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Flat-rate tax for sole traders in Serbia 2026: who qualifies, the turnover limit, how it is calculated

Flat-rate (paušalni) tax for sole traders in Serbia 2026: the RSD 6,000,000 limit, who is excluded, how the base is set, monthly payments, the KPO book.

INFO
Short answer. A flat-rate sole trader (paušalac) is an entrepreneur whose income the Tax Administration fixes in advance by a decision; tax of 10% and social contributions are paid on that fixed amount, with no bookkeeping. The regime is not available to an entrepreneur whose turnover in the previous year, or planned turnover at the start, exceeds RSD 6,000,000, to anyone registered for VAT, or to advertising and market research, trade, hotels and restaurants, financial intermediation and real estate activities (Art. 40 of the Personal Income Tax Act). The base is not your actual earnings but a formula from the Government Decree: the average wage in your municipality, an activity coefficient and adjustments for years since registration, age and zone. The amount is paid monthly, by the 15th for the previous month.
ROK
Deadline. Anyone registering with the Business Registers Agency (APR) opts for flat-rate taxation in the registration form itself. An entrepreneur already keeping books applies for the next year by 31 October of the current year, electronically through the ePorezi portal. Tax and contributions under the decision are paid by the 15th of the month for the previous month. A change affecting the regime, including turnover above RSD 6,000,000, is reported on form PPDG-1R within 15 days. (Arts. 42(1), 94(2) and 110(1) of the Personal Income Tax Act (Zakon o porezu na dohodak građana, Sl. glasnik RS Nos. 24/2001 ... 6/2026 - indexed amounts and 80/2026); Tax Administration information booklet for self-employed natural persons (April 2026))

What flat-rate taxation is and who it is for

Flat-rate taxation is a way of paying tax on self-employment income in which the Tax Administration, instead of taxing the actual profit shown in business books, fixes an amount of income in advance by a decision ("paušalno utvrđeni prihod") and calculates tax and contributions on it for the whole year (Arts. 33(3) and 40 of the Personal Income Tax Act). The entrepreneur pays the same known amount every month, keeps no books and prepares no annual accounts.

It is designed for entrepreneurs working alone or with few employees, with turnover up to RSD 6,000,000 a year: programmers, designers, consultants, craftsmen, hairdressers, translators, dentists and similar. For someone starting out with low costs the flat rate is usually simpler than bookkeeping, but not always cheaper: with high real costs or low turnover, books can come out lower.

The flat rate exists only for entrepreneurs, natural persons registered for a business activity. A limited company (d.o.o.) cannot be a flat-rate taxpayer.

Who can and cannot be a flat-rate sole trader

Any entrepreneur for whom, given the circumstances, keeping books would be a burden may apply (Art. 40(1)); in practice that condition is not tested separately. Instead the Act lists who cannot be granted the flat rate (Art. 40(2)):

  • an entrepreneur in advertising and market research;
  • an entrepreneur in wholesale and retail trade, hotels and restaurants, financial intermediation and real estate activities, except trade or catering from a kiosk, trailer or similar prefabricated or mobile unit, which may be approved on request;
  • an entrepreneur in whose business other persons invest;
  • an entrepreneur whose total turnover in the previous year, or planned turnover at the start, exceeds RSD 6,000,000;
  • an entrepreneur registered as a VAT payer.

The Decree on the conditions, criteria and elements for flat-rate taxation (Sl. glasnik RS Nos. 94/2019, 96/2019 - corr., 156/2020, 141/2022, 89/2023 and 115/2025) lists eligible activity codes with coefficients in Annex 1. If your registered code is not on the list, the Tax Administration matches it to the closest one by profitability and turnover (Art. 4(5) of the Decree). The predominant activity is the registered one, but also any other activity that produced more income in the year (Art. 3(2) of the Decree), so a flat-rate taxpayer who formally holds an eligible code while actually doing an excluded activity risks losing the status.

How the base is set

The base is not your actual income. It is calculated by the formula in the Decree, in three steps.

First, the starting base for the activity group (Art. 4 of the Decree): the average monthly wage in the city or municipality of the seat, according to Statistical Office data for the last 12 months, multiplied by the number of employees in that municipality and the activity coefficient from Annex 1, divided by the municipality's population. The ten central Belgrade municipalities (Voždovac, Vračar, Zvezdara, Palilula, Rakovica, Savski venac, Stari grad, Novi Beograd, Zemun, Čukarica) are pooled. For computer programming (6201), IT consulting (6202), other IT services (6209), data processing and hosting (6311), web portals (6312), business consulting (7022), architecture (7111), engineering (7112), design (7410), performing arts (9001, 9002), taxi (4932) and a few other activities, national figures are used, so the seat does not change the base.

