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Why is Serbia an Attractive Country for Foreign Investors?

Updated on Monday 22nd June 2020

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According to the World Investment Reports for 2016 and 2017, Serbia is mentioned as one of the few countries from the South-Eastern part of Europe where foreign direct investments and companies from abroad found the proper place for development and stability. Also, the World Bank Report revealed that Serbia improved the business climate in the past few years and worked on the conditions related to fast incorporation and a favorable tax regime for foreign investors. Considering the confidence and the stability of the economy, Serbia welcomes investors worldwide to operate in the country’s main industries. Our Serbian company formation agents are at your disposal with assistance and information about how you can set up your company.
 

The manufacturing sector in Serbia is strong and consistent

 
 
Boosting the business-friendly incorporation procedures in Serbia represented the proper starting point to attract foreign investments. The manufacturing sector made no exception, as the authorities sustain this important sector and the multitude of projects involved. Equipment, machinery, food & beverages, tobacco, textiles, petroleum products, wood, and plastics are part of the flourishing manufacturing sector in which most FDIs directed from abroad. This is the reason why the employment in this field increased by 50% in the last two years.
 

Competitive tax rates in Serbia

 
Because most entrepreneurs from overseas consider the tax regime in the chosen country for business, the Serbian government focused on creating a welcoming structure in this sense. For instance, the corporate profit tax is set at 15%, the tax on dividends, royalties, capital gains, and interests is a rate of 20%, the VAT has the same rate of 20%  but lower in certain fields, and the withholding tax is set at 20%. Compared to other European countries, Serbia offers low taxes in the business field. Here is an infographic with extra details about why you should invest in Serbia:
 
Main reasons to invest in Serbia1.png
 

Free zones in Serbia

 
To simplify the direction of the business and to benefit from all kinds of tax exemptions, Serbia created the free zones and related industrial parks. Novi Sad, Pirot, Zrenjanin, Vranje, Belgrade or Krusevac are only a few of Serbia’s free zones with well-developed infrastructures and the possibility of benefiting from 0% VAT for import and export goods from and in these areas if 50% of the goods are made with domestic components. Multinational companies interested in operating with low labor costs among many others can choose the free trade zones in Serbia.
 
As for the company formation process in Serbia, this can be done within a few days if all the documentation complies with the rules of Companies Act in Serbia and if you ask our specialists in company incorporation for support.
 

Serbia has an excellent geographic position

 
In many cases, Serbia is seen as a gateway to Europe, due to its strategic geolocation which sustains businesses from abroad. In this sense, Serbia is the link between the Eastern and the Western part of the old continent. The well-developed infrastructure allows foreigners to have great connections with Russia, Germany, Austria, Benelux, UK, France, Spain, Italy and many more. The air, water, and land transportation sustain a good way of doing business in Serbia.
 
As for the political stability of Serbia, foreigners do appreciate a relaxed climate and a government that sustains the foreign investments by offering varied incentives, a proper administration, and a trustworthy fiscal background.
 

Investments in 2018 in Serbia

 
The statistics for 2018 revealed a sum of interesting facts in matters of foreign direct investments in Serbia. For example, investors in more than 100 countries were interested in placing their investments in Serbia, transforming the country into a significant investment hub for 2018 in the Balkan region where Montenegro was the first support. Investors from Cyprus were also interested in investments in Serbia in the previous year, and numerous business owners decided to relocate their companies in this part of Europe. Investors from Northern Macedonia, Slovakia, Bosnia and Herzegovina, Bulgaria, Poland, the Czech Republic, and Hungary presented more interest in placing their investments in Serbia compared to previous years. Japanese investors were important players in 2018 in Serbia, with approximately $ 1.3 million registered as foreign direct investments in this country. Most of the investments in 2019 were placed in major sectors like transport, electronic industries, chemicals, plastics, and textiles. The positive direction of Serbia’s economy was noticed by international players who were attracted by the numerous business opportunities in this country in recent years, with a registered growth of 157% for 2018. We invite you to get in touch with our team of company formation representatives in Serbia and solicit in-depth information and complete support if you are interested in opening a company in Serbia. Let our consultants help you establish your company in this country by helping you with the requirements imposed among many others.
 

What is the business direction in Serbia in 2019?

