Paušal, Model B, or Employed: The Work Status Decision, Priced

If you have foreign clients and your work is not on the excluded list, register as a preduzetnik and elect paušal. If you have one foreign client who behaves like an employer, paušal is still probably right but you have a second problem, and it is the expensive one. If your income is large or your real business costs are large, Model B — actual bookkeeping — starts to win. If a Serbian company is hiring you, let them employ you and stop reading calculators: the tax question is theirs, not yours.

That is the whole ranking. The rest of this post is why, with the numbers, and with the part nobody puts on the same page: your work status and your residence permit are the same decision. The basis you take for privremeni boravak is usually your work status, so choosing badly here does not just cost you money in April. It costs you the folder you have to rebuild in front of a counter.

Every figure below was checked on 2 September 2026 against the source named beside it. This area moves — the paušal ceiling has an open proposal against it right now, and I will come back to that at the end.

The three things, before the arithmetic

People use these words interchangeably and they are three different legal animals.

Paušal (paušalno oporezivanje) is not a company type. It is a taxation method available to a preduzetnik — a registered sole trader. The Poreska uprava issues you a decision saying what you owe each month, based on a formula, and that number does not move when your income moves. You keep one book, the KPO (knjiga o ostvarenom prometu), which is a running list of what you invoiced. That is the entire accounting burden.

Model B is the same preduzetnik, taxed on actual profit, keeping real business books. Income minus recognised expenses, tax on the difference. More paperwork, a knjigovođa you cannot skip, and an option paušalci do not have: lična zarada, electing to pay yourself a formal salary out of the business, which changes how your contributions are calculated.

Employment is a Serbian company putting you on its payroll under an ugovor o radu. You are not a business. Payroll tax and contributions are withheld and paid by the employer, and your monthly admin is zero.

There is a fourth animal — a d.o.o., a limited company — and for most people arriving here it is the wrong answer for the first two years. It exists for when liability, partners or scale make it necessary, and it has its own post further down this site: when the company is the right answer.

Paušal: what actually determines your number

This is the part that surprises people. Your paušal bill has almost nothing to do with what you earn.

The Uredba o bližim uslovima, kriterijumima i elementima za paušalno oporezivanje sets a starting base for your municipality and activity code, computed from a published formula — average salary multiplied by the number of employed people, divided by the number of inhabitants — and then adjusts it with corrective coefficients. One of those coefficients is how long you have been registered:

• up to 12 months registered at 31 December of the preceding year — starting base × 0.8
• 12 to 24 months — × 0.85
• 24 to 36 months — × 0.9
• more than 36 months — × 1

So a new preduzetnik pays the least, and the bill climbs on a schedule for three years regardless of whether the business grows. Budget for that. It is the single most common unpleasant surprise in year three, and nobody selling you a registration service mentions it.

On the base the Uredba produces, the published rates are 10% income tax, plus contributions — PIO 25.5%, health 10.3%, and unemployment 0.75%. The contributions are the large half. People say “the tax” when they mean the total, and then discover that the tax is the small line.

Do not let me or anyone else give you a monthly figure. It varies by municipality, by activity code, and by how long you have been registered, and a number invented on a blog gets quoted back at an accountant as if it were a benchmark. The Ministry of Economy runs an official calculator inside its Mali biznis informator at informator.preduzetnistvo.gov.rs/kalkulator, and it says of itself that the result is indicative and unofficial. Use it to get the order of magnitude. Your binding number arrives as a rešenje from the Poreska uprava, in your electronic tax mailbox, and only that one is real.

Who cannot use paušal at all

Article 40 of the Zakon o porezu na dohodak građana excludes whole fields from the regime, whatever your income. The excluded set includes advertising and market research, wholesale and retail trade, hotels and restaurants, financial intermediation, and real-estate activities.

Read that list again if you are in marketing. An advertising-agency activity code cannot be paušal — not at any income level, not with any argument. Registering under a software or consulting code because it is convenient, while actually doing agency work, is not a workaround; it is a misdescription of your activity that a tax inspection reads exactly the way you would expect. Pick the code that describes what you do, then find out what regime it allows. Not the reverse.

The ceiling

Paušal ends at 6,000,000 RSD of turnover in a calendar year. Crossing it does not fine you; it moves you onto books. The timing rule is worth memorising because it decides whether you have six weeks or six months to prepare:

• cross the ceiling in the first half of the year, by 30 June → you keep business books from 1 July of that same year
• cross it in the second half → books from 1 January of the following year

A separate and frequently confused number: the VAT threshold is 8,000,000 RSD of turnover in the previous 12 months. Two different limits, two different consequences, and the paušal one arrives first. The month you cross it has the full sequence.

Model B: when the books are worth keeping

Model B wins in two situations and loses in every other one.

It wins when your real, documented business expenses are large relative to income — you rent premises, you buy equipment, you subcontract, you travel for the work. Paušal gives you no deduction for any of that, because it never looks at your income in the first place. Under Model B those costs come off before tax.

It wins when your income is high enough that a fixed base stops being a bargain — which, given that the paušal base is derived from a municipal average rather than from you, usually means the ceiling is close anyway and the choice is being made for you.

