What is the Difference Between Gross and Net Salary in Serbia?

Every month, the company must calculate and pay the workers wages – gross wages (net wages increased by taxes and contributions). There is a difference between gross and net wages.

The total salary calculation for one employee depends on various parameters. When it comes to the minimum wage, it depends on the type of employment contract, the number of working hours in that month, then on the wage increase and other conditions.

And in this case, there is a difference between gross and net minimum wage.

The difference between net and gross salary

Gross salary and net salary in accounting do not have the same meaning.

Net salary

An employee receives a basic salary for his work, which is obtained as a product of the price of work and the number of working hours. The price of work per one working hour for the year 2024 is 271.00 dinars. The price per hour is in the net amount.

The worker’s salary can be increased, so when the increase is added to the basic salary, the net salary is obtained. The amount of wages paid to the worker at the end of the month, as wages, is net wages. The right to pay salary is one of the basic rights of every employee.

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Gross salary

Gross wages are the total cost of the employer for the salary of one employee. That is, it is the sum of net salary and all the employer’s obligations to the state. Obligations include income tax and mandatory social security contributions. All together, it is included in the salary (salary) of the employee.

The employer has the obligation to pay the full amount for taxes and contributions, which in professional terminology are defined as contributions at the expense of the employee and contributions at the expense of the employer.

For the exact amount of all monthly obligations related to salary, we recommend hiring an accounting agency that can do a detailed calculation of net salary with taxes and contributions.

Gross minimum wage

When calculating wages for the minimum wage, the basic wage is always increased by tax and contributions at the expense of the employee and at the expense of the employer. In fact, the gross minimum wage consists of the minimum wage, taxes, contributions and all increases to which the employee is entitled based on the employment contract.

This is how the procedure for obtaining the gross minimum wage, which is valid for LLC companies and for entrepreneurs who keep business books, looks like.

The gross amount of the basic minimum wage or gross 1

When taxes and employee contributions are added to the net amount, the gross amount of the basic minimum wage or gross 1 is obtained (net salary increased by income tax and employee contributions).

Gross minimum wage or gross 2

When increments are added to the gross amount of the basic minimum wage – past work, hot meal, holiday pay, work during holidays, overtime or night work, etc., the basis for calculating the gross minimum wage is obtained.

Then, when taxes and employer contributions are added to this base, the gross minimum wage is obtained – gross 2.

According to the Law on Social Contributions, the monthly basis of contributions cannot be lower than the lowest prescribed basis for calculating social contributions. The new lowest prescribed basis for the calculation of social contributions for the year 2024 was determined in the amount of 40,143 dinars. Then, the new highest monthly basis for the year 2024 on which tax and social contributions are calculated and paid is the amount of 573,470 dinars.

For the purposes of calculating and calculating salaries, we recommend that you consult an accounting agency that can provide professional accounting services and help with the calculation of costs for employees.

Minimum wage in Serbia in 2024

When calculating contributions, as well as the gross minimum wage, the following provisions of the Law on Social Contributions should be taken into account:

1. if the lowest prescribed basis for calculating social contributions is higher than the gross minimum wage, the contributions are calculated on the lowest prescribed basis;
2. if the lowest prescribed basis for calculating social contributions is less than the gross minimum wage, the contributions are calculated on the amount of the gross minimum wage.

First, it is necessary to determine the net minimum wage, in order to then calculate the basic gross minimum wage. As of February 1, 2024, the new non-taxable salary amount applied for salary calculation is 25,000 dinars per month and will be valid until January 31, 2025. year. The applicable wage tax rate is 10%.

Based on the formula and non-taxable amount, a table of net minimum wage and basic gross minimum wage for 2024 was formed, individually by month: