Serbia, a nation positioned at the crossroads of the Balkans, boasts a wealth of opportunities for foreign investors seeking to establish a strong foothold in an emerging market. The country’s strategic location, coupled with a growing economy and favourable business environment, makes it an enticing destination for businesses looking to expand their global presence. This guide provides an overview of key aspects that foreign investors should consider when contemplating investments in Serbia.
Geographical and Demographic Advantages
Despite not being a member of the European Union, Serbia enjoys a privileged location as a bridge not only between Western and Eastern Europe but also the Middle East. This positioning facilitates trade and connectivity, making it an ideal hub for businesses seeking to access markets in both regions. Moreover, Serbia’s population of approximately 6.647.003 offers a skilled and competitive labour force, making it an attractive destination for businesses looking to tap into a diverse talent pool.
Business Incorporations and Corporate Law
Establishing a business in Serbia is a straightforward process, offering foreign investors a streamlined avenue for market entry. The Companies Act regulates business incorporations, allowing for a variety of entity types, such as limited liability companies, joint-stock companies, and representative offices of foreign companies. The process mainly involves the notarization of the memorandum of association, online registering before the Serbian Business Registers Agency (upon which the SBRA will decide within 5 business days) obtaining of electronic certificate and other ancillary actions before state authorities. As for tax regulations, Serbia is developing a trend in encouraging foreign investors to venture in the Republic of Serbia with the Law on the Budget of the Republic of Serbia for 2023 serving as a solid example which envisions a significant increase from 17 billion RSD to 23 billion RSD (cca 51 million RSD). As for the General VAT rate in Serbia, it amounts to 20% while the corporate income tax rate equals to 15% and it is also worth noting that in the case of purchasing a company, there is no tax on the transfer of absolute rights, nevertheless tax on capital gains applies in this case and amounts to 15%. All of these steps can be finalized within approximately 7 days.
Employment Regulations
Navigating employment regulations in Serbia is crucial for investors seeking to establish a strong workforce. The Labour Law governs employee rights, working conditions, and termination procedures. It is worth noting that foreign employees (if one opts to employ foreigners) cannot be subject to employment agreements for an indefinite period of time, and that minimum wage may vary but is currently approximately EUR 360,00. Serbia has adopted amendments to the laws regulating the status and employment of foreigners, extending the issuance period of residence and work permits for a maximum period of 3 years (compared to the recent 1 year maximum), which further simplifies the administrative procedure of employing foreigners. Additionally, what is also worth mentioning is the amount of “Gross II” salary, which is equal to 45% added to the net salary of each employee. Serbia’s competitive labour costs and skilled workforce provide a strategic advantage for companies seeking to optimize their operations.
Construction Law and Infrastructure Development
Serbia’s construction sector is thriving, presenting opportunities for investors interested in real estate and infrastructure projects. The government’s commitment to infrastructure development, with continuous projects such as Belgrade Waterfront projects, building of numerous highways (and byroads) as well as the railway projects, further enhances Serbia’s appeal as a potential investment hub. It worth mentioning that by DB 2020 Dealing with Construction Permits Score, Serbia was ranked as high as 9 th place with 99.5 days needed to complete the entire procedure (compared to Europe & Central Asia’s 170.1 days) and given so, it is evident that dealing with construction permits and other ancillary procedures in this field are fairly easy, simple and quick.
Conclusion
As an increasingly attractive investment destination, Serbia offers foreign businesses a myriad of advantages. Its geographical positioning, growing economy, favourable business climate, and skilled workforce combine to create an environment ripe for growth and success. Whether establishing a business, navigating corporate regulations, optimizing tax strategies, or venturing into real estate and construction, Serbia’s dynamic landscape holds promise for those looking to make their mark on the Balkan crossroads. Conducting comprehensive research and partnering with experienced legal professionals will be key to harnessing the full potential of this flourishing market.
Article written by
Andjelka Radovanovic
Attorney at law and Partern at
Stankovic & Parterners
(NSTLAW)
Njegoseva 19/11, 11000 Belgrade,
Republic of Serbia
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