{"id":39957,"date":"2024-12-07T15:36:00","date_gmt":"2024-12-07T14:36:00","guid":{"rendered":"https:\/\/zuniclaw.com\/tax-incentives-for-employees-in-research-and-development\/"},"modified":"2025-10-20T11:16:17","modified_gmt":"2025-10-20T09:16:17","slug":"tax-incentives-for-employees","status":"publish","type":"post","link":"https:\/\/zuniclaw.com\/en\/tax-incentives-for-employees\/","title":{"rendered":"Tax Incentives for Employees in Research and Development"},"content":{"rendered":"\t\t
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The tax incentives which have been introduced in Serbia in the past years in the field of research and development demonstrate the increasing importance of encouraging innovations and creativity. You can read more about the already existing tax incentives in the Serbian legal system in our text Checklist of Tax Incentives for Companies In Serbia \u2013 Don\u2019t Give Away Your Money Just Yet!<\/a><\/p>

The first R&D incentive in Serbia for companies working on research and development enabled the research and development expenses to be counted in the double amount in the tax balance, allowing the possibility of a significant reduction of the corporate income tax base of such companies.<\/p>

R&D incentives have gone a step further by presenting the solution in the form of the Personal Income Tax Law from the beginning of 2022, which provides tax exemption from the obligation to pay 70% of taxes for salaries of employees who are directly engaged in research and development, proportionally with the time these persons spend on such positions.<\/p>

The abovementioned incentive has been applied since March 1, 2022, and in mid-April of the same year, the Government adopted the special Rulebook on the conditions and manner of exercising the right to tax exemption based on salaries of employees engaged in research and development (hereinafter: Rulebook), which specifies the conditions for exercising the tax exemption.<\/p><\/div><\/section>

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Who Is Entitled to Tax Exemption?<\/h2><\/div>
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An employer-legal person is entitled to tax exemption exclusively based on research and development projects conducted on the territory of the Republic of Serbia<\/strong>, which conducts research and development at their expense<\/strong> and retains the ownership<\/strong> of intangible assets that may arise from research and development.<\/p>

Therefore, an employer who can use this exemption is not considered to be <\/strong>a legal person that conducts research and development on behalf of others and does not become the owner of intangible assets incurred by such research and development activities (service research and development).<\/p><\/div><\/section>

For example, XYZ, an outsourcing company that develops custom software cannot use this incentive for its employees. Why? Simply put \u2013 if intellectual property rights on created intangible assets (software) are transferred to another company upon the finished project, that implies that research and development is conducted for another person and not for their own needs, thus the conditions for R&D incentives are not met.<\/em><\/p>

From the previously explained, it can be easily concluded that the intention of introducing this incentive is motivating the innovation in our country, instead of its \u201cexport\u201d abroad.<\/em><\/p><\/blockquote><\/div><\/section>

An employer is not considered a legal entity established abroad, a branch, or a representative office of a foreign legal person in Serbia. Therefore, only a Serbian legal entity is entitled to an exemption based on the salaries of employees in research and development.<\/u><\/p>

In addition, employers who use any type of incentive for a specific person, except when they use the exemption in accordance with the provision of the law regulating mandatory social security relating to the same type of incentive (explained later in the text), based on entering into an employment relationship with that person, are not entitled to this tax exemption<\/a> for that person.<\/p>

In conclusion, you may not combine this incentive with the incentive for employment of returnees and foreigners<\/a> or other employment incentives, and the only possible option is to combine it with the existing R&D incentive<\/a> relating to the double deduction of research and development expenses in the tax balance.<\/p><\/div><\/section>

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What Is Considered to Be a Project?<\/h2><\/div>
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The project, which is the basis for the use of this incentive is considered to be a project in which at least 90%<\/strong> of all employees working on research and development conduct their project activities on the territory of the Republic of Serbia.<\/p>

However, the project will be considered as conducted on the territory of the Republic of Serbia even if some parts are performed outside the Serbian territory, provided that the performance of such activities is conditioned by specific physical, geographical, and natural factors which cannot be ensured on the territory of the Republic of Serbia.<\/p><\/div><\/section>

For example, if your company works on the development of a modern technology system used for filtering seawater, it is certain that some research may not be conducted on the territory of the Republic of Serbia, but you must move part of the project to the country with access to the sea. In that case, it is still possible to use an R&D incentive, if all other conditions are met.<\/em><\/p><\/blockquote><\/div><\/section>

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Who Are Employees in R&D?<\/h2><\/div>
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R&D employee is an employee who:<\/p>