A foreign national can set up a business company in Serbia within 5 days only. If the company has a more complicated corporate structure, the process of company registration may take up to 20 days. Serbia offers a wonderful business climate as the country is rapidly developing and overcoming the blow that it took after the dissolution of Yugoslavia.
However, a favorable business climate is not the only thing that attracts foreigners who register companies in Serbia by the hundred every year. A foreign company owner is entitled to apply for a long-term residence permit. The permit is valid for up to 1 year and it can be extended afterwards.
What investments are required to launch a company in Serbia?
The cost of establishing a company is rather low in Serbia. Your authorized capital can be as small as 100 Serbian dinars (about 1 euro). Certain fees and state duties are involved in the company registration process but they are almost negligible. Overall, you can establish a fully functional business entity in Serbia for a couple hundred euros. If you are setting up a company with a complicated corporate structure, however, you need legal advice. This same holds if you would like to buy an existing company in the country, which is possible. In this case, your costs are going to increase.
As far as operational investments are concerned, you have two choices:
- Use your own money.
- Raise some funds.
The latter opportunity is available in Serbia even though the resources are rather scarce. Anyway, some businesses such as the IT sphere, for example, enjoy state support and you may be able to find financing for your company in Serbia.
What are the legal requirements for opening a company in Serbia?
You have to draw up a Memorandum and Articles of Association as well as company By-laws to register a business entity in Serbia. Companies are registered with the Commercial Register in the country.
The most popular types of companies that foreigners register in Serbia include LLCs (private or public) and Partnerships (general or limited). Some immigrants also register sole proprietorships.
There is one more attractive option, however. We suggest that you consider the opportunity to form an Association in Serbia. This type of business structure is unique for Serbia but it can bring a number of benefits. An Association is considered a not-for-profit organization but it can be used for business purposes too. Probably the most important feature of a Serbian Association is that it allows legally saving on taxes.
What type of company should you prefer?
The choice of the corporate structure depends on your business needs. Below please find the key characteristics of each of the forms of company ownership in Serbia.
Limited Liability Company
- The fact that the company founders’ liabilities are limited is of prime importance.
- This is the most popular form of company ownership in Serbia.
- It fits small- and medium-size businesses.
- The minimum amount of registered capital is 100 dinars.
Corporation
- A private corporation has to have a registered capital of at least 10,000 euros and it cannot have more than 100 shareholders.
- A public corporation has to have a registered capital of at least 25,000 euros and it can have more than 100 shareholders.
- Fits large businesses.
Partnership
- In a General Partnership, all Partners have unlimited liabilities, which is not good news.
- In a Limited Partnership, only the senior Partner has unlimited liability and Limited Partners have limited liabilities. But their participation in the decision-making process is also limited, which is not very good news either.
- Partnerships don’t have to declare any authorized capital at all.
Sole proprietorship
- The simplest type of company to establish in Serbia.
- The cheapest type of company to establish.
- Fits tiny businesses.
Payroll tax in Serbia and social contributions
The payroll tax is 10% in Serbia.
Social security includes pension insurance, medical insurance, disability insurance, and unemployment insurance.
A portion of the social security contributions is paid by the employer and the rest is paid by the employee. Technically, the employer deducts that social taxes from the employee’s salary and pays them on the employee’s behalf. So, if you are an employee in Serbia, you don’t have to bother about the social security payments. If you are an employer, you do.
Net income from various sources (salary, dividends, royalties, etc.) is taxed in Serbia.
Important notes concerning salaries
The monthly salary has to be paid before the end of the next month in Serbia.
On the day when the salary is paid, the company has to submit the payroll to the tax authorities for registration and approval. When the payroll is approved, the company management is given a code that it can send to the bank thus authorizing it to transfer the salaries to the employees.
The current minimum wage is 64,474 dinars per month in Serbia and the current median salary is 123,000 dinars per month.
Audit requirements
Any company whose turnover exceeds 4,400,000 dinars per year has to appoint an auditor and conduct yearly audits. The audit results are submitted together with the financial report.
VAT in Serbia
- 20% – standard rate.
- 10% – discounted rate (applied for some goods).
- 0% – export operations, overhaul of foreign marine vessels.
- If the company’s turnover exceeds 8 million dinars over the last 12 months, it has to register for the VAT and pay the tax.
- VAT declarations have to be filed to the tax agency and the tax has to be paid within 15 days after the end of the fiscal year.
- VAT on imported goods is payable at the moment when the import duties are paid.
- Any goods imported to Serbia are subject to VAT and the customs authorities are authorized to make the calculations.
Corporate profit tax in Serbia
- The rate is 15% of the taxable profit.
- As a rule, the fiscal year coincides with the calendar year but it does not have to be the case. A tax declaration has to be filed to the tax authorities not later than 180 days after the end of the fiscal year.
- During the year, the company has to make monthly advanced payments to pay the corporate income tax. The amounts are based on the amounts of taxes paid last year.
As you can see, Serbia is a competitive country as far as the tax rates are concerned. A favorable business environment coupled with a European lifestyle make Serbia highly attractive for entrepreneurs from other countries.
