Doing Business in Serbia

Serbia is a gateway to central and south-eastern Europe, landlocked by several neighbours including Croatia, Hungary, Romania and Bulgaria. Having emerged from the global crisis, Serbia’s economic outlook has been improving steadily - helped by government support for local and international entrepreneurs interested in investing the country. Serbia’s economic growth has trended upwards, from -3.1% in 2009, to 3.5% in Q1 2016 - while its GDP has also trended positively, reaching $37.75 billion in 2016. An emerging market economy, Serbia’s leading sectors include financial services, energy, IT and communications, agriculture, and oil and gas. As part of its commitment to stimulating investment, the government has introduced a number of economic reforms, and incentives like government grants, tax relief, and free trade zones. Serbia is a member of the United Nations, the OSCE, and CEFTA, and is in negotiations to join the European Union and the WTO. The World Bank ranked Serbia 48 on its Ease of Doing Business Survey 2018.

Why invest in Serbia?

Investors interested in Serbia should consider the following factors:

  • International Profile: Located in a strategic geographic position, Serbia is continuing to grow its international political and economic profile. On a path towards full EU membership by 2020, Serbia also enjoys a favoured relationship with the Russian Federation in the form of an advantageous free trade agreement.
  • Business Landscape: Serbia offers investors plenty of opportunities across a varied industrial landscape. Well known for it agricultural and mining industries, key industries also include automotive, electronics, IT and communications, food, and textiles. In 2014, the IBM Institute ranked Serbia as the top international investment destination.
  • Labour Force: Businesses in Serbia enjoy access to a pool of skilled labourers. The country hosts 5 major universities, with over 240,000 active students specialising in STEM fields. Serbia’s labour force is highly literate with a strong rate of English language proficiency.
  • Operating Costs: Serbia offers its businesses one of the lowest cost operating environments in Europe in terms of electricity, fuel, and communications. Serbian labour, transport and real estate costs also offer significant savings compared to the other EU28 nations.
  • Government Incentives: To encourage investment and competition, Serbia’s government offers a range of incentives to businesses, including cash grants for start-ups, subsidies for construction, corporate income tax relief, and payroll tax incentives. Serbia also hosts several free trade zones.

Foreign Direct Investment in Serbia

The Serbian Government welcomes inward investment, with an array of incentives to attract investors in key future industries for the economy.

Company Registrations and Incorporation of a legal Entity in Serbia

The company should register with the Pension Insurance Fund, Business Registers Agency and Tax Administration. The key legislative authorities in Serbia is the Republic Tax Administration, Belgrade, Save Maskovic Street.

Business Banking in Serbia

In Serbia, it is mandatory to make payments to employees and authorities from an in-country bank account in RSD.

Generally, banks are open from 0800 to 1700 hours Monday to Friday and 0900 to 1300 hours on Saturdays. Only some designated banks are open on Sundays.

Working Days in Serbia 

The working week in Serbia is Monday to Friday. The general working hours for commercial offices in Serbia is between 0900 and 1700 hours.

Basic Facts about Serbia

The territory which became Serbia lies in the heart of southeastern Europe, and was first settled by the Slavs in the 6th century. Over the following centuries, Serbia was inhabited and governed by a variety of powers, and became part of the Ottoman Empire in the 15th century. In 1830, a revolution led to the establishment of the Principality of Serbia, and membership of the Austro-Hungarian Empire - before the country became part of Yugoslavia in 1918. After the turbulent dissolution of Yugoslavia in the late 20th century, Serbia became an independent republic and took steps to join the wider international community: today, the country is member-state of numerous global organisations, and is in the process of joining the European Union. Serbia is a mountainous country with numerous fertile agricultural regions, and enjoys a temperate continental climate throughout the year. 

General Information

Full Name: Republic of Serbia

Population: 7.12 million (UN, 2017, Kosovo is not included)

Capital: Belgrade

Primary Language: Serbian

Main Religion: Christianity

Monetary Unit: Dinar

Main Exports: Manufactured goods, food and live animals, machinery and transport equipment.

