Some amendments to the Serbian legislation concerning foreigners are coming into force in 2024. The good news is that the amendments make immigrants’ lives easier in Serbia. Below we describe the recent changes and discuss how you can become a legal resident of Serbia by registering a sole proprietorship or an LLC in the country.
Serbia attracts foreign entrepreneurs by its favorable geographical location and a beneficial tax system. Serbia is located between east and west, right at the heart of Europe. What makes Serbia unique for trading companies is the fact that it has preferential trade agreements with the EU, the USA, and China at the same time. Even though Serbia is not an EU member (yet), the living standards there are comparatively high especially in large cities such as Belgrade or Novy Sad, for example.
Changes to the legislation to come into force in February 2024
The Foreigners Act has been amended in Serbia and beginning February 4, 2024, foreign nationals can apply for ‘uniform permits’. A ‘uniform permit’ serves as a temporary residence permit and as a work permit simultaneously. There are three types of legal grounds on which you can apply for a uniform permit: employment in Serbia, self-employment in the country, and study/ internship/ special training courses.
This is good news for foreigners residing in Serbia because it solves a discrepancy that used to exist in the country before. The matter is that previously, you had to have a residence permit to qualify for a work permit and you had to have a work permit to qualify for a residence permit. Because a uniform permit has both of these functions, we can safely claim that the problem has been solved.
The validity term of a uniform permit is up to three years. The term of validity depends on the legal grounds on which the permit has been granted.
Another important advantage that foreign nationals can use in Serbia is as follows. Citizens of the countries that have visa-free arrangements with Serbia (and the number of such countries is actually huge) are eligible to file applications for uniform permits both inside and outside Serbia.
What does it mean for a permit holder? It means that he or she can file an application for permit extension without leaving Serbia. You can file an application for uniform permit extension three months prior to its expiration date but not later than on the day when the permit expires.
The new text of the Act also says that in exceptional cases, applications for permit extension can be filed after the permit expires. The permit holder may have up to three months to apply for extension. This can be done if it is ‘in the interests of the Serbian Republic’ or in case of force majeure. Interestingly enough, the Act does not specify what exactly the phrase ‘in the interests of the Serbian Republic’ means.
What type of company should you launch in Serbia?
Serbia offers many routes to legal residence in the country and registering a business company is probably one of the most attractive such routes. Foreign nationals are eligible to start companies in Serbia and the procedure does not involve any heavy costs. You can find detailed information on company incorporation and legal residence acquisition in Serbia if you click here. In brief, foreigners can establish companies of the following types in Serbia:
Sole Proprietorship:
Fits small businesses with minimal seed capital. A sole proprietor can work in any legal sphere of Business in Serbia.
Limited Liability Company:
The most widespread form of company ownership in Serbia. LLCs are popular both with Serbians and with foreign nationals living in the country.
Stock Corporation:
The form of company ownership fits large business projects. Foreign nationals are entitled to be stockholders of Serbian corporations.
Branches and representative offices of foreign companies in Serbia:
Establishment of a branch or a representative office allows foreign business owners to acquire a business platform in the center of Europe and widen their customer bases.
Of the four types of companies mentioned above, Sole Proprietorship and Limited Liability Companies are the most popular forms of company ownership in Serbia.
A Sole Proprietorship for a foreigner in Serbia
You have to take the following steps to register a Sole Proprietorship in Serbia:
· Decide what business you want to do. You can find the list of legal business activities at the SBRA website (SBRA is the Serbian abbreviation for the national Commercial Register.
· Apply to the SBRA for company registration. You have to bring your personal ID and a receipt certifying payment of the registration fee.
· Register at the SBRA portal. This will make your communication with the business and tax authorities in Serbia very easy.
· Open a bank account.
· Register with the tax service as an individual entrepreneur.
· If your Sole Proprietorship is going to have authorized signatories other than you, you will have to feel out an ‘OP obrazac’ form and supply their signature samples.
Taxes for Sole Proprietors in Serbia in 2024
The tax scale is progressive in Serbia for sole proprietors:
· 10% if the annual income does not exceed the average annual salary in Serbia by more than 6 times.
· 15% if it does.
In addition, you have to register for the VAT if your income exceeds 8 million dinars per year (1 euro costs about 117 Serbian dinars). Some other taxes and fees may also be due depending on the type of your business activities.
Starting a Sole Proprietorship in Serbia can give you wonderful prospects but you have to study the relevant local legislation carefully to avoid possible unpleasant surprises and keep your business afloat.
An LLC for a foreigner in Serbia
If you are planning to carry out business operations in Serbia, establishing an LLC in the country can be the optimal solution. This form of company ownership is flexible enough and the taxes are lower in Serbia than they are in most neighboring countries.
A Serbian-registered LLC can have 1 founder (member) or up to 100 founders (members). You will find additional tax incentives if you domicile your company in one of the 15 Free Economic Zones in Serbia. In addition to tax incentives, you will find expert support in the Zones.
You have to contact the SBRA to register an LLC in Serbia. The application document package is going to be larger in comparison to registering a Sole Proprietorship but it is manageable especially if you request some professional assistance in the matter.
Within 5 days, you will be given a registration number, a taxpayer’s number, a VAT number, and an insurance number. When you have all these numbers, you can open a corporate bank account in Serbia.
Please note that LLCs do not have to have company seals in Serbia anymore. However, having a company seal can help you avoid some troubles when signing business contracts.
Taxes for LLCs in Serbia
· Tax rates are lower in Serbia especially compared to Western European countries:
· Corporate tax: 15%;
· VAT: 20%;
· Dividends: 20% but treaties on double taxation avoidance can bring the rate down;
· Interests: 20% but the rate can be reduced to 10%;
· Royalties: 20% but the rate can also be reduced to 10%.
Registering an LLC in Serbia would give you a vast spectrum of business opportunities. The favorable taxation system in the country can give you a serious competitive advantage.
