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Serbia Offers Unique Opportunities to International Entrepreneurs

7Newswire

Explore Serbia’s strategic location in Southeastern Europe, offering a thriving business environment with stable economics and impressive tax incentives.

Serbia is located in the center of Southeastern Europe, a strategic location between the Western and the Eastern part of the continent. Serbia’s geographical position is superb for import/ export operations. The country has a stable economy with a low level of inflation and relatively high fiscal discipline. Serbia offers impressive tax incentives to small- and medium-size businesses: both the income tax and the VAT rates are comparatively low.

Salaries are not very high in Serbia and the cost of labor is much lower than it is in Western Europe. This means that your operational costs will be low if you set up a business company in Serbia. The country has multiple free trade and preferential trade agreements so trading with other countries from Serbia can be profitable. The company registration procedure is simple and relatively fast.

The IT sector is developing dynamically in Serbia. The country invests a lot into informational technologies and software development. The same can be said about the infrastructure: it is improving at a fast rate. The transportation, electricity production, and logistics industries are booming. Without doubt, doing business in Serbia is not carefree especially if you are a foreigner in the country but it is straightforward and comfortable anyway.

Register a company in Serbia: forms of company ownership

You can set up a company of several types in Serbia. Below we are going to use the Serbian abbreviations for company types where applicable.

Pr (Sole Proprietor)

This is the simplest form of company ownership. A sole proprietorship can be registered in person in Serbia or by proxy via a trusted agent. The largest disadvantage of this form of company ownership is unlimited liability of the proprietor.

Some specifics of sole proprietorships in Serbia:

  1. A sole proprietor has the right to give employment to his/ her family members.
  2. Some spheres of business are unavailable to sole proprietors in Serbia.
  3. A sole proprietor is entitled to change the form of company ownership.

Sole proprietors often work in the following spheres in Serbia:

  • IT;
  • Technical services;
  • Software development.

Branch of a foreign company in Serbia

You can also open a branch of your domestic company in Serbia that will work under the original company’s name. You have to rent or buy an office and hire an official representative of your company in Serbia. Your company branch can conduct operations in spheres different from the spheres of the parent company’s operations. However, the parent company bears full responsibility for the activities of its Serbian branch.

DOO (Limited Liability Company)

A DOO can be founded by one or several persons/ legal entities. The registered capital can be as small as 1 euro.

DOOs usually work in the following spheres in Serbia:

  • Manufacturing;
  • Services;
  • Construction.

KD (Limited Partnership)

A KD can be formed by two or more persons (companies) in Serbia. One of the partners has to be an unlimited partner while others can be limited partners. No registered capital is required.

Naturally, the unlimited partner plays the key role in a Limited Partnership simply because he or she would have to sell his/ her personal property if the partnership made debts. Limited partners would not have to do that: all they could lose is their contributions to the registered capital of the partnership.

If a limited partner wants to take a more active part in the company management, he or she can become an unlimited partner. Having more than one unlimited partner in a limited partnership is allowed in Serbia.

A representative office of a foreign company in Serbia

You can also register a representative office of your company in Serbia. A representative office can do marketing research for the parent company and promote the parent company’s products in the country. Thus, it is not a full-fledged business company because it cannot manufacture or directly sell the parent company’s products.

AD (Stock Company)

An AD can be private or public in Serbia. An AD is a large business company that has

  • Shareholders;
  • Directors;
  • Company Secretary;
  • Accounting Department;
  • Audit department.

The registered capital of a Serbian AD has to be at least 3,000,000 Serbian dinars (around 25,000). 25% of the amount has to be deposited prior to registering the company. Serbian ADs can issue shares.

Stock Companies have to file annual reports and undergo audits. This form of company ownership will suit large businesses working in manufacturing, raw material processing, large-scale construction, and so on.

Steps in the process of setting up a company in Serbia

Starting a sole proprietorship is easy in Serbia but if you would like to have a company with a more complicated form of ownership, you normally would have to take the following steps:

  1. Prepare the key company documents that contain the company name, spheres of prospected business activities, form of company ownership, names of the company founders, directors, key officers, and so on.
  2. Draw up company By-laws. The By-laws have to contain the information described above plus the principles that the company is going to adhere to. The By-laws have to be signed by all company founders and notarized in Serbia.
  3. Open a temporary bank account in case you have to deposit (part of) the registered capital in advance. Make the deposit and get a receipt from the bank manager.
  4. Apply for company registration. A large portion of the application procedures can be done online in Serbia.
  5. Wait while your application is processed (5 days maximum). If the decision is positive, apply for a taxpayer’s number.
  6. Close your temporary bank account and open a permanent one.

Now you can start making money in Serbia. Please do not forget to file tax returns and pay the taxes. In this case, you will have no trouble doing business in Serbia.

Important corporate rules in Serbia

Please note that European labor principles are applied in Serbia:

  1. You have to make official job contracts with hiring personnel.
  2. Saturdays, Sundays, and national holidays are days off.
  3. A job contract can be signed for up to 3 years.
  4. Paid vacations of 18 days per year have to be granted to workers.
  5. The working week is 40 hours.
  6. Retirement age – 56 лет (females) and 63.5 (males).

Salaries in Serbia

The minimum wage is 47,200 Serbian dinars (400 euros) per month. The average salary is 75,300 dinars (650 euros). The following professionals can make 1,600 euros per month or more:

  • Accountants;
  • Software developers;
  • Agricultural workers;
  • Marketing experts.

Taxes for corporate entities in Serbia

The corporate tax rate is 15% in the country. If the company reinvests more than 1,000,000,000 dinars in its own development, the tax is paid at a discounted rate of 10%.

A VAT of 20% is also payable. The VAT rate can be reduced to 10% if the company operates in one of the following spheres:

  • Public utilities;
  • Food production;
  • Hospitality industry.

Establishing a business company in Serbia is not difficult at all especially if you seek professional advice in the process.