Second, adjustments (Art. 5 of the Decree). The starting base is multiplied by coefficients:

  • time since registration: 0.5 for the calendar year in which you registered; 0.8 when at most 12 months had passed on 31 December of the previous year; 0.85 up to 24 months; 0.9 up to 36 months; thereafter 1. Anyone registered within the 18 months before the current registration gets no reduction;
  • age: 0.9 for those under 30 and over 55, and 0.7 for those under 30 and over 60 in certain craft and service activities;
  • 0.85 for persons with disabilities and for absence longer than 90 days due to pregnancy, maternity and childcare leave, while the leave lasts;
  • 0.5 for certified old crafts;
  • for restaurants, bakeries, photographers, medical practices, repair shops and similar location-bound activities, a zone coefficient based on property-tax zones, from 0.7 to 1.1.

The product of all coefficients cannot be lower than 0.5. The adjustments do not apply to taxi services.

Third, a growth cap (Art. 6 of the Decree): the base cannot rise by more than 10% over the previous year, through 2027, unless you yourself change the activity code or the municipality of the seat. That is why two sole traders in the same activity and municipality can have different decisions, depending on when they started.

The calculator on the Tax Administration portal does all this: enter the code, municipality, registration date and year of birth and you get the monthly tax and contributions, the same as the decision would show. It is worth checking before registering, because a later change of code or seat changes the liability.

How much is paid: tax, contributions and an example

Tax of 10% is paid on the fixed income (Art. 38). The same amount is the contribution base (Art. 22(4) of the Law on Mandatory Social Insurance Contributions): 24% for pension and disability, 10.3% for health and 0.75% for unemployment insurance, 35.05% in total (Art. 44). The combined burden is 45.05% of the base.

Example: the decision fixes income at RSD 100,000 a month. Tax is 10,000, the pension contribution 24,000, health 10,300, unemployment 750; RSD 45,050 a month in total, or RSD 540,600 a year. You pay that amount in a month when you invoice 50,000 and in a month when you invoice 500,000.

The contribution base cannot be lower than the minimum monthly base, RSD 51,297 for 2026 (Arts. 36 and 37 of the Contributions Law); if the fixed income is lower, contributions are calculated on 51,297. A flat-rate sole trader who is also employed pays tax and the pension contribution under the decision but no health contribution, being insured through the employer.

Applying: through APR, deadlines and the decision

Anyone registering with the Business Registers Agency opts for the flat rate in the registration form; APR forwards the data to the Tax Administration and this counts as a filed tax return (Art. 94(2)). No separate PPDG-1R return or request is needed. Those who do not register with APR (lawyers, for instance) apply via the ePorezi portal within five days of registration with the Tax Administration or allocation of a PIB, and no later than 31 December.

An entrepreneur already keeping books who wants the flat rate applies for the following year by 31 October of the current year, electronically (Art. 42(1) and (3)). After VAT deregistration, the application is filed within 15 days of receiving the deregistration act, no later than 31 December for the next year. Once granted, the flat rate lasts while the conditions hold; it is not renewed annually (Art. 42(4)).

The Tax Administration delivers the decision only to the tax inbox on the ePorezi portal: to newly founded entrepreneurs within 48 hours of founding, to existing ones in January for the current year. The day of placement in the inbox is the day of delivery, so an electronic certificate or eID account is essential from day one. An appeal under the Tax Procedure and Tax Administration Act is possible, but it does not suspend payment.

Monthly duties, the KPO book and other records

Tax and contributions under the decision fall due within 15 days of the end of the month, i.e. by the 15th for the previous month (Art. 110(1)). When the 15th is a non-working day, the deadline moves to the next working day. Until the decision for the current year arrives, the amount from the previous decision is paid (Art. 109); the difference is settled when the new one comes. Each year has a new payment reference (BOP) from the decision.

A flat-rate sole trader keeps only the book of turnover, form KPO (Art. 43): every invoice issued is entered chronologically and the book is closed at year end. The KPO also proves that turnover stayed under RSD 6,000,000. In addition, the sole trader:

  • issues invoices with the mandatory elements and keeps them;
  • if selling to consumers at retail, has duties under the Fiscalisation Act;
  • if invoicing the public sector, sends the invoice through the e-invoicing system, although as a non-VAT taxpayer there is otherwise no e-invoicing duty;
  • files form PPDG-1R within 15 days of a change in the insurance basis, suspension or resumption of the activity, absence longer than 90 days, disability status or a move to books;
  • by 31 January reports a significant change in the volume of business from the previous year (Art. 93(2)).

