Taxation reforms proposed for entrepreneurs in Serbia and retirees in Croatia

In Serbia, entrepreneurs who maintain business books and opt for the personal income payout model must decide on their taxation method for the upcoming year by mid-December. Starting in 2027, a procedural change will allow those who lose their right to flat-rate taxation to choose the personal income payout model within 15 days of losing that status, rather than waiting for the following year. New entrepreneurs must submit an advance tax return (PPDG-1S) electronically within 15 days of starting activities, estimating income and expenses to determine monthly tax installments.

In Croatia, the government has proposed abolishing income tax on most pensions starting in 2027 to prevent hundreds of thousands of retirees from falling into 'tax scissors.' An analysis by the Institute for Public Finance warns that without changes, approximately 557,000 retirees would face taxation by 2027 because the basic personal deduction has not kept pace with rising wages and pensions. The proposed reform aims to increase the tax reduction for pensions from 50 percent to 100 percent for income up to 60,000 euros annually, which is estimated to exempt roughly 541,000 retirees from income tax.