Please be reminded that, as of January 1, 2025, free public transport has been introduced within the integrated tariff system on the territory of the City of Belgrade. This change has raised several legal and tax-related questions concerning the reimbursement of transport costs for employees, which employers provide in accordance with the Labor Law and internal general acts.
Following the introduction of free public transport, questions have arisen regarding whether employees still have the right to transport cost reimbursement if actual expenses no longer exist and whether such reimbursement, if continued, is subject to taxation as taxable income. Tax regulations allow tax-exempt reimbursement of transport costs only up to the amount of actual expenses. Therefore, it is essential to precisely regulate this area to avoid potential legal and tax-related issues.
The Ministry of Labor, Employment, Veteran, and Social Affairs has issued Opinion No. 340029 2025 13400 001 001 011 024, dated January 31, 2025, which states the following:
- According to Article 118, paragraph 1, item 1 of the Labor Law, employees are entitled to reimbursement of transport costs to and from work in the amount of the public transport fare, unless the employer provides organized transport.
- The law assumes that transport costs always exist unless the employer organizes its own transport, which is why employees are granted the right to reimbursement of these costs.
- Employers may further define the criteria for transport cost reimbursement in general acts and employment contracts, using the amount of the last reimbursement paid before the introduction of free transport as a reference.
We herewith emphasize that opinions issued by state authorities are not legally binding but can serve as guidelines for employers or competent courts in case of disputes.
In light of the above, we recommend that employers adjust their internal acts and employment contracts to reflect the new circumstances and further regulate the calculation and payment of transport costs for employees who live and work within the territory of Belgrade. This is necessary to prevent additional (tax) costs and mitigate the risk of employee lawsuits.
For additional information or consultations, our team at Tasić & Partners is at your disposal.