Losing the status and moving to books

The right to the flat rate lasts until it is established that the conditions have ceased (Art. 42(4)). Three cases are typical.

Turnover above RSD 6,000,000: the entrepreneur files PPDG-1R within 15 days, the branch orders bookkeeping from 1 July of the current year or 1 January of the next (Art. 42(5)), and from that day PPDG-1S is filed for monthly self-assessed advances. Entering VAT, mandatory once turnover in the previous 12 months exceeds RSD 8,000,000 (Art. 33 of the VAT Act) or voluntary: books are kept from the date of VAT registration, without a decision (Art. 42). Changing the code to an excluded activity: the status changes automatically from the APR data.

Anyone moving to books pays 10% tax on actual profit, with the option of paying themselves a personal salary, and contributions on a different base; the details are on the page about moving from the flat rate to books.

Risks flat-rate sole traders often overlook

The independence test. A flat-rate sole trader who earns 70% or more of income from one principal, works on its premises, by its hours and with its equipment, may fail the test in Art. 85(1)(17); the fee is then taxed as other income at 20% plus the pension contribution, with no standard expense deduction. A separate page explains the nine criteria.

Annual personal income tax. The fixed income from the decision counts towards annual income; anyone whose total exceeds three times the average annual wage also files an annual return (Arts. 87 and 98).

A fictitious seat. Registering in a municipality with a lower average wage to get a lower base is a change the Tax Administration can challenge if the activity is actually carried out elsewhere; changing municipality also removes the protection against growth above 10%.

When to see a tax adviser or accountant

The flat rate is designed to be run without professional help. Advice is worth seeking when choosing between the flat rate and books with high real costs, when you have one large client and an independence-test risk, when you approach the RSD 6,000,000 limit or the RSD 8,000,000 VAT threshold, when you also work for foreign clients and need to align invoices and foreign-currency inflows, or when you receive an audit notice. For a disputed flat-rate decision, the appeal deadline is 15 days from delivery, and delivery is the day of placement in the tax inbox.

Sources

What to do

  • Check whether your activity can be flat-rate taxed at all: advertising and market research, wholesale and retail trade, hotels and restaurants, financial intermediation and real estate activities are excluded, as is any business in which other persons invest (Art. 40(2)(1)-(3)).
  • Estimate turnover: if you plan, or in the previous year earned, more than RSD 6,000,000, the flat rate is not an option (Art. 40(2)(4)). Watch VAT too: entering the VAT system automatically ends the flat rate (Art. 40(2)(5)).
  • Before registering, run the Tax Administration calculator: enter the activity code, the municipality of your seat, your year of birth and the registration date. The result is the monthly tax and contributions you will see in the decision.
  • When registering as an entrepreneur with APR, tick the flat-rate option in the registration form; no separate filing with the Tax Administration is then needed (Art. 94(2)). An entrepreneur already on books applies via ePorezi by 31 October for the following year (Art. 42(1)).
  • Obtain a qualified electronic certificate or an eID account: the decision arrives only in your tax inbox on ePorezi, within 48 hours of founding for new entrepreneurs and in January for existing ones. The day it is placed in the inbox counts as the day of delivery.
  • Pay by the 15th of each month for the previous month, using the payment reference from the decision (Art. 110(1)). Until the decision for the current year arrives, pay the amount from the previous one (Art. 109).
  • Keep the KPO form, the book of turnover, recording every invoice issued (Art. 43). If you sell to consumers, check your fiscalisation duties; if you invoice the public sector, the invoice goes through the e-invoicing system.
  • Track turnover during the year. Once you pass RSD 6,000,000, file form PPDG-1R within 15 days; the Tax Administration orders bookkeeping from 1 July of the current year or 1 January of the next (Art. 42(5)).

What it costs

A flat-rate sole trader pays 10% tax on the fixed income (Art. 38) and contributions on the same base: 24% pension and disability, 10.3% health and 0.75% unemployment, 35.05% in total (Arts. 22(4) and 44 of the Law on Mandatory Social Insurance Contributions). Example: with a fixed income of RSD 100,000 a month, tax is 10,000 and contributions 35,050, so RSD 45,050 a month regardless of what you actually invoiced. The contribution base cannot be below the lowest monthly base, RSD 51,297 for 2026. A flat-rate sole trader who is also employed pays only tax and the pension contribution under the decision, being health-insured through the employer. The exact figure for your activity and municipality comes from the Tax Administration calculator; an accountant is not a legal requirement.

FAQ

What is the turnover limit for flat-rate sole traders in 2026?