Model B also unlocks lična zarada — electing to pay yourself a formal personal salary from the business, which changes the base your contributions are computed on. The election is not automatic and its deadline is unforgiving: by 15 December, filed electronically through the Poreska uprava’s ePorezi portal, for the year starting 1 January. It is not filed annually — once made, it stands until you file notice that you are stopping. A newly registering preduzetnik makes the election at the moment of registration with the business register, or electronically within five days of tax registration or PIB assignment, and no later than 31 December of that year. Paušalci cannot use it at all; there is no profit figure for it to sit on.

The cost of Model B is a knjigovođa every month, forever, and it is not optional in the way people hope it is. That is a real line item and I am not going to invent a price for it — what you are actually buying covers how to get comparable quotes rather than a number I made up.

Employment: the cheapest option to administer, and the least flexible

If a Serbian company hires you, the arithmetic stops being yours. The employer computes and pays everything. For 2026 the published rates are:

• Salary tax: 10%, applied to gross salary above a non-taxable monthly amount of 34,221 RSD for 2026 — up from 28,423 RSD in 2025. This figure is indexed and republished annually; check the current one rather than carrying it forward.
• Employee contributions: 19.90% — PIO 14%, health 5.15%, unemployment 0.75%, withheld from your gross.
• Employer contributions: 15.15% — PIO 10%, health 5.15%, paid on top by the company.

What employment buys you, beyond zero admin: a health insurance status that works without you arranging it, an income that a landlord and a bank both recognise immediately, and a residence route where the company carries the paperwork. What it costs you is every kind of flexibility, and a permit whose validity is tied to a job you might leave.

For a foreigner the employment route also has a condition that self-employment does not: working here requires a residence approval and a work authorisation, which since 2024 are obtained together through the single procedure — the Unified Permit covers what changed and who files what.

The three, side by side

The thing that decides it more often than the arithmetic

You can be a perfectly registered paušalac and still have your income reclassified.

Article 85 of the Zakon o porezu na dohodak građana, in force since 1 March 2020, sets out nine criteria describing a preduzetnik who is, in substance, an employee of one client. Meet five of the nine in relation to a single nalogodavac and that client’s payments to you are treated as “other income” rather than business income — taxed at 20%, with no standardised-cost deduction, and with pension contributions on top.

One of the nine is a pure arithmetic trap: 70% or more of your income over 12 months from one client. If you moved here with one employer-shaped client and turned yourself into a company to keep them, read the nine criteria before you file anything. It is the highest-stakes thing on this site, and it is where the money actually is.

I am not going to tell you that you pass. Nobody honest will, including a knjigovođa, because the test is applied to your facts by an inspector and not to a summary by a blog. What a knjigovođa can do is read your actual contract against the nine criteria and tell you which ones you are sitting on. Pay for that conversation before you sign a contract, not after.

The permit seam, which is the real reason to get this right

Here is what makes this decision different in Belgrade from the same decision anywhere else you have lived.

Your privremeni boravak has a legal basis, and for most people arriving to work, that basis is their work status. Self-employment supports one basis. Employment supports another. They are applied for differently, they are renewed differently, and they fail differently. Changing your work status mid-permit is not a neutral administrative act — it can be a change to the ground your stay rests on.

So the sequence matters. Deciding your work status first and your permit basis second is the right order, and doing it the other way round is how people end up holding a permit whose basis no longer describes what they do. If you have not yet worked out which route you are on, start with the ranking and come back here.

Two practical consequences people miss:

• The address registration is upstream of all of it. You cannot build a residence file on an address nobody will declare, and a landlord who will not be recorded is not a paperwork inconvenience — it is a permit problem.
• The bank is downstream of all of it. Your work status determines which account you can open, what the bank asks for, and how foreign payments reach you — the paperwork the bank wants is a separate exercise from the tax one and people are routinely blindsided by it.

So: the decision, in order

1. Look up your activity code first. If it falls in the article 40 exclusions, paušal is closed and the choice is Model B or employment. Everything downstream changes.
2. Estimate a year of turnover against 6,000,000 RSD. Comfortably under and paušal is the default. Near it or over it, you are planning for books either way, so plan properly.
3. Count your real deductible costs. Near zero — which is the honest answer for most people working from a laptop — and paušal wins on arithmetic alone. Substantial, and Model B deserves a real calculation with a knjigovođa.
4. Read the nine criteria against your actual client contract. Before registration, not after. This can override steps 1–3 entirely.
5. Only then choose your residence basis, and make sure the two describe the same life.
6. Run the official calculator for the order of magnitude, and wait for the Poreska uprava’s rešenje for the real number.

The failure mode is not choosing wrong. It is choosing in the wrong order — picking a permit basis because it looked simpler, then discovering the work status it implies is one you cannot afford or cannot legally use. Unwinding that costs months.

What changed, and what is about to

Two things worth carrying:

The non-taxable salary amount jumped for 2026 — 34,221 RSD monthly, against 28,423 RSD in 2025. If you are comparing an employment offer against a figure someone quoted you last year, the comparison is stale.

The paušal ceiling has a proposal against it. There is an active push from business associations to raise the limit from 6,000,000 to 8,000,000 RSD. As of 2 September 2026 it is a request, not law, and the ceiling is still six million. Do not plan a year of invoicing around a number that has not been enacted. If it changes, it changes in the Službeni glasnik and nowhere else first.

Everything on this page is mechanics, not advice about your situation. I am not an accountant, I have no referral arrangement with one, and there are no affiliate links here. The paušal decision is cheap to get right at registration and expensive to unwind afterwards, which is the entire argument for paying a knjigovođa for one hour before you file, and the entire argument against paying anyone a retainer to type a form for you.

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