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Foreign Investments in Serbia. LEGAL FRAMEWORK. by Vladimir Bojanovic. * This presentation does not deal with every topic or cover every aspect of the topics with which it deals. It is not designed to provide legal or other advice . Janković, Popović & Mitić International Law Firm.

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foreign investments in serbia

Foreign Investments in Serbia



Vladimir Bojanovic

* This presentation does not deal with every topic or cover every aspect of the topics with which it deals. It is not designed to provide legal or other advice.

jankovi popovi miti international law firm
Janković, Popović & MitićInternational Law Firm

Vladimir Bojanović

Attorney at Law, MBA (Cambridge)

  • Membership: Serbian and Belgrade Bar Association admitted
  • Expertise: Commercial Law , Corporate/M&A, Foreign Investments, Privatisations
  • Industry Sectors: Energy & Infrastructure, Telecommunications and Pharmaceuticals
jankovi popovi miti international law firm3
Janković, Popović & MitićInternational Law Firm


  • Corporate and Commercial
  • M&A
  • Privatizations
  • Competition / Antitrust
  • Banking and Finance / Capital Markets
  • Real Estate / Construction
  • Energy & Infrastructure
  • PPPs/PFIs
  • Dispute Resolution
  • IP
  • Employment & Labour

PART 1: General Legal Framework

  • Law on Foreign Investments
  • Law on Free Zones
  • Law on Foreign Exchange Transactions
  • Law on Foreign Trade Transactions
  • Customs Law
  • Privatization Law
  • Law on the Agency for Privatization
  • Share Fund Law
  • Company Law
  • Law on Securities and other Financial Instruments Market
  • Law on Takeover of Joint Stock Companies
  • Law on Registration of Commercial Entities
  • Law on Concessions
  • Insurance Law
  • Bankruptcy Law
  • Law on Games of Chance
  • Energy Law
part 2 specific l e g a l issues corporate
Part 2 - Specific Legal Issues:CORPORATE
  • Foreign investor may independently or in association with other foreign or domestic investors:
  • establish a new company (Model A); or
  • purchase stocks or shares in an existing companies (Model B);
  • Foreign investor may establish :
part 2 specific l e g a l issues corporate12
Part 2 - Specific Legal Issues:CORPORATE


  • In practice, foreign investors usually prefer to incorporate an LLC because of its simple form and fast incorporation.
  • Its advantages include the following:
  • Capital increase may be made without supervision of the SEC
  • Minimum share capital is EUR 500, as opposed to EUR 10,000 for a closed joint stock company
  • Registration is performed in practice in 2-5days.
part 2 specific l e g a l issues corporate13
Part 2 - Specific Legal Issues:CORPORATE