RSD 6,000,000 of total turnover, excluding VAT, in the year preceding the year for which tax is assessed, or planned turnover when the activity is just starting (Art. 40(2)(4) of the Personal Income Tax Act). The limit is unchanged in 2026 and is tied to the tax period rather than to your working year: whoever passes it on 25 November keeps books from 1 January, whoever passes it in April keeps books from 1 July of the same year. A separate, higher threshold of RSD 8,000,000 in the previous 12 months triggers mandatory VAT registration, but entering VAT itself ends the flat rate, so in practice 6,000,000 remains the ceiling.

How much does a flat-rate sole trader pay per month in 2026?

It depends on the activity, the municipality of the seat, years since registration and age, because the liability is calculated on the fixed income in the decision, not on actual earnings. That base carries 10% tax and 35.05% contributions (24% pension, 10.3% health, 0.75% unemployment), 45.05% in total. For a base of RSD 100,000 that is RSD 45,050 a month; for a base of RSD 60,000, RSD 27,030. The contribution base cannot be lower than the minimum monthly base of RSD 51,297 for 2026. Enter your details in the flat-rate tax and contributions calculator on the Tax Administration portal; the decision uses the same algorithm.

Who cannot be a flat-rate sole trader?

An entrepreneur in advertising and market research; in wholesale and retail trade, hotels and restaurants, financial intermediation and real estate activities (the exception is trade or catering from a kiosk, trailer or similar mobile unit, on request); an entrepreneur in whose business other persons invest; one with turnover above RSD 6,000,000; and one registered for VAT (Art. 40(2)). Eligibility follows the predominant activity, and the Decree treats as predominant any activity that produced more income in the year than the registered one, so changing what you do without changing the code does not protect the status.

How does the Tax Administration calculate the flat-rate tax?

Under the Decree on the conditions, criteria and elements for flat-rate taxation. The starting base for an activity group is the average monthly wage in the municipality of the seat multiplied by the number of employees in the municipality and the activity coefficient from Annex 1, divided by the municipality's population; the central Belgrade municipalities are pooled, and for programming, IT consulting, business consulting, architecture, engineering, design, taxi and some other activities national figures are used (Art. 4). The base is then multiplied by coefficients: 0.5 in the calendar year of registration, 0.8, 0.85 and 0.9 in the following three years, 0.9 for those under 30 and over 55, 0.85 for persons with disabilities and for pregnancy and childcare leave longer than 90 days, 0.5 for certified old crafts, and for some activities a zone coefficient from 0.7 to 1.1 (Art. 5). The product of the coefficients cannot be below 0.5. Until the end of 2027 the base may grow by at most 10% a year, unless you change the activity code or municipality (Art. 6).

What is the deadline to apply for flat-rate taxation for 2027?

An entrepreneur already in business and keeping books applies for the following year by 31 October of the current year, so by 31 October 2026 for 2027, only electronically via the ePorezi portal (Art. 42(1) and (3)). Someone founding a business through APR opts for the flat rate in the registration form, which counts as a tax return (Art. 94(2)). Someone not registered with APR applies within five days of registration with the Tax Administration or allocation of a tax number (PIB), and no later than 31 December. After deregistration from VAT the application is filed within 15 days of receiving the deregistration act. Once granted, the flat rate lasts until the conditions cease, with no renewal (Art. 42(4)).

Does a flat-rate sole trader have to keep books or hire an accountant?

No double-entry or single-entry bookkeeping. The Act requires only the book of turnover, form KPO, in which issued invoices are recorded chronologically (Art. 43). Beyond that, the sole trader issues and keeps invoices, pays the monthly amounts under the decision and files form PPDG-1R whenever something relevant to the flat rate changes: a move to books, a change in the insurance basis, suspension or resumption of the activity, sick or maternity leave over 90 days, disability status. An accountant is not required by law, although an entrepreneur who hires staff must run payroll and file wage returns, which in practice is outsourced.

What happens when a flat-rate sole trader exceeds RSD 6 million?

The right to the flat rate is lost and the entrepreneur moves to taxation of actual income with bookkeeping. Within 15 days of passing the limit, form PPDG-1R is filed, and the competent branch orders bookkeeping by decision from 1 July of the current year, if the limit was passed in the first half, or from 1 January of the next year (Art. 42(5)). From the date in the decision, form PPDG-1S is filed for self-assessed advance payments. Anyone who enters VAT because turnover passed RSD 8,000,000 in 12 months keeps books from the date of VAT registration, without a separate decision (Art. 42). Flat-rate amounts already paid for earlier months are neither refunded nor topped up.