How is the limit calculated?
A sole proprietor qualifies for flat-rate taxation as long as revenue does not exceed RSD 6,000,000 in a calendar year — measured by the revenue recorded in the KPO book up to 31 December. The limit is not pro-rated for businesses registered during the year: a business registered in October is still entitled to the full RSD 6 million until year end.
Do not confuse the RSD 6 million limit with the VAT threshold of RSD 8 million, which is measured over the preceding 12 months on a rolling basis rather than by calendar year, and which only counts turnover with a place of supply in Serbia. Note also that entering the VAT system automatically ends flat-rate taxation, regardless of the RSD 6 million figure.
What happens when you cross the limit?
You lose the right to flat-rate taxation and move to full bookkeeping. That is not a disaster — but it is a change of regime that is far better planned in advance than discovered by the Tax Administration. For our flat-rate clients we monitor revenue continuously and produce a projection in good time: if it is clear you will cross the limit, we prepare the transition before it happens.
Two options after flat-rate
Sole proprietor on a personal salary
- 10% tax on profit (income minus expenses)
- Money is withdrawn with no further tax
- The cheapest option after flat-rate
- The independence test still applies
LLC (d.o.o.)
- 15% corporate profit tax + 15% dividend tax
- Protection of personal assets
- Not subject to the independence test
- Room for growth, a team and partners
More on both options: the personal salary regime and LLC or sole proprietor. If you work mainly for one client, check the independence test before deciding — it does not disappear when you switch to a personal salary.
How we manage the transition
- Revenue monitoringThrough the KPO records we always know where you stand relative to the limit, well before it becomes urgent.
- Projection and choice of regimeWith the numbers in front of us we calculate which costs you less: a personal salary or an LLC.
- Paperwork and deadlinesFilings, the election for the personal salary regime or LLC registration, and opening the ledgers.
- No interruption to businessClients and payments continue as normal; only the background changes.
Frequently asked questions
Is the RSD 6 million limit measured by calendar year?
Yes — the limit applies to revenue earned in the calendar year up to 31 December, as recorded in the KPO book. It is not pro-rated for businesses registered during the year: a business registered in October is still entitled to the full RSD 6 million.
Can I stay on flat-rate tax if I exceed RSD 6 million?
No — crossing the limit means losing the right to flat-rate taxation and moving to full bookkeeping. The good news is that with planning the transition can happen without a single interruption to your business.
What is cheaper after flat-rate — a personal salary or an LLC?
As a rule, a sole proprietor on a personal salary: 10% tax on realised profit, and the money is withdrawn with no further tax. An LLC pays 15% on profit and a further 15% on dividend payments. An LLC is chosen when protection of personal assets, partners, or stepping outside the independence test matter more.
Does crossing RSD 6 million automatically put me in the VAT system?
No — the VAT threshold is separate: RSD 8 million of turnover with a place of supply in Serbia over the preceding 12 months (services with a place of supply abroad do not count). The reverse does apply, though: entering the VAT system automatically ends flat-rate taxation.
Approaching the limit?
Do not wait until 31 December. Get in touch — we will check where your revenue stands and prepare the transition that costs you least.
Book a consultation All about flat-rate taxNote: this content is informational and does not constitute tax advice. The exact timing and method of transition depend on your specific situation.