Serbia, particularly its capital Belgrade, has emerged as a hotspot for foreign entrepreneurs. Thanks to its competitive tax system, low barriers to entry, and growing economy, Serbia offers non-residents many advantages when setting up a business. Whether you’re an individual or a company looking to expand, understanding Serbia’s business structure, taxation, and legal frameworks is crucial for making informed decisions.
Why choose Serbia?
Serbia is an attractive destination for foreign investors due to its 15% corporate tax rate, one of the lowest in Europe, and its strategic location within Southeast Europe. Non-residents are given equal rights as local entrepreneurs, with no significant legal obstacles to forming companies.
Legal forms of business entities in Serbia
There are several business structures that foreign non-residents can choose from when registering a company in Serbia. Each legal form comes with different requirements, particularly regarding share capital and liability.
1. Limited Liability Company (LLC) – Društvo sa Ograničenom Odgovornošću (DOO)
An LLC (DOO in Serbian) is the most common legal form chosen by foreigners. It’s flexible, allows for one or more shareholders, and has minimal share capital requirements.
- Share Capital: The minimum share capital required is RSD 100 (approximately €1), which makes this option highly accessible
- Liability: Shareholders are only liable for the company’s obligations up to the amount of their contributions, offering protection to personal assets.
- Management: The company must appoint at least one director, who can be either a foreign or domestic person.
2. Joint-Stock Company (JSC) – Akcionarsko Društvo (AD)
For larger-scale businesses or those looking to eventually go public, a Joint-Stock Company (AD) is a suitable structure.
- Share Capital: The minimum share capital required is RSD 3 million (approximately €25,000). This makes it a more significant financial commitment compared to an LLC.
- Liability: Shareholders’ liability is limited to their investment in the company’s shares.
- Management: A JSC requires a board of directors and offers more complex governance structures compared to an LLC.
3. Entrepreneur – Preduzetnik (PR)
This is an ideal structure for individuals who want a simpler legal form with fewer administrative requirements.
- Share Capital: There is no requirement for share capital when registering as an entrepreneur.
- Liability: Unlike LLCs, entrepreneurs are personally liable for the company’s debts and obligations, which means personal assets could be at risk.
- Taxation: Entrepreneurs may opt for a flat-rate tax system if their revenues are below a certain threshold.
4. General Partnership – Ortačko Društvo (OD)
A General Partnership is an option if two or more individuals wish to co-own a business.
- Share Capital: There is no mandatory share capital, but partners jointly contribute to the company’s capital.
- Liability: Partners share unlimited liability for the company’s debts, and each partner can be held fully liable for the partnership’s obligations.
5. Limited Partnership – Komanditno Društvo (KD)
In a Limited Partnership, one or more partners have unlimited liability, while others have liability limited to the amount of capital they have invested.
- Share Capital: There is no mandatory minimum share capital.
- Liability: The general partner(s) have unlimited liability, while the limited partner(s) have limited liability, making it a flexible structure for risk-sharing.
Steps to Register a Company in Serbia
1. Choose a Business Name and Legal Structure
Select a unique business name and decide which legal form best suits your business goals. The name must be approved by the Serbian Business Registers Agency (SBRA).
2. Business Registration
All company registrations must be completed online through the SBRA’s eRegistration platform.
3. Initial Capital Deposit
For LLCs and JSCs, you must deposit the initial share capital into a Serbian bank account. This step is not required for entrepreneurs or general partnerships.
4. Appoint Directors and Submit Documentation
Appoint at least one director and prepare the necessary founding documents, such as the Memorandum of Association and Articles of Association. These documents must be certified by an authorized Serbian lawyer.
5. Open a Bank Account
After registration with the SBRA, open a bank account for business operations. You will need to provide proof of your company’s registration and identification documents.
6. Obtain a Tax ID and Register for VAT
All Serbian companies must obtain a tax identification number (PIB) from the Serbian Tax Administration. If your company’s annual turnover exceeds RSD 8 million (approximately €68,000), you are required to register for Value Added Tax (VAT)
Tax regime in Serbia
Serbia’s tax environment is one of the most favorable in Europe, with a flat 15% corporate tax rate, making it an attractive destination for foreign investors.
1. Corporate Income Tax
- Rate: 15%
- This applies to all resident companies on their worldwide income and non-resident companies on their income sourced from Serbia.
2. Value Added Tax (VAT)
- Rate: The standard VAT rate is 20%, with a reduced rate of 10% applicable to certain goods and services.
- Companies with annual turnover exceeding RSD 8 million must register for VAT.
3. Withholding Tax on Dividends
- Rate: 20% withholding tax applies to dividend payments made to non-residents, but this may be reduced under Serbia’s double taxation agreements.
Dividend and capital gains taxation
1. Dividends
- Taxation on Dividends: A flat 20% withholding tax is imposed on dividends paid to foreign shareholders. However, Serbia has tax treaties with over 50 countries, potentially reducing this rate
- Double Tax Treaties: Many treaties reduce the rate to 5-10%, depending on the country of residence of the foreign shareholder
Gains
- Rate: The tax rate on capital gains for both residents and non-residents is 15%.
- Capital gains are calculated as the difference between the selling price and the acquisition cost of assets
Advantages of doing business in Serbia
1. Favorable Tax Environment
With a 15% corporate tax rate and the potential to reduce withholding taxes through double tax treaties, Serbia offers one of the most competitive tax regimes in Europe.
2. Financial Incentives
Serbia provides various government incentives, including non-refundable funds for startups, particularly in innovative sectors like IT. Tax incentives also apply to the employment of foreigners.
3. Strategic Location
Serbia’s location in Southeast Europe provides easy access to EU markets while maintaining favorable trade agreements with non-EU countries. This makes it a strategic hub for international operations.
Starting a business in Belgrade, Serbia as a non-resident is a compelling opportunity for foreign entrepreneurs. With favorable tax policies, minimal bureaucracy, and a low cost of entry, Serbia stands out as a business-friendly destination. By selecting the appropriate legal structure, understanding the tax implications, and navigating the administrative procedures, you can establish a thriving enterprise in this dynamic region.
Damalion helps international entrepreneurs to register their company in Serbia with business bank accounts. Contact your Damalion expert now.
This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.
