Guide for setting up a company in Serbia

Establishing and registering a company at the Serbian Business Registers Agency (hereinafter: SBRA) is the first and most important step if you have decided to start a business in the Republic of Serbia. The procedure of registration at the SBRA depends on the choice of the legal form of the business entity.

The Law on Companies of the Republic of Serbia, in addition to entrepreneurship as a business activity by a natural person, also envisages four legal forms of companies: limited liability company, joint stock company, limited partnership and general partnership.

A company in Serbia can be established by anyone with legal capacity - natural or legal person, whether it is a resident or a non-resident. This possibility is the same for all persons regardless of their country of origin and without any restrictions or special conditions. Also, when founding a company, non-residents are not conditioned by the fact that the legal representative, i.e. the director of the company has to be a citizen of Serbia.

Also, a non-resident legal entity may conduct its business activity on the territory of the Republic of Serbia through the establishment of its branch or representative office in Serbia.

The basic condition for founding a company in Serbia is the registration of the company at the business register, which begins with the submission of the registration application to the SBRA.

However, when founding a company, and before submitting the registration application, it is necessary to choose company’s business name, make a decision on the predominant business activity and registered office (headquarters) of the company, prepare a memorandum of association and decide whether the company will be in the VAT system depending on the estimated annual turnover.

Business name

Must contain the name, legal form and registered office of the company. The choice of business name is free but it has to be in compliance with legal rules and must be different from the business name of other business entities. Also, the company can operate under an abbreviated business name which consists of the name and legal form of the company.

Predominant activity of the company

The company is obliged to register its predominant activity, but it can also perform all other business activities that are not prohibited by law, regardless of whether they are determined by the founding act of the company.

Registered office of the company

Location on the territory of the Republic of Serbia from where the company's business is managed and which is determined as such by the company's acts. In addition to renting/owning a specific business space, it is possible to rent a virtual office and register the company's headquarters at that address, regardless of the place of business.

Founding act

Constitutive act of a company that has the form of a resolution in case of a single-member company, or agreement in case of a multi-member company. The signatures on the founding act have to be verified by the public notary. In the case of an electronic document, the signature verification is replaced by a qualified electronic signature of the members of the company. The content of the founding act depends on the legal form of the company being established. In the case of a limited liability company, as the most common legal form, the founding act contains, among others: data on members of the company, business name and registered office of the company, predominant activity of the company, total amount of share capital of the company (the minimum amount of money share capital of a limited liability company is 100 RSD, or approximately 1 euro), the stake of each member of the company, the time of payment, or entry of contributions into the share capital of the company, etc. Payment or entry of contributions into the share capital of the company is not a condition for the establishment of the company. The law provides the possibility of payment, i.e. entry  of contributions within the period provided by the founding act, but no later than 5 years from the date of establishment of the company (except in certain cases of capital increase and subscription of shares of the joint stock company).

Registration application

This has to be submitted on the prescribed form provided by the SBRA. The application must be accompanied by certain documents, including: founding act of the company, proof of identity of members of the company, decision on the appointment of representatives, if not determined by the founding act, proof of paid i.e. entered contribution, if the contribution is paid/entered to the company before founding, proof of paid fees for registration of the establishment of the company and publication of the founding act, as well as other documentation depending on the legal form and the specific case. All documents are submitted in the original, a certified transcript or a certified photocopy. Also, starting from 2018, there is a possibility of electronic establishment of a limited liability company as well as electronic registration of entrepreneurs.

If all conditions are met, the SBRA shall, within 5 working days, issue a Decision on the founding, i.e. a Decision on the approval of the application, which shall be published on the SBRA website. Along with the decision, the business entity also receives a personal identification number (MB), a tax identification number (PIB) as well as a VAT application if it will be a VAT payer.

Whether the company will be a VAT payer depends on the realized annual turnover. If at the time of establishment, the expected turnover is higher than 8.000.000,00 rsd, or approximately 68.000,00 euros during 12 months of operation, the company will be obliged to pay VAT.

After the establishment of the company, it is necessary to take several more steps, such as: opening a bank account, making a stamp (optional), as well as submitting a tax return (within 15 days from the day of registration of the company).

In addition to the above, it is important to note that on June 8, 2018, The Law on Central Register of Ultimate Beneficial Owners came into force, which stipulates the obligation of all companies to register the ultimate beneficial owner of the company in case of establishing a new company or changing the ownership structure of the existing company. The beneficial owner is always a natural person who ultimately owns or controls a company or other foreign law entity. If it is not possible to determine the beneficial owner in the manner described, the beneficial owner is a natural person registered for representation, i.e. a person registered as a member of the body of that entity.

The current economic and business climate in Serbia is extremely favorable for investments and business on its territory, given that the corporate income tax rate is among the lowest in Europe.

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 certain 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.

 

For more information on the above or on our services on Serbia please consult Legal Counsel Serbia, Dajana Kojić on info@a-law.eu or fill in our online contact form.