Can Employees Continue Receiving Salary from China While on Assignment in Serbia?

From an international HR perspective, maintaining home-country payroll for employees stationed abroad requires careful consideration of tax regulations. While Chinese parent companies can technically continue paying salaries to employees dispatched to Serbia, this approach must comply with specific conditions to avoid triggering Serbian tax obligations.

To maintain payroll from China without creating Serbian tax liability, all three of these conditions must be met:

The employee spends fewer than 183 days in Serbia during any 12-month period
Compensation is not paid by a Serbian employer or their representative
Payment is not borne by a permanent establishment that the Chinese company maintains in Serbia

If any of these conditions are not satisfied, Serbia retains the right to tax the employee's salary, regardless of where the payment originates.

Practical consideration: Even when these conditions appear satisfied, Serbian tax authorities may still require temporary assignees to pay local income tax based on domestic legislation, unless explicitly exempted under the bilateral tax treaty.

Local Tax Obligations for Employees Stationed in Serbia

When an employee's stay in Serbia reaches 183 days, they typically become Serbian tax residents, triggering several compliance requirements.

Serbian Tax Requirements

Global income becomes subject to Serbian income tax
Employment income taxed at a flat rate of 10%
Monthly basic allowance available to reduce taxable income
Employer must register with Serbian tax authorities and handle payroll reporting

Chinese Tax Considerations

Employees maintaining Chinese tax residency must declare worldwide income
Annual tax reconciliation required between March 1 and June 30
Foreign tax credits available for taxes paid in Serbia, preventing double taxation

Applying the China-Serbia Tax Treaty

The Double Taxation Avoidance Agreement between China and Serbia provides the framework for determining tax jurisdiction. The treaty conditions align closely with the payroll location criteria mentioned earlier.

Key determining factors remain the 183-day threshold and the source of remuneration payments.

Completing Tax Formalities Upon Employee Return

Pre-departure Procedures in Serbia

Tax residents must complete final tax settlement before leaving Serbia
Submit annual income tax return documenting all earnings
Obtain tax clearance certificate for Chinese tax filing purposes

Post-return Compliance in China

Compile documentation of Serbian income and tax payments
Prepare supporting materials (income statements, tax certificates, translations)
Complete annual individual income tax reconciliation through electronic or in-person channels
Claim foreign tax credits and settle any outstanding tax liabilities

Strategic HR Planning for Serbia Assignments

Carefully monitor assignment duration to anticipate 183-day threshold implications
Implement local tax registration for long-term assignments
Assist employees with obtaining and translating tax documents for home-country compliance
Clearly define compensation structure and tax responsibilities in assignment agreements

Designing Compliant International Assignment Programs

Effective global mobility programs require proactive tax planning and documentation management. Companies like SailGlobal specialize in helping organizations navigate these complex cross-border employment scenarios while maintaining full compliance with both Chinese and Serbian regulations.

Serbia Assignment Tax Compliance: HR Guide for Chinese Companies