Do I Need a Local Entity to Hire in Serbia?

In Serbia, a "local entity" refers to a legally recognized presence, such as a subsidiary or branch office, that allows you to act as an employer. This setup is essential for meeting local payroll and employment obligations, ensuring compliance with Serbian labor laws.

Without a local entity, you typically cannot register as an employer, manage mandatory social security processes, or run compliant payroll. An alternative is to use an Employer of Record (EOR), which can handle these responsibilities on your behalf.

What is Required to Employ Someone in Serbia?

• Local employing entity required to directly employ? Yes (you need a registered entity for direct employment)
• Payroll registration required? Yes (must register with the Tax Administration of the Republic of Serbia)
• Withholding/tax remittance required? Yes (employers must withhold income tax and social contributions)
• Social contributions required? Yes (mandatory contributions to the Pension and Disability Insurance Fund)
• Local employment agreement required? Yes (written contracts are mandatory under Serbian law)
• Mandatory benefits to budget? Yes (includes paid leave, health insurance, and pension contributions)
• Works council/collective agreements considerations? Usually (many sectors have collective agreements that may apply)

Best Options If You're Hiring in Serbia

Can I Hire Contractors Instead of Setting Up an Entity?

Yes, but be cautious about misclassification risks.

While hiring contractors in Serbia can be done without establishing a local entity, it’s essential to ensure that the contractor operates independently. Misclassification can lead to legal issues, especially if the contractor's work resembles that of an employee.

Consider these points when hiring contractors:

• The contractor should have multiple clients and not be exclusively working for your company.
• They should control their work hours and methods.
• Ensure that the contract clearly defines the nature of the relationship.

How Long Does Entity Setup Take And What Does It Cost?

Typical entity setup timeline: It often takes 4–8 weeks to set up an entity in Serbia, depending on the required registrations.

Ongoing cost categories (entity route):

• Accounting, bookkeeping, and statutory filings: Estimated 50,000–120,000 RSD per month ($425–$1,020)
• Payroll provider: Estimated 10,000–25,000 RSD per employee per month ($85–$210)
• Employer registrations and recurring compliance: Varies by complexity
• Corporate tax filings and annual reporting: Estimated 100,000–300,000 RSD per year ($850–$2,550)

EOR cost components (no-entity route):

• A per-employee EOR service fee (from $399 p/month with Playroll)
• Pass-through statutory costs (employer social contributions, mandatory benefits administration)
• Any optional benefits you choose to provide beyond statutory minimums

How an Employer of Record Can Help You Hire in Serbia

Hiring in Serbia can be complex, but it doesn’t have to require setting up a local entity or taking on long-term overhead. With an Employer of Record like Playroll, you get a simple, predictable way to hire compliantly while keeping costs transparent and under control. We help you:

• Hire employees in Serbia quickly without establishing a local entity, eliminating incorporation costs, ongoing administration, and exit complexity.
• Stay fully compliant with local payroll, tax, and employment regulations with Playroll’s managed payroll services.
• Control your total employment costs, with a clear monthly EOR service fee (from $399 per employee).
• Focus on growing your business, while we manage contracts, payroll, compliance, and labor law obligations end to end.
• Scale up or exit the market easily, without the financial or legal burden of closing a local entity.