Serbia 2025: Overview of Immigration, Tax and Incentives for Investors

03.10.2025

In 2025, many would say that Serbia remains at crossroads: balancing the challenges of a transitional economy while being geographically positioned between the West and the East, a reality that raises a range of political, cultural and geopolitical questions. 

In these circumstances, the country’s positioning in terms of foreign investments remains one of the most important mechanisms needed to achieve national interests. Serbia continues to shape its legislation to provide a favorable business environment for foreign individuals and companies.

Immigration

• keeping in mind the new Law on Foreigners, which entered into force in 2024, Serbia remains one of very few countries that issues temporary residence and work permit for a period up to 3 years with a possibility of applying for permanent residence and work permit immediately upon expiration of 3-year period in accordance with the Law,
• procedures, established in the process of obtaining residence and work permits, except for biometrics, can be carried out online – still, there is room for further improvements (for example, special procedures may be triggered in case of changing the legal basis of the residence and work permit if the current one was established in accordance with the law that was replaced in 2024),
• Ministry of Internal Affairs’ Foreigners Department have begun to implement address verification procedures in order to prevent foreigners from declaring fictional addresses – a practice that was identified as foundation for various immigration and tax violations,
• it is expected that state authorities will continue strengthening cross-checks to ensure the payment of payroll taxes, real estate-related taxes and other income taxes income most often generated by foreigners. It is highly likely that the Montenegrin model, which combines the legal basis for residence permits with a tax clearance certificate, will be adopted. 

Tax

• The state continues with a stable increase in tax-free amounts following the inflation and other indicators - for now, those with low incomes benefit the most, but the pressure is not exerted on tax residents with higher income,
• Property tax rates have increased, depending on the part of the country, from 4% to 30%, following the growth in the average price per square meter in Belgrade and other cities - until now, property tax has been paid in traditionally low, almost symbolic amounts,
• Modernization of Tax Administration’s personnel continues with the hiring of new, professional associates through numerous public tenders - one of the last ones involved the employment of more than 200 staff,
• Wip boxe must underline the examples of solving increasingly complex cases of tax on capital gains from cryptocurrency trading (Serbia adopted the Law on Digital Assets in 2021) and similar, tech-driven business activities, which testifies to the development of positive practice within the territory of the state

Incentives for Investors

• Serbia continues to position itself as R&D center as well-known incentives, such as IP Box (which lowers the effective corporate profit tax rate to 3%) and “R&D Double Deduction” (allows qualified R&D expenses to be double-counted in the tax statements) – those two can be combined,
• Government abolished one of the tax incentives for newly employed experts – this regulation either way could not be used simultaneously with another tax incentive, of a very similar type – withdrawal of this tax incentive cannot be interpreted as a negative trend given that all other incentives are in force, especially the one lowering the payroll and social contributions tax base for 70% in case of employed experts,
• Individuals still find Serbia as one of the jurisdictions with the lowest personal tax rate, keeping in mind the maximum tax rate of 15% with a wide range of tax-exempt and deductible amounts – including non-taxable annual income threshold, personal deductions and dependent family member deductions – no changes to personal income tax are planned,
• Tax residents younger than 40 remain subject to additional benefits, such as doubled non-taxable annual income threshold and lower flat-tax and social contributions amount in case they register as individual entrepreneurs, which makes the jurisdiction very attractive in terms of relocation of qualified personnel in IT and similar sectors,
• Foreign investors still tend to be cautious about the incentives, which is understandable considering the rapid development of the IT sector in Serbia, that is slowly but surely being accompanied by appropriate regulatory solutions and training of Tax Administration’s personnel. 

Conclusion

The legal and fiscal landscape in Serbia is characterized by constant legislative refinement, offering specific benefits to foreign capital, particularly within the dynamic IT and R&D sectors.

Navigating the evolving requirements for immigration, taxation, and state aid requires detailed, up-to-date knowledge to ensure full compliance and maximum fiscal efficiency.

 

Author: Bogić Sekulović, Anna Miritskaya.