Doing business in Serbia
- How quickly can I set up a business?
- What is the minimum investment needed?
- How can I raise finance?
- What are the legal requirements for setting up my business?
- What structure should I consider?
- What advice can you give me in regards to payroll and taxation requirements?
- Is there anything else that I should know?
How quickly can I set up a business?
What is the minimum investment needed?
Investment depends on the scale of project. The minimum founding capital to register a private Limited Liability Company should be 100 RSD, which equals approximately 1 EUR.
How can I raise finance?
There are internal and external sources for funding a business:
- Internal sources include investment by the owner of the company, proceeds from retained earnings, proceeds from the sale of assets, cash flow from operating activities, etc.
- External sources of funding could be loans from credit institutions, loans by a third person, leasing, factoring, loans from regional and international investment funds, etc.
What are the legal requirements for setting up my business?
To set up a business, a Serbian legal entity must create a document called Articles of association which contain all the internal regulations and entity details. Companies must be registered at the Business Registration Agency.
Main legal structures you can set up in Serbia are: Limited Liability Companies – private (d.o.o.) or public (a.d.) – and Partnerships – general (o.d.) or limited (k.d.).
What structure should I consider?
The choice of structure depends on your business needs. You can see the brief overview of the main structures below:
Limited Liability Company
- legal entity where all the shareholders have a limited liability, based on their contributions
- the most popular company structure in Serbia
- suitable for small and medium businesses
- minimum share capital that the founders must provide is 100 RSD (approximately 1 EUR)
Joint Stock Companies
- closed joint stock companies (the founders must provide a share capital of at least 10.000 EUR and cannot have more than 100 shareholders)
- open joint stock company (with a minimum share capital of 25.000 EUR and more than 100 shareholders)
- suitable for large businesses
- general partnerships (all the major decisions are taken by all the partners equally; the personal assets of the members are not protected in the case of liquidation)
- limited partnerships (there are members with unlimited rights and liabilities (general partners) and at least one member with limited rights and liabilities decided by their contribution to the capital)
- no minimum share capital request for any of these partnerships
- the simplest form of business available in Serbia
- set up your business activities without creating LLC or other structures
- you can start with your business activities immediately.
What advice can you give me in regards to payroll and taxation requirements?
Salary tax rate amounts to 10%.
The mandatory social security insurance includes pension and disability insurance, health insurance and unemployment insurance.
The base for mandatory social security contributions is gross income (net, personal income tax and social security contributions on behalf of an individual) generated by the insured individual such as: income from
employment, income from freelance agreements, etc.
The legislation provides a maximum base for mandatory social security contributions as a five-time average salary in Serbia. If income generated by the insured individual exceeds the maximum base, mandatory social security contributions would be paid on the maximum base. The surplus amount is subject only to annual personal income tax.
In case of employment income, mandatory social security contributions are payable on behalf of employee and on behalf of employer, but both are to be calculated and withheld by the employer.
Important points of attention:
Salaries must be paid by the end of the following month.
On the day of payment of salary, the company must submit calculation of salaries with all relevant taxes and contributions to tax authorities for approval. If calculation is approved, tax authorities provide you with a code which must be sent to a relevant bank for execution of payment of salary.
Current minimum net wage in Serbia equals 32.372 RSD (275 EUR), while minimum total cost of the salary equals 50.823 RSD (430 EUR)
Is there anything else that I should know?
All large and medium enterprises, as well as all other enterprises with an annual turnover over EUR 4.400.000 must appoint an auditor and must publish their annual financial report along with the auditor’s opinion.
Value-added tax (VAT)
- 20% – standard rate
- 10% – reduced rate (applicable for specially stated supplies)
- 0% – export of goods, overhauling of foreign ships
- Tax period: calendar month (turnover in the previous 12 months exceeds RSD 50 million and also for taxpayers who start up business) or calendar quarter (turnover in the previous 12 months is lower than RSD 50 million). VAT registration threshold is RSD 8 million turnover in the previous 12 months.
- VAT returns must be filed with the Tax Authorities and VAT liability declared in VAT return should be paid within 15 days after expiry of the tax period.
- Import VAT is payable according to terms prescribed for the payment of customs duties.
- Any goods imported into Serbia are subject to VAT computed by Serbian Customs during the regular customs clearance procedure.
Company income tax
- Rates: 15% on taxable profit stated in the corporate income tax return which is based on the corporate income tax balance.
- Generally, the tax year is the calendar year, but it does not have to coincide with the calendar year. A tax return should be filed with the tax authorities within 180 days after expiry of the tax year.
- During the year the taxpayer should pay monthly advance payments that are based on the tax liability assessed for the previous year. Monthly advance payments are due on the 15th day of the month for the then previous month.
- Taxable income is established based on accounting profit disclosed in the annual income statement in accordance with the Law on Accounting which does not differ significantly from IFRS standards (main differences relate to disclosure requirements), further adjusted in the tax balance.
Serbia has also introduced transfer pricing requirement applicable to related parties’ transactions (25% ownership threshold). Submission of transfer pricing documentation, along with each annual income tax return, is prescribed by CIT Law.
Our firms in Serbia
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As the Government implements new audit reforms and the market shifts away from the Big Four, what does the change mean for small audit clients?
From 1 April 2023, companies will need to digitally pre-notify HMRC of any planned R&D claims, and within six months of the end of the period to which the claim relates.
Congratulations to our German member firm, Kreston Bansbach, whose consulting arm Bansbach Econum, has been ranked among the top consulting firms in Germany in the Handelsblatt 2022 Best Consultants list.