Serbia

Why trade or invest in Serbia?

Republic of Serbia is a modern and democratic European country on a path to the membership in the European Union. Serbia gained an EU candidate status in 2012. Negotiation for accession to the EU officially began in 2015, and the Government of the Republic of Serbia plans to be ready for accession in 2026.

Serbia is located at the crossroads between the West and the East, which provides an optimal position for delivering finished products to markets across the World. Infrastructure in Serbia is very developed and one of the government’s continuous top priorities is to invest into it. Transportation costs are very competitive. The existing infrastructure, speed of issuance of building permits, administrative procedures and existing transport corridors and logistics, provide solid and stable business environment.

Serbia has 14 Free Zones operating in different cities. Entry of goods, transportation, electricity, gas and other services provided to users of Free Zones, as well as supplies of goods and services within the Free Zones in Serbia is exempted from Value Added Tax.

Externally, Serbia can serve as a manufacturing hub for duty-free exports to a market of over 1 billion people that includes the European Union, the United States of America, the Russian Federation, Kazakhstan, Turkey, South East Europe, the European Free Trade Agreement members, and Belarus. These customs-free regimes cover most key industrial products, with only a few exceptions and annual quotas for a limited number of goods. Serbia is the only country outside of the Commonwealth of Independent States that has a Free Trade Agreement with Russian Federation.

Serbia has generally positive business environment which is much more liberal than its neighbors. This is characterized, for example, by the lowest corporate tax rate in Europe (15%). The country's 44th position in the Doing Business ranking attests to a pro-business environment.

According to the latest report "IBM Global Location Trends 2020", the Republic of Serbia is the world leader in the number of vacancies through foreign direct investment projects (FDI) in 2019 for the fourth year in a row, in terms of population. For example, investments of EU companies make up almost 70% of the total FDI inflow in Serbia in the previous nine years, with a total amount of over 13 billion euros.

Some of the top reasons why it is good to invest and trade in Serbia:

 

LOW TAX RATES

Profits and capital gains of resident companies are taxed at a rate of 15% while capital gains of non-residents are taxed at a rate of 20%. Other related withholding taxes (e.g. interest, dividends, royalties) are taxed at rates between 15% and 25%, unless otherwise is provided by the Bilateral Double Taxation Treaties concluded by Serbia with many countries. In addition, the law provides a number of tax reliefs, including a reduction in the tax rate on capital gains when hiring new employees, investments in fixed assets and investments in underdeveloped areas of the country etc.

QUALITY, COMPETITIVE AND LOW-COST WORKFORCE

Highly qualified staff in Serbia is widely available. The labor force in Serbia is well educated, proficient in foreign languages, innovative and equipped with strong management skills. The number of engineers, machinists, managers, and other specialists is sufficient to meet the growing demand of international companies. Yearly, the labor supply increases by approximately 43,000 university and college graduates and 75,000 high school graduates.

 

Local schools and universities are recognized for working with the industry to continuously tailor their programs to fit the market needs, developing future employees that are ready to contribute from day one.  

Compering to the rest of Europe, Serbia has a young workforce, well trained and multilingual (nearly half of the population speaks English fluently) whose cost is among lowest in Europe.

LEADER IN SEE REGION

Establishing business or office in Serbia, investors can almost equally cover the whole Balkan region and the market of around 20+ million customers. Language barriers are almost non existing between Serbia, Croatia, Slovenia, Montenegro, Bosnia, Macedonia, as all ex Yu countries recognize Serbian language, while distances between capital cities from Belgrade are very modest. So, office in Serbia can act as complete center for the Balkan / SEE region.

 

GOVERMENT MEASURES TO ATTRACT INVESTMENTS

• Cash Grants

To offset initial capital investments and ease the start-up of business endeavors, the Government of Serbia offers financial support for Greenfield and Brownfield projects in manufacturing, and the services sector which may be subject to international trade.

• Corporate Income Tax Relief

A 10-year Corporate Profit Tax Holiday is available for investors who hire more than 100 employees and invest more than 8.5 million euros (1 billion RSD). Tax holiday begins once the company starts making a profit.

• Construction Land Transfer Subsidy

Government or the local municipality can sell construction land at a price which is lower than the market price in support of an investment project that is of national importance (if the land is owned by the government) or an investment projects that promotes local economic development (if the land is owned by the local municipality).

• Double Taxation Avoidance

Republic of Serbia has 54 effective double taxation agreements in place that cover income, capital and property. In addition to having double taxation agreements in place with most European countries, Serbia has double taxation treaties in place with many countries in Asia and Africa.

• Other

In certain cases, the government has set up exemptions of social charges, some imports are not subject to custom duties, fixed charges for companies are relatively low, possibility of gaining Serbian citizenship by investing in country etc.

 

The most attractive sectors to invest in are:

AGRICULTURE, FOOD AND BEVERAGES

Serbia is covered with over 6.12 million Ha of agricultural land, of which 60% is arable. Serbia as agriculture land with almost half of its territory under suitable land for cultivating grains produces very healthy food without GMO and very affordable. Agriculture is one of the few industry sectors recording a trade surplus. Favorable natural and climatic conditions promote the development of agriculture. The lowland regions are suitable for mechanized field and vegetable production. Hilly areas are favorable for the development of fruit, vineyard and livestock production. Mountainous areas are suitable for the development of sheep, cattle and forestry. Serbia is a global leader in the export of frozen raspberries and one of the leading producers of raspberries in the world.

