During the last ten years, the Republic of Serbia has dramatically improved the country’s legal framework for foreign investors. This is largely driven by two things: (1) making the incorporation of companies a relatively easy process and (2) the providing of significant stimulation from the State in the form of investor incentives.
What’s more, adding to investment appeal has been the meaningful expansion of markets where products produced in Serbia can be placed under favourable conditions regardless of the origins of the capital, the founder or the financier of the project.
Starting your company
Registering companies in Serbia, especially limited liability companies (the “LLC”), is quite simple and fast. Namely, there are no restrictions on the number of founders, the number of stakeholders, the number of mutual relations and the manner of placement of funds.
The law allows the investor(s) to independently regulate the status of the company, without significant restrictions and with a minimum initial capital of 1 Euro, bearing in mind strict adherence to measures related to the prevention of terrorism and extremism. In this manner, there is a special register in which the authentic owners must be entered, which is not available to third parties, but only to the founders and the bank holding the company’s business accounts.
While LLCs are formed with relative ease, joint-stock companies require somewhat more complicated procedures, which includes a minimum capital of 25,000 Euros and appropriate documents submitted to the stock exchange, as well as the obligation to appoint a broker.
State-driven incentives
In relation to the incentives provided by the Serbian state to investors, each year a special regulation is adopted which governs the number of incentives, taking into account the amount of investment, the number of employees and the region in which it is invested.
Monetary incentives apply to each job and can be up to 10,000 Euros per job, depending on the region, and reach upward of 10% of the amount of the investment. Projects worth more than 200 million Euros, or those of special importance for the Republic Serbia, will come with additional negotiations on the number of incentives and can be realized in amounts higher than the standard.
What you can look forward to
In the immediate future, we can expect new regulations to further encourage foreign-investment, particularly with the effects of the global economic situation caused by the COVID-19 pandemic.
To date, Serbia has granted significant relief to existing companies, including postponing the payment of taxes and contributions for 2021 and paid the amount of minimum wages for all employees.
What’s more, the state has made way for the possibility of interest-free borrowing from the Development Fund and agreed upon special credit arrangements with commercial banks in which the state will take a guarantee of up to 80% of the loan value.
Products coming out of Serbia
It should be noted that the overseas market, in terms of Serbian product placement, is extremely large. This is the result of bilateral agreements made between the Russian Federation, Belarus, Kazakhstan, the European Union, USA, Turkey, Australia and Japan, as well as the Central European Free Trade Agreement (CEFTA) and European Free Trade Association (EFTA) agreements, which altogether allow Serbian goods to be exported to these countries without paying taxes.
Goods of Serbian origin are considered to be goods that have a share of 51% of Serbian raw materials or invested labour, technology or other parameters that are provided depending on the type of product.
There are fifteen customs zones in the Republic of Serbia, with the fact that the existing customs zones can be extended to neighbouring territories covered by one customs administration, and in that sense, it is possible to work in the zones in compliance with European regulations.
With steady economic growth and an increasing level of foreign investment, Serbia has grown into one of the premier investment locations in Central and Eastern Europe.
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