The flat-rate tax regime is popular because it is simple, but it is precisely that apparent simplicity that lulls many entrepreneurs into complacency. Most problems with the Tax Administration do not come from bad intentions, but from a few typical, easily avoidable mistakes. In this article we walk through the ones we see most often and how to steer clear of them.

Mistake 1: Paying tax and contributions late

The most common misconception is that a flat-rate entrepreneur pays tax only once a payment “comes in” or on a quarterly basis. In Serbia, flat-rate tax and contributions are paid monthly, no later than the 15th of the month for the previous month. For example, the obligation for January must be settled by 15 February. The amounts are fixed and stated in the assessment decisions that the Tax Administration issues on the ePorezi portal.

If you miss the deadline, statutory default interest automatically accrues on the unpaid amount until it is paid. A small delay of a few days will not ruin you, but if it piles up over the year, the debt can grow uncomfortably large.

Set a reminder for around the 10th–12th of each month, so you have a buffer before the deadline.
Use the payment reference numbers exactly as stated in the assessment decisions.
Check your balance on ePorezi from time to time so you don’t have a “forgotten” liability.

Mistake 2: Not tracking the 6 million and 8 million dinar thresholds

There are two different thresholds and they are easy to confuse. The 6,000,000 dinar threshold relates exclusively to eligibility for flat-rate status and is tracked over the calendar year (1 January – 31 December). That amount includes both domestic and foreign turnover, so invoices to foreign clients count too. If you exceed it, you lose the right to flat-rate status and switch to double-entry bookkeeping.

The 8,000,000 dinar threshold is the PDV (VAT) threshold. It is tracked over the last 365 days (not the calendar year) and only includes domestic turnover. As soon as you exceed it, you enter the PDV system.

When crossing the 6 million mark, it matters at which point in the year it happens. If you exceed the threshold on or before 30 June, the obligation to keep books begins on 1 July of the same year. If you exceed it in the second half of the year, the switch takes effect on 1 January of the following year. The biggest mistake is not tracking total turnover at all, so the threshold catches you off guard.

Keep a running total of issued invoices throughout the year, not just by amounts collected.
If you carry out several business activities, turnover is added together and treated as a single threshold.
React in time: the deadline to apply to switch to the personal salary regime is 15 December.

Mistake 3: Incorrectly issued invoices

A flat-rate entrepreneur essentially issues invoices without PDV charged, but that does not mean the form is unimportant. Errors on invoices are a frequent cause of client complaints, problems collecting payment from abroad, and ambiguities in turnover records.

Mandatory elements: your details and the buyer’s details, the invoice number and date, a clear description of the service, the amount and currency.
As a flat-rate entrepreneur you are not in the PDV system, so the invoice should clearly state that PDV has not been charged.
Record every income in the KPO book, since it is the basis for tracking the threshold.
Pay cash you receive into your business account within the statutory deadline; don’t keep it “on the side”.

Mistake 4: Failing to report changes to the Tax Administration and APR

Many people think the job is done once they receive their assessment decision. In reality, every significant change must be reported, and within the prescribed deadlines. The ones most often forgotten are a change of business activity code and a temporary suspension or cessation of operations.

Change of business activity code or place of business: tax return (form PPDG-1R) no later than 31 January of the following year.
Suspension or cessation of business activity: notify the tax authority via a tax return within 30 days.
Crossing 6 million: an application to switch to the personal salary regime via ePorezi by 15 December, followed by the corresponding tax return.

Status changes to the business (address, name, suspension) are first recorded with the APR, and that data is then used for the Tax Administration’s decisions. That is why it is important to keep the register up to date, since your tax obligations depend on it.

Key takeaways

Tax and contributions are paid monthly, by the 15th of the month for the previous month.
6,000,000 dinars is the flat-rate threshold (calendar year, domestic + foreign turnover); 8,000,000 is the PDV threshold (365 days, domestic only).
Track total turnover throughout the year so the threshold doesn’t surprise you; the deadline to switch to the personal salary regime is 15 December.
Invoices must contain all mandatory elements, and every income goes into the KPO book.
Changes (activity code, address, suspension) are reported to the APR and the Tax Administration within the deadlines.

If you need help tracking thresholds, deadlines, or reporting changes, get in touch with us.

Mistake 1: Paying tax and contributions late

Mistake 2: Not tracking the 6 million and 8 million dinar thresholds

Mistake 3: Incorrectly issued invoices

Mistake 4: Failing to report changes to the Tax Administration and APR

Key takeaways

Sources