Tax treatment of reimbursement of transportation costs for arriving and departing from work

(Opinion of the Ministry of Finance, No. 1915441 2025 10520 004 000 011 001 of April 24, 2025)

According to the provisions of Article 18, paragraph 1, item 1) of the Law, personal income tax is not paid on the income of an employee from the employer based on reimbursement of transportation costs for arriving and departing from work, when such an expense is documented by an appropriate reliable accounting document. However, in the case where the reimbursement of transportation costs for arriving and departing from work is not documented by an appropriate reliable accounting document, such income is taxed by personal income tax on earnings at a rate of 10%.

Therefore, in order to exercise the right to tax exemption from Article 18, paragraph 1, item 1) of the Law, in the case where the free passenger transport service is provided in the integrated tariff system on the territory of the City of Belgrade, in order to exercise the right to tax exemption, it is necessary that the actual cost of transport for arriving and departing from work is documented by appropriate reliable use in good condition (e.g. a receipt for own fuel).

Contributions for mandatory social insurance are not paid for the reimbursement of costs for arriving and departing from work, to which the employee is entitled in accordance with the general act and the employment contract in accordance with the provisions of Article 118, paragraph 1, item 1) of the Labor Law (which is not considered wages under Article 105, paragraph 3 of the Labor Law), regardless of the Law on Tax Treatment of Such Income.

Source: Bulletin - Official explanations and expert opinions for the implementation of financial regulations, May 2025