After the employee and employer, based on the documentation listed, prove that the condition was met, that the employee is considered to be a newly settled taxpayer, in the time of exercising the rights to the tax reduction, it will be necessary to prove that the entity, after concluding the employment agreement, fulfills the prescribed condition, i.e. that they are considered a taxpayer of the Republic of Serbia.
That is, in accordance with Article 7, paragraph 2 of the Law on Personal Income Tax:
- Has a residence on the territory of the Republic of Serbia, or has resided in the Republic of Serbia for business or living purposes, or
- has resided on the territory of the Republic of Serbia continuously or discontinuously for 183 or more days in 12 months which starts and ends in the current tax year.
The rulebook prescribes that this can be proved by registering one’s address or residence, and for foreign citizens, by obtaining a temporary or permanent residence for the foreign employee and members of their family.
Namely, the definition of a taxpayer in accordance with the quoted item 1, from Article 7, paragraph 2 of the Law, was always undefined and disputable – what is considered a business and living purpose, and moreover, how can one prove it?
Having in mind the regulation introduced by this rulebook, it could be said that it is firstly an act where one could find a basis to comprehend this fundamental provision of the Law.