On December 30, 2024, the City of Belgrade announced in its Official Gazette that, effective January 1, 2025, public transportation will be completely free for all residents and visitors. This development has raised important questions for employers regarding their obligation to compensate employees for commuting costs.
Legal Framework for Transportation Reimbursement
According to Article 118, paragraph 1 of the Labor Law, employees are entitled to reimbursement of commuting expenses equivalent to the cost of public transportation unless the employer provides their own transport service.
Furthermore, Article 8, paragraph 2 of the Labor Law grants employers the discretion to include additional benefits, such as transportation allowances, within employment contracts. This provision allows companies to define their own terms regarding transportation reimbursement through individual agreements or internal policies.
Additionally, Article 18, paragraph 1, item 1 of the Personal Income Tax Law states that salary tax is not levied on an employee's reimbursement for documented commuting expenses, provided that the amount does not exceed 5,398 RSD per month. This regulation serves as a guideline for employers when determining the level of transportation reimbursement.
Awaiting Official Tax Ruling
Given the introduction of free public transport in Belgrade, numerous companies have sought an official tax ruling to clarify their obligations regarding commuting compensation. At present, the authorities have yet to issue an official stance on the matter.
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