INCORPORATING A SUBSIDIARY IN SERBIA

29.02.2024.

You are considering opening up a company in Serbia? Serbia is open for all commerce and constantly strives to improve its business climate. Here are a few points to have in mind.

#1 IS PRESENCE OF SERBIAN NATIONALS IN THE MANAGEMENT A MUST?

Technically, no. There is no hard rule that your NewCo must employ/engage Serbian citizens as directors in order to be operational. For local help, accountants and lawyers are available. However, a lot of management actions (e.g. registration of Ultimate Beneficial Owners) must be done via a Serbian-issued electronic signature of the directors. Attorneys cannot sign in their stead. The directors need to be available to travel to Serbia to personally take them over. So, it might be convenient to have a Serbian national employed (or engaged) as the director of the NewCo.

#2 IS REGISTRATION DIFFICULT?

Actually, not at all. Our Agencija za privredne registre is wonderfully efficient – the incorporation is done electronically and takes up to 5 business days. Again, a Serbian-issued electronic signature is necessary, but filing for incorporation can be done through a power of attorney. The process is more complex if a license is needed, but this is rarely the case – and having an attorney is beneficial, to find out if it is.

However, the next step is opening the bank accounts, and here it becomes trickier. Banks tend to have difficult Know-Your-Client procedures, and personal presence of the NewCo directors is practically a must.  Here, again, having a local director is a benefit. Also, if your ownership structure is complex, or includes off-shore or similar jurisdictions, the process will not go smoothly.

#3 WHAT KIND OF HELP IS NEEDED?

Legal consultants are good to have, especially in the incorporation and setting-up phase. Accountants are a must (unless you have an in-house accounting, and sometimes even then), for payroll and preparation of financial reports, tax returns, etc.

Essentially, local help is beneficial for guiding you through the process of setting up a company.

#4 A FEW NOTES ON EMPLOYMENT

While the taxes are generally quite low/moderate, payroll taxes tend to be the heaviest burden. Some companies tended to prefer to use B2B mode in operation. However, this is not viewed favorably by the local tax authority. Such a mode of operation must pass an independence test, otherwise, an employment relation is in order.

We hope this was helpful. We do believe that the positive points outweigh the negative and that Serbia is a good place to invest.