A personal salary (lična zarada) is the amount that an entrepreneur (preduzetnik) in Serbia who keeps business books chooses to pay themselves every month as personal income. It is the entrepreneur’s counterpart to an employee’s salary.

Calculating the personal salary and the taxes and contributions due

The entrepreneur chooses the amount of the personal salary. The following are calculated on it:

• salary tax (10%), with the non-taxable amount deducted
• mandatory social security contributions:
  • pension and disability insurance contribution
  • health insurance contribution
  • unemployment insurance contribution

The non-taxable amount, tax and contribution rates, and the minimum and maximum contribution bases by year are listed here.

Entrepreneurs who are also employed by another employer do not pay health and unemployment insurance contributions on their personal salary, only tax and the pension contribution. These two contributions are always paid on one priority basis only, which in this case is the employment.

The personal salary is usually calculated by the entrepreneur’s accountant.

The entrepreneur is free to set the amount of the personal salary. Since an entrepreneur is not an employee, the minimum wage per working hour does not apply. There is, however, one limit: the minimum base for social security contributions. If the gross personal salary is lower than the minimum contribution base (published by the government in the Official Gazette), contributions are calculated on the minimum base.

How does an entrepreneur opt for a personal salary?

Entrepreneurs who keep business books may, but do not have to, opt for a personal salary.

If they decide to pay a personal salary, they must notify the Tax Administration. The notice is given in the registration application when the entrepreneur is registered with the Serbian Business Registers Agency (APR), or later by 15 December of the current year for the following year. It applies to one calendar year.

After registration, an entrepreneur who has opted for a personal salary also files the PPDG-1S advance tax return within 15 days.

The decision cannot be changed during the year; a change takes effect only from the next calendar year. The exception is flat-rate taxed entrepreneurs: from 1 January 2027, they can opt for a personal salary if they lose the right to flat-rate taxation. This is explained in a separate section below.

There is no prescribed form for the notice on paying a personal salary.

Flat-rate taxed entrepreneurs (paušalci) cannot opt for a personal salary while they are taxed on a flat-rate basis, because their social security contributions are calculated by the Tax Administration.

Why do entrepreneurs opt for a personal salary?

An entrepreneur who keeps business books and is taxed under self-assessment (not on a flat-rate basis) and who does not opt for a personal salary pays social security contributions on the taxable net income from self-employment. Simply put, contributions are paid on the profit. The combined rate of tax and contributions on profit in this case is 45.05% (rate for 2026; current rates are always available on the page with salary calculation parameters).

An entrepreneur who opts for a personal salary pays 10% tax on profit, plus tax and contributions on the personal salary, the amount of which they choose themselves.

This means that for entrepreneurs whose profit exceeds the minimum contribution base, a personal salary pays off. Profit is taxed at 10% instead of around 45%, and the high tax and contribution burden applies only to the smaller, chosen amount of the personal salary.

New from 1 January 2027: switching from flat-rate taxation to a personal salary during the year

Under the amendments to the Personal Income Tax Act adopted in August 2026, a flat-rate taxed entrepreneur who loses the right to flat-rate taxation during the year, for example by exceeding the income limit, may opt for a personal salary within 15 days of the date that right ends.

The personal salary is then recognised for the period following the date on which the right to flat-rate taxation ended.

Until now, such an entrepreneur could opt for a personal salary only from 1 January of the following year. Until the end of the current year, they paid tax and contributions under self-assessment on the profit earned. This caused practical difficulties and put entrepreneurs who lost flat-rate status during the year at a disadvantage.

For all other entrepreneurs, the deadline is unchanged: the notice on the personal salary must be submitted to the Tax Administration by 15 December of the current year for the following year.

Personal salary calculation examples

Below is an illustration of tax and contributions based on the 2026 parameters, for a gross salary slightly above the minimum contribution base. This is the amount most entrepreneurs choose in practice, as it carries the lowest contribution cost.

The first entrepreneur is not employed elsewhere; self-employment is their main activity. Tax, the pension contribution and the health and unemployment contributions are all paid on their personal salary, so the net amount left after these charges is lower than in the second case.

The second entrepreneur is also employed by another employer. Health and unemployment contributions are paid only on the salary from that employer, so only tax and the pension contribution are paid on the personal salary. As a result, the net personal salary is somewhat higher for the same gross amount.