Commuting Expenses

March 08, 2019

Commuting Expenses

March 08, 2019

Milan Samardžić

Milan Samardžić


Dušan Dinčić

Dušan Dinčić

Senior Associate

Serbian Ministry of Finance (“the Ministry”) issued a new opinion regarding reimbursement of expenses for employees’ commute to and from work. The Serbian Labor Act (“the Act”) stipulates that an employee is entitled to reimbursement of said expenses in the amount of money equal to the price of a public transportation ticket, if the employer has not provided its own transport.

Some employers bought monthly public transportation tickets and some paid the amount in cash.

The Serbian Act on Citizens’ Income Tax, stipulates that the income that an employee receives for reimbursement of commuting expenses in the amount up to 3,914 RSD per month is non-taxable.

The employers that paid this amount in cash used to deliver to the tax authority lists of employees to justify the expense and to make it non-taxable.

New Opinion…

However, the opinion issued by the Ministry on 1 February 2019 stipulates that, in order to make reimbursement of commuting expenses non-taxable, proof has to be obtained that this amount was actually spent on commuting. If an employer does not obtain this proof, reimbursement shall be considered as salary and taxed to the full extent as such.

The proof may be the invoice from the public transport company or a fuel receipt. It remains to be seen how deep will the Ministry go into verifying expenses – e.g. will a gas receipt be enough or a copy of license and registration will be required, what happens if several employees carpool to work, etc. However, for larger employers this may dramatically increase the volume of paperwork each month.

… New Problems

The easiest way out for the employer is to buy monthly tickets for public transportation for all employees. However, many employees do not use public transportation and use the reimbursement money to buy gas or use it as an addition to the salary.

There are dilemmas how employers should adapt to new circumstances, to be in compliance with the new opinion and to keep employees satisfied.

An additional problem is the fact that the new opinion is in conflict with well-established practice in Serbian labor law that an employee is entitled to reimbursement regardless of the way he or she actually commutes to work. It has also been established for a long time that an employee does not have to request payment of expenses in order to be entitled to receive them.

What Will Happen Next?

This opinion has been given a lot of publicity because it was announced by the local government in Belgrade as a measure to induce companies to buy monthly tickets and therefore to increase revenues of the Belgrade Public Transport Company, a public enterprise company owned by the City of Belgrade. However, for employees that do not use public transport, this represents just a reduction of their monthly income.

It is expected that this issue will be settled by the courts. It remains to be seen how strict the tax authority will be in applying the new opinion and will all companies be under scrutiny or only the ones that do not buy monthly tickets. However, until the issue is resolved, the employers have to adapt to new circumstances by changing their accounting procedures, updating employment documents, and finding the best solution for both the employer and the employees.

This text is for informational purposes only and should not be considered legal advice. Should you require any additional information, feel free to contact us.


Milan Samardžić, Partner
+381 63 318 320

Dušan Dinčić, Senior Associate
+381 69 328 28 07


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