Child birth aid for employees

by | May 17, 2024 | Uncategorized | 0 comments

The employer can pay the employee an aid upon emploee’s child birth, if such a gift was defined in Labor Rulebook or employment contract. This possibility is regulated by Article 120 of the Labor Law of Republic of Serbia.

This is an option, not an obligation for employer. Employers do not have to make payments if they have not regulated so in their acts. If they have, then they are obliged to follow those paragraphs.

The Labor Law does not provide further details regarding the amount of payment. Companies themselves can determine the amount they will pay. The amount of aid per child must be equal for all employees, and it is paid for each new-born child.

In Article 105 of the Labor Law, it is defined that solidarity benefits (aid) are not considered as earnings, so they are not taxed, if paid in accordance to the above rules.

The tax treatment of the payment of solidarity aid is regulated by the Law on Personal Income Tax. In Article 18, which regulates tax exemptions, it is stipulated that no income tax is paid on solidarity benefits for the birth of a child up to the amount of the average salary paid in the Republic of Serbia.

A certain number of employers decide to pay employees a tax-free amount. Other employers define a certain nominal amount for these needs in their acts (for example, 50.000 dinars per child).

If the amount paid is above untaxed amount, the employer pays 10% tax on the gross excessed amount.

For example, if we assume that, according to the latest published data, the average salary at the time of payment of solidarity aid is 80,000 dinars, and that the employer has predicted an aid payment of 90,000 dinars, the difference on which tax should be paid is 10,000 dinars.

The difference is multiplied by 1.111111 and thus the tax base is 11,111.11 dinars. By applying a rate of 10%, we get 1,111 dinars of tax.

This right is determined per new-born child. An employee who gets twins is entitled to double amount.

The employer submits tax return before the aid payment.

The tax should be paid on the same day when the solidarity aid is paid to employee.


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