.

Tax on salary and mandatory social security contributions are charged on the amount of your personal salary. Each salary payment is reported on the PPP-PD return.

In addition, the entrepreneur pays 10% tax on the taxable profit of the business. At the start of the business, the monthly amount of that tax is set by the PPDG-1S advance return.

So paying yourself a personal salary does not mean you pay no tax on profit. It means that contributions are paid on the salary amount you choose, rather than on your entire taxable profit.

For readers new to Serbia: PPP-PD is the monthly return filed every time a salary is paid in Serbia, whether to an employee or to yourself. In practice, your accountant prepares it together with the salary calculation.

In summary

An entrepreneur who keeps business books and pays a personal salary files the PPDG-1S advance return after starting the business (within 15 days of the date on which the Serbian Business Registers Agency (APR) issues the decision registering you as an entrepreneur).

In the return, you estimate your income and expenses to the end of the year. Tax at 10% is charged on the estimated profit and paid in monthly advance instalments.

The estimate does not have to match the actual result. The final liability is determined after the year ends, based on the actual figures in your books.

Even so, make the initial estimate carefully. Too low an estimate can lead to a large one-off tax payment, while too high an estimate puts unnecessary pressure on your cash flow.

Finally, having no income does not affect the obligation to file the advance tax return. Once an entrepreneur is registered with the Serbian Business Registers Agency, with business start date set as the date of the APR registration decision, they must file the advance tax return. Not invoicing or earning anything in the first three months does not release them from this obligation.