Serbia Rental Income Tax Guide 2026

Overview — Rental Income Taxation

Rental income from property leasing is classified as other income under the Serbian IIT system and taxed at the flat 10% rate. Both residential and commercial property rental income are subject to the same tax treatment. Landlords have two options for calculating taxable income: the deemed expense method (prescribed expenses) or actual expenses method.

Deemed Expense Method (Prescribed Expenses)

The default and most commonly used method is the deemed expense approach:

• A 25% deemed expense deduction is applied to gross rental income
• Taxable income = 75% of gross rental receipts
• IIT at 10% = 7.5% effective tax rate on gross rental income
• No documentation of actual expenses required

For example, on RSD 100,000 monthly rental income: deemed expenses = RSD 25,000, taxable base = RSD 75,000, IIT at 10% = RSD 7,500. Effective rate on gross = 7.5%.

Actual Expense Method

Landlords may elect to deduct actual expenses instead of the deemed 25% rate. Allowable expenses include maintenance, repairs, management fees, insurance, property tax, interest on mortgage loans, and depreciation. This method may be beneficial for properties with high actual expenses (e.g., older properties requiring significant maintenance).

Filing and Payment

Rental income must be declared annually in the personal income tax return by 15 May of the following year. Tax is paid in installments: advance payments during the year (based on prior year's income) with a final settlement upon filing the annual return. Landlords can register as rental income taxpayers with Poreska uprava for streamlined compliance.

Rental Income from Abroad

Serbian tax residents must declare worldwide rental income. Foreign rental income is taxable in Serbia but a foreign tax credit is available for taxes paid in the source country. Serbia's extensive DTT network (65+ treaties) may also affect the taxation of cross-border rental income.

FAQs

What is the effective tax rate on rental income?

The effective tax rate using the deemed expense method is 7.5% of gross rental income (25% deduction + 10% IIT on the remaining 75%).

Can I deduct mortgage interest?

Yes, if using the actual expense method, mortgage interest on loans used to acquire or improve the rental property is deductible.

Do I need to register with Poreska uprava?

Yes, landlords earning rental income should register with the tax administration. Registration can be done electronically through the Poreska portal.

Disclaimer

This guide provides general information about Serbian rental income tax for 2026. Tax laws and rates may change. Always consult with a qualified Serbian tax advisor or Poreska uprava directly. InvestmentKit does not provide tax advice.