 
Serbia’s development plans continue to gain weight this year, especially when it comes to an important project signed with Turkey for extending the pipeline to the Balkans. Approximately EUR 250 million will be invested on the first highway section that connects Belgrade, the Serbian capital, to Sarajevo, the capital of Bosnia and Herzegovina, with the purpose of strengthening the business relations between the two countries. The first major investor for this vital project comes from Turkey, a country that offered numerous investors in Serbia for the past decades. The healthcare system and water transportation are also on the list of projects for which foreign investments are expected in 2019. Moreover, Chinese investors are very much interested in creating more than 1,000 jobs in Serbia by establishing a plant for making car parts. Even the Swedish investors are looking straightforward to invest in Serbia and create several jobs.
 

Key facts to consider when making investments in Serbia

 
Knowing the business destination for investments in Serbia will help an entrepreneur decide fast on the sector in which he or she wants to place the money. Here are a few facts to consider about Serbia before making investments:
 
  • Companies can be easily incorporated in Serbia as there are fewer formalities involved.
  • The taxation regime in Serbia is among the lowest in Europe.
  • An investor can easily establish a subsidiary or a branch in Serbia.
  • The manufacturing sector in Serbia is preferred by numerous international investors.
  • The Serbian economy met significant developments and a positive direction.
  • Serbia is an important business hub which allows foreigners to place their investments in varied sectors.
  • There are several tax incentives for investors from abroad willing to open companies in Serbia.
  • Vranje, Novi Sad, and Pirot are important free trade zones with an excellent infrastructure and a series of tax advantages.
  • In terms of business costs, large companies from abroad can establish branches and subsidiaries in Serbia’s free trade zones.
  • There is no VAT imposed on imported and exported goods in Serbia’s free trade zones.
  • Serbia connects the Eastern and the Western parts of Europe, thanks to its strategic location.
  • Serbia welcomes foreign investments from countries like China, Hungary, Turkey, France, UK, Spain, Japan, Germany and many more.
 
Any kind of investor appreciates the ways in which the business is made in a foreign country, meaning that the simplified incorporation procedures of a firm in Serbia are vital to entrepreneurs looking for a fast start on the market. The tax structure and the tax exemptions are considered in a large percent by overseas players who would rate concentrate on more investments instead of paying lots of taxes. If you are interested in a business plan and specific strategies that can help your business grow, we invite you to talk to our specialists at any time.
 

Provisions of the Foreign Investment Law in Serbia

 
The Serbian Investment Act was enforced in 2015 to help foreign entrepreneurs understand better the rules and regulations of the business environment. In this sense, it is good to know that the direct investments are seen as concrete assets of a company running in a wide range of industries. The foreign investments in Serbia can be placed by forming a company or buying shares in an already established business. Both ways involve nationals and foreigners interested in investments in Serbia. One should know that such investments are made through legal contracts in respect to the local legislation.
 
If you want to know more about how companies can be registered in Serbia, you may address your inquiries to our company incorporation agents in Serbia.
 

Types of investments in Serbia

 
Nationals and foreigners can place their investments with the help of varied tools, such as:
 
  • securities;
  • convertible foreign currencies;
  • assets;
  • property rights;
  • non-monetary investments.
 
 
Entrepreneurs who want to invest in Serbia are protected by applicable legislation and have the same entitlements as nationals, meaning that they benefit from the same duties and conditions when opening a company or buying shares. From an accounting point of view, foreign companies in Serbia are obliged to keep the records of each financial operation and related matters. One should bear in mind that when opening an investment fund, the tax regime and the exemptions are the same as for the nationals who set up the same investment funds.
 

How do I open a company in Serbia?

 
Because the legislation related to foreign investments in Serbia is permissive, foreign investors can open varied types of companies in this country, among which, the limited liability company or the DOO might be the suitable one. This is the simplest business form that allows international investors to easily register for business in Serbia. The following aspects are a few of the important steps to consider when opening a company in Serbia:
 
  1. The name verification must be made with the Business Registers Agency in Serbia.
  2. RSD 100 or EUR 1 is the minimum share capital for opening a private DOO in Serbia.
  3. A bank account needs to be established for the company’s future financial activities.
  4. One must apply for special licenses and permits and verify the business activities classification in this sense.
  5. The registration for tax purposes and social contributions must be observed at the time the company is registered.
  6. The company seal can be obtained in approximately 3 days. Then, the business can start activities in Serbia.
 