Internet domain: .rs

International Dialing Code: +381

Hello Здраво

Good morning Добро Јутро

Good evening Добро Вече

Do you speak English? Да Ли Говорите Енглески?

Good bye Збогом

Thank you Хвала

See you later Видимо Се Касније

The date is written in the format (date/month/year) for example 1 July 2015 is 1/07/15.

Numbers are written with a comma to denote fractions, for example RSD 150 000,75

Income Tax & Social Security in Serbia

The Tax Year in Serbia runs from 1st January to 31st December.

  • Pension Insurance 11%
  • Unemployment 0.75%
  • Health insurance 0.75%

The percentages are the same for both employer and employee.

The key legislative authorities in Serbia are the Republic Tax Administration.

Payroll providers do not need to be licenced to make any tax or social security fillings on behalf of their client in Serbia.

Income Tax in Serbia

Annual individual’s income tax is collected from resident individuals, including foreign nationals with a residency status, whose income for the calendar year under review exceeds the sum of three average annual salaries per employee disbursed in Serbia in the year for which tax is assessed, using the statistical data of the relevant state institute.

If the net income of a taxpayer is between RSD 2,285064.00 and RSD 4,570,128.00, a 10% tax on income is levied. On the annual income above RSD 4,570,128.00 a 15% tax rate is charged.

A taxpayer of annual income tax is entitled to a personal allowance of RSD 304,675.00 for himself/herself and RSD 114,253.00 for any of his/her dependent family members. The tax-free amount cannot exceed 50% of the person's taxable income.

The deadline for the submission of annual income tax returns is usually is 15 May.

Monthly income tax contributions are paid on the 30th of current month.

The penalty for late payment ranges from RSD 100.000.00 up to RSD 2,000,000.00.

Social Security in Serbia

Monthly social security contributions are paid on the 30th of the current month for the previous month.

The penalty for late payment ranges from RSD 100.000.00 up to RSD 2.000.000.00

Micro entities or small companies that employ at least 2 workers and started operating after 31stOctober 2015 will be eligible for a refund of up to 75% of the taxes and contributions paid until 31st December 2017 on behalf of their newly employed workers.

Reporting Tax in Serbia

Monthly

  • PPOPJ forms
  • PPOD forms

These forms are required to report paid taxes and social insurance (on a monthly and annual basis)

Yearly

  • M4 forms

The deadline for M4 from is 30th April for the previous year

  • PPP-PO forms

The deadline for PPP-PO form is 31st January for the previous year. These forms are issued to employees and are used for the calculation of the annual income tax.

All documents are to be sent to the Tax Administration and can be submitted by the client or by a partner. It is mandatory for the forms to be signed by the client. 

New Employees in Serbia

New starts have to be registered with Pension and Insurance Fund and Health Insurance. The deadline for new starts to be registered with the authorities in Serbia is one month from the beginning of their employment.

For setting up a New Start the details required include:

  • ID
  • Employment Agreement
  • Employment Record
  • M form (deregistration of previous employment with Fund)
  • M form for New Employment (signed and stamped by employer)

Leavers in Serbia

All dues to a Leaver have to be affected within 30 days from Termination of the Employment Agreement.

A leaver in Serbia must be de-registered from Health and Pension Insurance Funds.

Payroll in Serbia

Employers in Serbia must withhold employees’ income tax at source as part of the payroll process. The payroll process must take employee residency into account - that is, residents are taxed on income earned worldwide, while non-residents are taxed only on income earned within Serbia.

The personal income tax rate in Serbia is 10% for income up to RSD 4,570,128,00. An additional 15% is charged on income above that threshold.

Social security contributions must also be withheld during the payroll process. Social security in Serbia includes pension funds, health insurance, and unemployment insurance - employees must contribute around 30% of their salary, while employers contribute around 17.9%.

Serbia’s payroll landscape involves strict regulations - and foreign businesses operating in the country must be able to navigate the rules, or face compliance penalties. Expatriate organisations operating within Serbia often engage a third-party payroll provider in order to ensure payroll compliance.

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