  • LLC Registration documents:
  • Filled-in BRA registration form;
  • Founder’s certificate of incorporation (for legal person) or copy of ID/passport (for natural persons);
  • Decision of the founding company on establishing a limited liability company in Serbia with designation of the persons authorized to sign Memorandum of Association (the “MoA”) before the Serbian court;
  • MoA with the notarized signatures of founders (or their authorized representatives) by the Serbian court;
  • Decision on appointment of the company’s legal representative, if not appointed in the MoA;
  • Copy of the passport (or ID for domestic citizens) of the designated representatives of the company;
  • Duly notarized OP form for certification of the representative’s signature (notarized by the Serbian court);
  • Duly completed application forms for opening of a temporary bank account and bank certificate on payment of the monetary founding contribution in the temporary bank account;
  • All the documents coming from abroad should be notarized, with apostil, accompanied with the official translation into Serbian by a sworn-to-court interpreter.
part 2 specific l e g a l issues corporate14
Part 2 - Specific Legal Issues:CORPORATE
  • A company with foreign share may perform all activities, except :
  • In the field of production of and trade in arms, or
  • in areas defined as restricted zones(e.g. border zones, national parks).
  • Foreign investor may establish the company in the above-mentioned field, or invest its capital in it together with a domestic entity:
  • without acquiring the majority rights in the management of such company, and
  • only with the consent of the Ministry of Defence of Serbia.
  • Special laws also regulate business areas in which foreign investors may not, alone or with another foreign investor, establish a company e.g. Broadcasting Law.
  • Foreign company’s rep office can perform only activities registered as the prevailing activity of the main company (EXCEPTIONS – Rep offices of the companies registered in Serbia).
part 2 specific l egal issues accounting and audit
Part 2 - Specific Legal Issues:ACCOUNTING AND AUDIT
  • Legal entities are to apply the International Financial Reporting Standards (IFRS) in preparing their financial statements.
  • The application of these standards and accounting framework are prescribed by Decrees of the Minister of Finance for companies, and the Governor of the National Bank for banks.
  • The Decrees and the Law differ in some aspects from IFRS, resulting in some deviations of local accounting standards actually applied from IFRS.
  • Company with the foreign share may decide to keep books in accordance with:
  • Serbian regulations, or
  • InternationalAccountingStandards (IAS), i.e. (IFRS).
part 2 specific l egal issues accounting and audit16
Part 2 - Specific Legal Issues:ACCOUNTING AND AUDIT
  • Annual Financial Statements are prepared on December 31, with two exceptions:
  • Foreign company subsidiaries, for which the financial year differs from the calendar year, may prepare and submit their financial statements at the parent company's financial year end, with the prior obligatory approval from the Ministry of Finance;
  • Entities undergoing a change of status (e.g. merger, liquidation, or bankruptcy)are required to prepare their financial statements at the date on which this procedure is completed.
  • In principle, legal entities must file:
  • financial statements by 28 February;
  • consolidated financial statements by 31 April;
  • approved financial statements by 30 September (30 October for consolidated FS).
  • Audit is mandatory for all medium-sized and large companies. Medium-sized companiesmust change auditors every five years, large companies every three years.
part 2 specific legal issues dispute resolution
Part 2 - Specific Legal Issues:DISPUTE RESOLUTION
  • The RS and the Kingdom of Spain concluded the Bilateral Agreement on mutual investment protection on 25 June 2002, which, inter alia, regulates dispute resolution regarding foreign investment, between the RS at one side and a foreign investor on the other side:
  • Step 1: disputes are declared in writting by a foreign investor and adressed to the RS represented by the competent authority;
  • Step 2: the RS and the foreign investor shall try to resolve the dispute ammicably;
  • Step 3: If the dispute cannot be resolved ammicably within 6 months as of delivering the written notification to the RS, the dispute may be addressed to:
  • competent court of the RS;
  • “ad hoc” arbitration tribunal, in line with UNCITRAL Rules;
  • International Center for the Resolvment of international Disputes (ICSID);
part 2 specific legal issues dispute resolution18
Part 2 - Specific Legal Issues:DISPUTE RESOLUTION
  • Any dispute related to foreign investment may be settled either before the Serbian court or in arbitration as agreed between the parties. In May 2006, Serbia enacted its first Law on Arbitration permitting the use of:
  • institutional arbitration
  • “ad hoc”arbitration
  • international arbitration
  • domestic arbitration. 
  • DOMESTIC INSTITUTIONAL ARBITRATION: The Foreign Trade Court of Arbitration (founded in 1947) is located within the Serbian Chamber of Commerce and is a domestic arbitration body.  Arbitration is voluntary and conforms to the UNICTRAL model law. 

Part 2 - Specific Legal Issues: EMPLOYMENT


  • Foreign national intending to work in Serbia under employment contract would have to obtain:
  • Temporary Residence Permit (the “TRP”)
  • TRP is necessary for foreign nationals intending to work/reside in Serbia, and it is issued in 2 steps:
  • Registration of the foreigner’s presence at the territory of Serbia in a period of 24 hours from arrival by obtaining the "white card”. White card may be issued by the local police (if a foreign citizen leased the apartment) or by a hotel (if a foreign citizen stays in a hotel).
  • Visit to police and applying for residence permit with required documents, within 90 days as of the arrival to Serbia.

b) Work Permits

  • An employee would need to apply for issuance of work permit and submit documents to the National Employment Service (NES) whereby NES issues the work permit within several days provided that all submitted documents are satisfactory

Part 2 - Specific Legal Issues:EMPLOYMENT


  • The employment relationship can be terminated for various reasons, including decrease in the volume of work due to technological, economic ororganizational changes.
  • The employer isobliged to pay redundancy compensation to the employee, and it is prohibited to employ another person atthe same position in the period of six months followingtermination.
  • If the demand for work on the same positionarises before expiry of the six months, preferenceshall be given to the employee whose employment on thesame position was terminated.
  • Adoption of a RedundancyProgramme is the obligation of the employers if a certainnumber of employees, depending on the total number ofemployees, are to be declared redundant.

Part 2 - Specific Legal Issues:TAXATION



Part 2 - Specific Legal Issues:TAXATION


  • Non-residents are only liable to tax on Serbian sourced income.
  • Double Tax Treaties between Serbia and expatriates’ residencecountries can limit the Serbian right to tax or offer relief for thedouble taxation of certain types of income.
  • Double Tax Treatiesprovide for resolving tax residency disputes, i.e. situations inwhich, according to the local rules of the respective countries,a person is deemed to be a tax resident of both countries.
  • In certain cases, remuneration of non-residents working fordiplomatic and consular missions or international organizationsin Serbia is not taxable.

Part 2 - Specific Legal Issues:TAXATION



  • Formula for calculation of the total costs for an employer related to salary of one employee:


(TC is total cost, G is gross salary and 0,179 is joint percentage of social contributions).

  • Gross salary is calculated in the following way:

G=(N-786.48)/ 0,701

(N is net salary and 786,48 RSD is not taxable part of the salary applied on monthly basis to the total amount of net salary in the relevant month. This figure is amended on an annual basis each January)

thank you for your attention
Thank you for your Attention.

Q & A

Phone: +381.60.3.777.444