As soon as you decide for opening a DOO in Serbia, we recommend you talk to one of our company formation representatives in Serbia and solicit in-depth assistance and support for all the formalities involved. This is a proper way to start a business in Serbia in a fast and reliable manner, by hiring one of our specialists.
 

Laws governing the business in Serbia

 
Companies in Serbia must follow varied rules and regulations applicable in this country. The Law on Energy, The Law on Customs, the Law on Foreign Exchange Operations, the Law on Public-Private Partnership and Concessions, the Law on Insurance, the Law on Capital Markets and the Law on Procedure of Registration before Business Registers Agency must be observed by both domestic and international investors in Serbia. It is important to have an idea about the business environment and general rules for starting a company in Serbia and skip any possible misunderstandings that might occur. Feel free to talk to one of our company formation agents in Serbia and ask for comprehensive assistance and help. They can also guide you towards VAT registration in Serbia.
 

Repatriation of profits - Is it hard to transfer the money?

 
The assets and profits can be easily transferred from Serbia to the country of origin of the company. Once the imposed taxes are paid, the repatriation of profits can be easily made The legislation related to foreign investments in Serbia imposes no particular rules in this matter, however, it puts the accent on taxation and the preparation of profit repatriation in complete security. One of our consultants can give more details on this matter.
 

Serbia, a solid business destination

 
 
Serbia provides suitable business conditions for both local and foreign entrepreneurs interested in expanding or developing their operations in a safe and appreciated environment. The excellent and strategic geographic position of Serbia gives access to numerous investors from abroad as this country is a connection between the Western and the Eastern parts of Europe. The political stability, the great infrastructure by sea, land, and air, the appreciated economic indicators, the appealing tax structure, and the support provided by the authorities in matters of business encouragements make Serbia not only an attractive business destination but also a long-term partner for countries like Germany, Greece, Romania, France, Italy, Austria, Cyprus, Russia, UK, Spain, Poland, and many others. The numbers for 2018 are quite encouraging if we refer to the number of countries interested in investments in Serbia, that surpassed 100. The same positive business track registered this year as sectors like real estate, textiles, plastics, electronic industries have been in the attention of a large number of international investors. An important business project started this year between Serbia and Bosnia & Herzegovina where approximately EUR 250 million were invested in infrastructure and the first highway to connect the two important destinations. Below you can find some interesting facts, numbers, and details about the economy in Serbia:
 
  • Chinese companies are interested in creating more than 1,000 jobs in Serbia in the years to come;
  • incentives of around EUR 10,000 can be granted to international investors creating jobs in Serbia;
  • according to the “2019 Doing Business” report, Serbia ranks 48th out of 190 economies in the world;
  • the total FDI stock for 2018 sustained Serbia’s GPD in approximately 79% rate.

 

FDIs and accounting in Serbia

 
Foreign investors looking for business in Serbia are obliged to keep the records of their financial operations, or in other words, to respect the accounting matters imposed on companies and businesses. Bookkeeping and audits need to respect the international laws of accounting. All companies need to respect the taxation system in Serbia and to align with the requirements in this sense, including the ones connected to the accounting matters. You can also solicit tax minimization methods or wealth management solutions if you have a business in Serbia and you are interested in further investments in the firm by analyzing the financial status of the company.
 
Foreign direct investments are often the choice of foreigners who want control and ownership in a company in Serbia. Entrepreneurs can expand their operations of an existing company in their home country, in respect with the Serbian Laws, especially the Law on Company, the Competition Law and the Commercial Code.
 
If you are a foreigner willing to expand the activities in Serbia through varied investments, please feel free to contact our team of company formation consultants for extra information and support in company formation in Serbia.
 
 
 
 

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Call us now at +385 95 9981 628  to  set up an appointment with our company formation specialists from  Law Firm Ivan ┼Żupan. Alternatively you can incorporate your company without traveling to Serbia.

As our client, you will benefit from the joint expertize of local lawyers and international consultants. Together we will be able to offer you the specialized help you require for your business start-up in Serbia.

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