Guide
How salary is calculated
A guide to salary calculation: gross and net, the 10% tax and contributions, and the PPP-PD return.
Payroll sounds complicated, but it comes down to one question: from the agreed salary, how much reaches the worker and how much goes to the state? In Serbia a salary is built through three levels (net, gross 1 and gross 2), and what owners most want to know is how much an employee truly costs them. Below we explain it with a concrete example, with the 2026 rates and amounts, and if you want a quick gross-to-net or net-to-gross calculation, our salary calculator is right here.
What you should know
- A salary has three levels: net (what the worker receives), gross 1 (net plus the employee's tax and contributions) and gross 2 (the employer's total cost). Owners care most about gross 2, because that is the real cost of an employee.
- Salary carries a 10% tax and employee contributions of 19.90% (PIO 14%, health 5.15%, unemployment 0.75%), while the employer pays a further 15.15% on top (PIO 10%, health 5.15%).
- The non-taxable amount (34,221 dinars in 2026) reduces only the tax, not the contributions. Contributions are calculated on the full gross, so the common belief that the non-taxable part also lowers contributions is wrong.
- Concretely: on a gross 1 of 100,000 dinars, the tax is about 6,578 and the employee's contributions 19,900, so the net is about 73,500 and the employer's total cost (gross 2) about 115,000 dinars.
- Contributions have a lowest and a highest base: 51,297 and 732,820 dinars for 2026. Below the lowest base contributions are still paid on 51,297, and above the highest they stop at 732,820. Even the minimum wage (371 dinars net per hour) carries the tax and all contributions.
- The PPP-PD return is filed and the tax and contributions paid no later than the salary payment date, and the employee must be registered for insurance via CROSO before their first working day. Late filing brings interest and penalties.
| Levy | Rate | Paid by |
|---|---|---|
| Wage tax | 10% | From salary reduced by the non-taxable amount (34,221 RSD) |
| Pension (PIO) contribution | 24% | 14% employee + 10% employer |
| Health insurance | 10.3% | 5.15% employee + 5.15% employer |
| Unemployment insurance | 0.75% | Employee (employer share abolished) |
How we handle it
- 01 Data collection We collect from you each employee's salary data, hours, sick leave, absences, and any deductions.
- 02 Payroll calculation We compute net, gross, and all taxes and contributions, accounting for the non-taxable amount and the prescribed minimum and maximum bases.
- 03 Tax filing We prepare and electronically submit the PPP-PD return to the Tax Administration and obtain the approved filing identification number (BOP).
- 04 Payment orders We prepare transfer orders for net salaries, taxes, contributions, and any administrative garnishments, deductions, or loans.
- 05 Records and filings We keep records, issue payslips to employees, and manage mandatory social insurance registrations and deregistrations through CROSO.
Frequently asked questions
What is the non-taxable part of salary in 2026?
The 10% wage tax is not charged on the whole salary, but only on the part above 34,221 dinars per month. This non-taxable amount applies to the tax only, not to contributions, and is in force for all of 2026.
What tax and contribution rates apply to salaries in 2026?
Wage tax is a flat 10%. The employee also pays contributions of 19.90% (PIO 14%, health 5.15%, unemployment 0.75%), and the employer pays an additional 15.15% on top (PIO 10%, health 5.15%).
What are the lowest and highest contribution bases for 2026?
Contributions for 2026 are calculated within a range: the lowest monthly base is 51,297 dinars and the highest is 732,820 dinars. If a salary is below the lowest base, contributions are still paid on 51,297 dinars; above the highest base, they are capped at 732,820 dinars.
How much is the minimum wage in 2026?
The minimum wage for 2026 is 371 dinars net per working hour. Because the number of working hours differs each month, the monthly net minimum ranges roughly from about 59,360 to 68,264 dinars, averaging around 64,554 dinars. Minimum-wage employees still pay the 10% tax and all contributions.
By when do I have to file PPP-PD and pay salary taxes?
The PPP-PD return must be filed and the tax and contributions paid no later than the day the salary is paid out. The employee must be registered for mandatory social insurance through CROSO before starting work. Late filing or payment brings default interest and penalties.
How to start a company
A guide to starting a company in Serbia: choosing a legal form, APR registration and first obligations.
Read moreSole trader, flat-rate or LLC: which to choose
An overview of the three Serbian legal forms (flat-rate sole trader, sole trader on business books, and an LLC) compared by liability, taxation, bookkeeping and capital, so you can pick the form that pays off best for you.
Read moreOpening a company in Serbia for foreigners
Foreign nationals and companies can set up a business in Serbia on the same terms as locals, and we run the whole process from choosing the form to registration and banking, remotely if needed.
Read moreReady to hand your books to the experts?
Book a free 30-minute consultation. No obligations, just a clear plan for your finances.