⚠️  The tax information below is an extremely brief summary for standard situations of the referred relationship, and each situation may of course be different from the norm and have its own specificities. ⚠️

A more comprehensive set of information for this country and work relationship is available on Easop.

If you’re looking for more detailed information in this country (or if you are just curious about our global compliance offering and pricing), get in touch with us and we’ll tell you more about it! 💡

✅ Yes, you can grant non-qualified stock-options (NSO) to EoR employees in Serbia.

In a nutshell, what does taxation look like?

• At grant 👉 No taxation.
  
  
• At exercise 👉 The spread (i.e. the difference between the fair market value (FMV) of the shares at the time of exercise and the exercise price paid by the grantee) is taxed as “other income”. If the grantee has a total annual income exceeding a certain threshold, then an additional taxation applies.

• At sale 👉 The difference between the sale price and the exercise price is subject to personal income tax.

✅ Yes, you can grant non-qualified stock-options (NSO) to contractors in Serbia.

Note that granting stock options to contractors could increase the misclassification risk (i.e. the contractor relationship being requalified as an employer-employee relationship, with all tax consequences that can go with it). This will never be the only factor though, what counts primarily for determining the degree of misclassification risk are factors relating to the modalities of the services performed (control over the contractor’s work, exclusivity, term of the services, etc.).

In a nutshell, what does taxation look like?

• At grant 👉 No taxation.
  
  
• At exercise 👉 The spread (i.e. the difference between the fair market value (FMV) of the shares at the time of exercise and the exercise price paid by the grantee) is taxed as “other income”. If the grantee has a total annual income exceeding a certain threshold, then an additional taxation applies. Under certain contractor's regime, there is no taxation at time of exercise.

• At sale 👉 The difference between the sale price and the exercise price is subject to personal income tax.

What you should know if the grantee works via a management company?

It’s quite common for contractors to work via personal management companies in Serbia, the most common one called "D.O.O.".

A personal management company is a corporate vehicle used in some countries outside of the United States, usually set up for limitation of liability, personal accounting and tax purposes, owned and managed by the same natural person and through which such person provides services as a contractor/freelancer.

If a contractor works via a personal management company, it usually makes more sense from a tax perspective to offer the stock options to the management company, which in turn immediately transfers it to the natural person behind the management company.

This should be provided in an agreement and allowed in the relevant documentation, which we can provide you with Easop.