Serbia: Pausal/Freelance Model vs Native Teams Remoter Plan

What is the Native Teams Remoter plan?

The Native Teams Remoter plan is crafted to provide freelancers with the best of both worlds — the security and benefits of traditional employment and the freedom of working on your own terms. With our legal entities in more than 65 countries, you can get properly employed in the country of your choice and become eligible for any employment perks. 

In addition, the Remoter plan also includes the suite of payment tools from the Payments plan. This entails everything from simplified client invoicing and a multi-currency digital wallet to an exclusive Native Teams card for online or in-store purchases. 

Staying on top of tax compliance doesn’t have to be daunting — Native Teams has practical solutions that will ensure you meet all of your tax obligations and optimise the owned tax amount. Moreover, the tax reporting feature assists you in compiling financial documents for transparent financial reporting and compliance.

Remoter plan vs Freelancing tax model

The sections below will dissect the differences between the Native Teams Remoter plan and the Serbian freelance tax model, helping you gain a firm grasp of their calculations.

Freelancing tax model

Freelancers in Serbia have the option to choose between two freelancing tax models — Model A and Model B.

Model A is more advantageous for freelancers with lower quarterly incomes or those who freelance for an extra income, as this model sets standardised costs at RSD 96,000. 

In practical terms, the taxable base is calculated by subtracting RSD 96,000 from the freelancer’s quarterly income, upon which a 20% tax rate is applied. Contributions for mandatory pension and disability insurance are calculated based on the freelancer’s taxable income at a rate of 24%. Health insurance contributions are also derived from the tax base, with a minimum threshold of approximately EUR 390, subjected to a 10.3% rate.

Model B is a preferable option for freelancers with higher incomes as it incorporates two categories of standardised costs — a fixed sum of RSD 57,900 + a percentage-based amount equivalent to 34% of the total earned income.

With this model, the taxable base is initially reduced by RSD 57,900, followed by an additional reduction of 34% of the total income. The remaining sum after these deductions is subject to taxation at a rate of 10%. Unlike model A, this model requires that the contributions for mandatory pension and disability insurance be approximately EUR 890 per quarter or above. The base for health insurance contributions follows the same parameters as model A.

What are the limitations?

1. Exceeding the standardised threshold — When opting for Model A, you may face limitations if your quarterly income exceeds the standardised threshold of RSD 96,000. This could result in higher tax liabilities. 
2. Unified tax rate — While the tax rate of 20% is applied uniformly to the taxable income after deducting standardised costs, freelancers may find this rate burdensome, especially if their income fluctuates or if they are in a higher income bracket.
3. Minimum contribution rate — Model B imposes a minimum contribution base of approximately EUR 890 for mandatory pension and disability insurance. Freelancers whose income falls below this threshold may find it challenging to meet this requirement, leading to additional financial strain.
4. Complex calculation — The calculation for Model B involves deducting both a fixed sum and a percentage of the total income, which may be complex for freelancers to calculate. This complexity could lead to errors in tax reporting and compliance.

Native Teams Remoter plan advantages

The Remoter plan offers freelancers under Model A and Model B diverse payment tools, including an invoicing feature. Users can receive their funds in multiple currencies and spend them directly through the Native Teams card. Moreover, with the Remoter plan priced at $49, freelancers can declare their income under Model A or Model B with a flat fee structure. 

When crunching down the numbers, the Remoter has superior financial advantages over Model A yet falls short in comparison to Model B. However, for an additional 30.000 RSD per month, freelancers gain access to the benefits associated with traditional employment. This includes health insurance, pension, regulated employment status, and compliant contracts and documents. Plus, our EOR program enables employees to receive their salary in their local currency on their bank account and choose how they want to access those funds. 

Remoter plan vs Paušalna firma (Sole proprietorship)

Freelancers in Serbia can capitalise on favourable taxation rules by operating under a Paušalna firma. Let’s break down how this method works, along with its associated expenses and limitations.

Paušalna firma (Sole proprietorship)

Paušalna firma is a type of sole proprietorship which is chosen by individuals who aim to provide services independently or run a small business without establishing a separate legal entity such as a corporation or partnership.

One of the main advantages of operating as a sole proprietorship in Serbia is the simplified tax system. Instead of paying various taxes and contributions separately, sole entrepreneurs pay a flat-rate tax based on their estimated income. The tax costs for a software development agency as a sole proprietorship depend on the type of services offered and the location. 

This flat-rate tax covers income tax, social security contributions, and other taxes and contributions. Individuals can also set their own tax rate based on their fluctuating income. However, their income can’t surpass the threshold of 6,000,000 RSD on a yearly basis. 

What are the limitations?

1. Limited legal protection — Users of the sole proprietorship model remain liable for the debts and obligations of the business. So, personal assets might be at risk if the business undergoes financial or legal difficulties. 
2. Taxation — Although the simplified tax system might benefit certain individuals, it can also lead to increased tax burdens compared to alternative business models, particularly as the business expands. 
3. Regulatory compliance — The regulatory requirements for a sole proprietorship are generally simpler than other business structures, but there are certain legal and administrative duties that must be met by the owner. Not complying with these requirements can result in penalties or consequences.

Native Teams Remoter plan advantages

Besides its core employment solutions, the Remoter plan comes with additional benefits that streamline freelancers’ tax management. Below, we outline some of them:

• No paperwork — Dealing with administrative tasks and handling your taxes can be daunting. That’s why we take all of these tasks off your plate, so you can focus on your craft. 
• Full compliance — It’s important to stay on top of your tax obligations to avoid any legal pitfalls. Thanks to our team of legal experts, you can ensure full tax compliance no matter what type of work you do. 
• Further customisation with add-ons — You can go a step further and personalise your Remoter plan by purchasing add-ons, like work visas and permits, additional employee benefits, travel booking, coworking spaces, weekly pay, and many more. 
• Expert guidance — Our team of experts possess a thorough knowledge of every tax, payment, and employment matter, leaving you in safe hands. 
• Local support and communication — We aim to provide smooth and transparent communication to ensure optimal user experience. 
• Easier access to loans and mortgages — Individuals employed through sole proprietorship typically experience challenges when it comes to obtaining loans, as the company has to undergo rigorous scrutiny. With an employment status regulated through Native Teams, you can bypass the scrutiny and access a loan and mortgage with ease. 

To wrap up

Making tax contributions as a freelancer in Serbia involves careful consideration of various models and their implications. While the sole proprietorship and freelance tax models offer flexibility, they come with complexities and limitations, especially concerning taxation thresholds and calculations.

Native Teams’ Remoter plan emerges as a comprehensive solution, offering freelancers the benefits of traditional employment alongside the flexibility of freelancing. With streamlined tax management, diverse payment tools, and global compliance, the Remoter plan provides a hassle-free experience for freelancers seeking stability and efficiency in their professional endeavours.