Tax incentives

In order to support and encourage the development of old age saving , the government has introduced certain tax and other incentives for both employers and individuals.

TAX INCENTIVES FOR EMPLOYERS:

Employer's payments of pension contributions for its employees up to RSD 5,589 per employee are personal income tax and mandatory social insurance contributions exempt.

In the following table a comperative view of employer's expenses if RSD 5,000 are paid to VPF as pension contribution or the salary of the employee is increased for the same amount:

  EXPENSE SALARY (RSD) PENSION CONTRIBUTION (RSD)
1 Net amount 5,000 5,000
2 Gross amount I (net/0.701) 7,132.67 -
3 Contributions paid by employee 19,9 (2x19,9) 1,419.40  
4 Personal income tax 10% (2x10%) 713.27  
5 Contributions paid by employer 17,9% (2x17,9%) 1,276.75  
6 Gross amount II (2+5) 8,409.42 5,000
7 Additional expense (6-1) u % 68.19% 0%

Note: the percentage is aproximate and depends on the salary and tax exempt part of the salary.

Financial advantages and benefits of the VPF contribution payments for the employer are clear (no additional expenses), whereas in case of the salary increase additional expenses are around 70%. 

TAX INCENTIVES FOR INDIVIDUALS:

Citizens are also encouraged to save, since the pension contributions up to RSD 5,589 paid via administrative ban are personal income tax (10%) exempt.

The table below shows an example of savings if a member makes contributions through administrative ban:

PENSION CONTRIBUTION (RSD) TAX (%) TAX INCENTIVE (RSD) ANNUAL SAVING (RSD)
5,589.00 10% 558.90 6,706.80

 

 

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