AUTOMOTIVE INDUSTRY

This sector has a wide availability of highly qualified workforce with top technical education at all levels. Also, the perfect geographical position of the country affects the efficient service of the EU, SEE and the Middle East. The sector has sufficient capacity for large production volumes.

IT

Serbia is home to 1,600 innovative IT companies employing more than 14,000 people. Microsoft’s 4th development center in the world is opened in Serbia. IT experts possess expertise in custom, high-end IT development, including software, hardware, and solutions.

METALWORK AND MACHINE BUILDING

It’s one of Serbia’s core industries with the longest manufacturing tradition. Most of the companies are export-oriented because of internationally acknowledged quality and competitive prices. Highly-skilled workers and competitive labor costs.

MINING

There are a large number of different metal and non-metal ores in Serbia and they occur in significant quantities. The most common is the exploitation of iron, chromium, manganese, molybdenum, cobalt, cadmium, copper, antimony, lead and zinc.  Country is also rich with different mineral water sources near spa centers.

TOURISM

Serbia’s enchanting landscapes are a true feast for the eyes and soul. Whichever region of Serbia you choose to visit, you are guaranteed to leave with lasting impressions of its magical scenery and unrivalled experiences. There are plenty or rivers and lakes, as well as mountains for summer and winter sports and recreations. Rural tourism is also very common. Beautiful landscapes, hospitality of the locals and amazing food are some of the reasons why people always return to Serbia.

TEXTILE

Serbia has long tradition in providing services to global industry leaders and also developed educational system that includes both secondary schools and university levels. This is highly export-oriented sector, with more than 1 billion euros of total export in 2019, out of which 70% was absorbed by EU market.

FOREST INDUSTRY

The area of ​​Serbia under forest is about 2,880,000 ha or 32% of its territory with over 50 different species of trees. There is a long tradition and experience in producing hard wood furniture. Given the amount of forests there are large opportunities in sawn wood, engineered wood products, furniture and paper production and top-quality raw base materials.

LEGAL SISTEM OF THE REPUBLIC OF SERBIA

The legal system of the Republic of Serbia belongs to the so-called continental-European legal system and consists of the Constitution of the Republic of Serbia, as the highest and most important legal act, as well as the entire system of laws governing all areas of social life.

The politics of the Republic of Serbia functions within the framework of parliamentary democracy, more precisely as a parliamentary republic. The organization of the political system is based on the division of power into legislative, executive and judicial. The relationship between the three branches of government is based on balance and mutual control. The legislative power in the Republic of Serbia consists of the National Assembly of the Republic of Serbia (Parliament). The executive power in Serbia consists of the President of the Republic of Serbia and the Government of the Republic of Serbia.

The judiciary is independent and unique in the territory of the Republic of Serbia and it belongs to the courts of general and special jurisdiction. The courts of general jurisdiction are the basic, higher, appellate courts and the Supreme Court of Cassation as the highest court in country. The courts of special jurisdiction are the Commercial Courts, the Commercial Court of Appeal, the Misdemeanor Courts, the Misdemeanor Court of Appeal and the Administrative Court.

In 2015, the Parliament of the Republic of Serbia passed the Law on Investments, the goals of which are to improve the investment environment in the Republic of Serbia and encourage direct investments in order to strengthen economic development, as well as employment growth.

The law is very favorable to foreign investors. For example, investors who are foreign legal or natural persons, in terms of their investment enjoy the same position and have the same rights and obligations as domestic investors, and can also acquire property rights and other real rights to movables and real estate that are located on the territory of the Republic of Serbia. Also, numerous types of state aid are envisaged, such as the granting of incentives, tax incentives and reliefs and exemptions from paying taxes, customs privileges and others

Thanks to all the above and the demanding economic reforms that it has implemented in the previous period, Serbia has inevitably positioned itself as one of the most important investment destinations in Central and Eastern Europe.

A-LAW FIRM SERBIA DESK

A-LAW has covered a wide range of economic and civil areas related to Serbia ranging from real estate, infrastructure and construction to transport and logistics; from establishment of new companies to inheritance and family issues; from agriculture and forestry to tourism and HR and employment issues including secondment.

A-LAW services comprehend due diligence, advisory services, mediation and litigation. A particular scope of work lies in the guidance of commercial cooperation relationships, distribution, franchising, commercial agency and procurement. Considering the importance of EU funded projects, A-LAW provides guidance for compliance audits by in-house attorneys understanding the culture and business habits.

Whom we work for

A-Law experienced lawyers welcome all clients in need of legal advice including legal defense with regard to the investment and trade projects in or from Serbia. Guiding foreign investors into the Serbian corporate and bank regulations, license requests and public procurement policies may constitute a challenge on its own.

A-Law has built up this expertise as well as provided multiple legal services to Serbian companies providing engineering, IT, construction, logistics services in other EU and non EU countries involving i.a. tax, labor, migration and IP issues.  A-Law Serbia desk has been providing legal support to clients in different areas, such as real estate issues, corporate and civil (family) law, traffic law, migration law, liability law and debts recovery (bankruptcy, administrative fines).

An in-depth approach of the different legal aspects of cross border cooperation and trade, commercial agency, distribution and franchising of a wide variety of products exported from or imported into Serbia have been assessed through A-Law dedicated team.