If you often receive payments made by other citizens, you could face tax obligations and consequences. Namely, depending on how often and how much money you receive, as well as from whom and for what purpose, the tax administration can interpret those payments as your income or gift, on which tax is paid. In this text, we will explain how these types of payments are taxed and how you can avoid unpleasant surprises.
The tax authorities’ interpretation
If you do not have a registered business or non-profit organization, the tax authorities may interpret these payments as your income or gift, which is taxed at 20% or 2.5%. If you have a registered non-profit organization, you may be exempt from gift tax on money you receive for your non-profit work.
Personal income tax is a tax that is paid on all the income you make as a natural person, whether it is salary, pension, sick pay, royalties, interest, dividends, or some other type of income. The personal income tax rate is 10%, except for the so-called other incomes, for which 20% is paid. Other income is all income that is not included in other income categories, such as awards, scholarships, fees for volunteering, fees for membership in boards and commissions, and similar.
If you often receive payments from other citizens, and you do not have a registered business or non-profit organization, there is a risk that the tax administration will treat these payments as your other income and ask you to pay a 20% tax on them. This especially applies to cases where payments are frequent and come from several different persons, which indicates that you are engaged in some activity that you have not declared. For example, if you sell products or services through social networks or ads, and the money is paid by customers to your account.
A gift tax
A gift tax is a tax that is paid on a gift you receive in money or things that can be valued in money. The gift tax rate is 2.5%, and it is paid only if the value of the gift is greater than RSD 100,000 in one calendar year. If the value of the gift is less than that amount, no tax is payable.
If you rarely receive payments from other citizens, and you do not have a registered business or non-profit organization, there is a possibility that the tax administration will treat these payments as your gift and ask you to pay a 2.5% tax on them. This applies especially to cases where the payments are larger and come from the same or a small number of people, which indicates that you received money without any consideration. For example, if a relative or friend pays you money for your birthday or some other occasion.
There is an exemption from the payment of gift tax for non-profit organizations that were established to achieve a general purpose and that use the funds from donations exclusively for the purposes for which they were established. This means that if you have a registered non-profit organization, such as an association, foundation, cooperative, religious community or other, you do not have to pay gift tax on the money you receive from other citizens for your humanitarian, educational, scientific, religious, environmental, sports or cultural work. However, you must take care that you have documentation that proves that you are a non-profit organization and that you use the money for its intended purpose.