LEGAL PROCESS FOR ESTABLISHING A COMPANY IN SERBIA

Serbia has become an attractive destination for foreign investors in recent years due to its strategic geographical location, trade relations with the European Union, and investor-friendly policies. The company formation process is quite transparent and understandable for foreign investors, offering various advantages. This article will detail the legal process for establishing a company in Serbia.

 

Types of Companies

There are several different types of companies that investors can choose from in Serbia. The most common types of companies are:

1. Limited Liability Company (Društvo sa Ograničenom Odgovornošću – DOO):
   • This is the most preferred type of company in Serbia.
   • Investors benefit from the principle of limited liability. This means that company partners are only liable to the extent of their capital investment.
   • The minimum capital requirement is 100 Serbian Dinars (approximately 1 Euro).
2. Joint Stock Company (Akcionarsko Društvo – AD):
   • It is preferred for larger-scale investments.
   • It can be established as both a private (closed) and an open (open) limited liability company.
   • Publicly traded companies can be listed on the stock exchange.
3. Sole Proprietorship (Preduzetnik):
   • Suitable for small businesses and individual entrepreneurs.
   • In these types of companies, the founders bear unlimited liability.

Company Formation Stages

The process of establishing a company in Serbia begins with following certain legal steps and preparing the relevant documents. This process is explained in detail below:

1. Choosing the Company Name

The first step in the company formation process is choosing a company name. The company name must be registered with the Serbian Trade Register Agency (Agencija za Privredne Registre – APR). The name must not have been previously used by another company.

2. Preparation of the Company's Articles of Association

One of the most important documents in the company formation process is the articles of association (Osnivački akt). This document outlines the company's structure, field of activity, partners, and capital distribution. The articles of association must be signed in the presence of a notary.

3. Capital Requirements

Limited and joint-stock companies have minimum capital requirements. As mentioned above, the minimum capital for limited companies is 100 Serbian Dinars. The capital must be deposited into a temporary account opened at a bank during the establishment process.

4. Company Registration

Once all documents are prepared, the company is registered with the Trade Register Agency (APR). The registration application can be made online or in person. The following documents must be submitted during registration:

• Company articles of association
• Identity documents of the founding partners
• Company name and address
• Bank account information

5. Obtaining a Tax Identification Number

After completing company registration, a tax identification number (PIB) must be obtained from the Tax Administration. It must also be determined whether the company is subject to Value Added Tax (VAT). VAT liability is not mandatory for companies whose annual turnover does not reach 8 million Serbian Dinars (approximately €67,000).

6. Opening a Bank Account

After completing the company registration, a bank account must be opened in the company's name. This account will be used for both daily transactions and capital transfers. There are many national and international banks operating in Serbia.

7. Work Permit and Social Security Registration

If the company employs foreign workers, work permits must be obtained for these employees. Furthermore, all employees must be registered with the social security system. This registration is done by applying to the Social Insurance Institution (Fond za PIO).

Special Conditions for Foreign Investors

Serbia offers several advantages and incentives for foreign investors:

• Tax Incentives: Serbia offers tax exemptions and reductions for new investments. Investments in specific sectors, in particular, can provide significant reductions in income tax and social security contributions.
• Free Zones: Serbia has free trade zones. Companies operating in these zones are exempt from customs duties and can benefit from many commercial advantages.
• Double Taxation Agreements: Serbia has signed double taxation avoidance agreements with many countries. Thanks to these agreements, foreign investors are exempt from paying taxes on the same income in both their own countries and in Serbia.

Advantages of Establishing a Company in Serbia

There are many advantages to setting up a company in Serbia:

• Access to the European Market: Serbia has free trade agreements with the EU. This allows for exports to EU countries with low customs duties.
• Skilled Workforce: Serbia offers a skilled and affordable workforce. There is a particularly high demand for educated professionals in IT and engineering fields.
• Low Operating Costs: Serbia has lower operating and labor costs compared to many other European countries.

Conclusion

The process of establishing a company in Serbia is based on a clear and understandable procedure for both domestic and foreign investors. Serbia's investor-friendly policies, tax incentives, and access to the European market make the country an attractive investment destination.