"Polakost" and benefits for startups: a guide to Serbia for entrepreneurs

Serbia is a small country in the center of Europe, de jure not a member of the EU, but in fact connecting Russia with the European and American markets.

The country's government continues to take steps to accommodate expats by simplifying migration laws. In 2022, more than 100,000 Russian citizens relocated here, and over the same period, more than 2,300 companies with Russian participation were launched.

And although not all experts can call Serbia an IT hub in the full sense of the word, since 2022, the ecosystem for technology startups and for business in general has been steadily improving here.

Life in Serbia

Serbia is a small Eastern European state with a population of over 6.8 million people, of which about one and a half million live in Belgrade.

There are two industrial centers here: Belgrade and Novi Sad, the rest are municipalities, whose role is quite high. Each municipality has broad regulatory powers, including establishing free economic zones, building technology parks, and providing social support to residents and emigrants.

For example, in 2022, the Novi Sad municipality decided to pay child benefits to all preschoolers, regardless of citizenship. Belgrade does not have this yet.

“Serbs are closer to Italians than to Eastern Slavs. This is reflected in the speed of work: in Serbia there is no rush like in Italy. But there is also no such Spanish extreme as “mañana”, when “tomorrow” never comes. Opening a bank account can take two or three weeks simply because the specialist was busy with other things. The main word can be called “polako”, which means “restrained, leisurely, unhurried”. This delicacy is a characteristic feature of Serbian culture, its DNA," says Milica Djokic, founder of the business relocation service to Serbia Relocation.rs.

The working day in Serbia lasts from 8 am to 3 pm: this is when government agencies finish work, the notary works until half past four, and at five in the evening in Belgrade no one works. In small towns, life ends even earlier.

"There is no virtue of working around the clock here, people understand that life is short. In Serbia, people work no more than eight hours, sometimes six, after which they take care of their family, children, and relax. There are no 24-hour services here, even bank support works until eight in the evening. If your card is blocked at nine in the evening, at best the next day you will receive an answer on what to do about it," adds Milica Djokic.

Deviation from the contract is not considered a problem here, as, for example, in Germany or Great Britain: the concept of an honest word, agreements sealed with a handshake or rakija, can be more important.

"Forcing the Serbs to work according to the contract - this is to raise a natural question about your own adequacy," emphasizes Milica Djokic. "And if a bank employee, instead of serving you, talks to a colleague on the phone, drinks coffee or goes out for a smoke, and you tell him that you have been waiting for him for twenty minutes, you may not be understood.

People stand in lines for a long time and patiently, the sense of time is different here. The likelihood that you will do a lot of things in one day is small - not because of traffic jams, but because of the unpredictable human factor."

A feature typical of mono-ethnic states: the success of a business is sometimes determined by the presence or absence of Serbs in the team who know other Serbs. Milica Djokic emphasizes: "It is important that the partner is known. Horizontal connections determine a lot. A company that has a mix of employees - Serbs, Russians, Belarusians, Canadians, etc. - is more viable than a company of just Russians or Belarusians."

English is actually the second language of Serbs, but some citizens find it unpleasant to express themselves in it because of the NATO invasion 23 years ago.

"Serbs consider Russians a brotherly people, treat them with respect and warmth, help and try to understand the language. Historical ties with Russia are quite strong: here, streets are named after Russian tsars, and Russia provided military support during World War I," adds Milica Djokic.

And the government, in turn, wants highly qualified intellectuals, IT and engineering personnel from the Russian Federation to drop anchor in Belgrade, which is in line with the country's economic transformation strategy. Because of Russian relocators, Serbia unexpectedly implemented a program last year to increase the share of IT personnel in the country's employment structure.

From Serbia, you can drive to, for example, Thessaloniki or Vienna in six hours, and to Budapest, Sofia, Zagreb in four hours.

“It gives you the feeling that you are in the center of Europe. The language also plays a role. The language based on Serbian (also known as Serbo-Croatian or Croatian-Serbian) is spoken in at least six countries: Croatia, Slovenia, Bosnia, Montenegro, Macedonia, Bulgaria. Therefore, the basics of Serbian grammar and vocabulary will be an advantage for relocators: it gives the opportunity to speak with more than five million people from neighboring countries,” says Relocation.rs specialist Marko Petrovic.

Business in Serbia: Personal Experience

Pavel Smirnov, co-founder of Domestiq (Italian-Serbian PropTech startup), former IT director at PIK

Unlike many other countries, Serbia has fewer special regimes for startups and the IT industry. In this regard, the country and its legislation are not very attractive, there are few well-known startups here. But there is another useful aspect: the IT community, which is currently being formed.

The largest IT companies have moved their offices here. The second largest office of Yandex is here, as well as offices of large Serbian IT companies and a fairly large Microsoft office since the 90s. And with the arrival of Russian developers, the IT community has grown many times over.

Serbia has a plus - a special IP Box regime, which allows you to keep corporate income tax at 3%, which is a very low tax.

But IP Box works if you receive income from the use of your registered intellectual property mark. Before that, you need to register it correctly, this is not a quick process.

The second plus is an attractive relaxation - R&D (research and development) deduction. If you, as a legal entity, spend money on R&D activities, they are multiplied by two, taken into account in double size, and the amount of these expenses can be deducted for taxes. This applies not only to IT, but to any area where there is R&D. You can take into account the amount of expenses that you incurred on R&D in double size in your tax payment.

The third advantage, due to which many new offices and IT companies have appeared here, is the ability not to pay deductions for employees, social and pension contributions for three years. This benefit is suitable for large players. A startup will not be able to qualify for this benefit due to a lack of scale.

Serbia has a low basic tax, but it is higher than in Russia. If you register an individual entrepreneur under a simplified scheme, like I do, the fixed tax is calculated depending on the place of registration of the legal entity and the type of activity.

The tax can be €200-300 per month - a fixed amount regardless of income. But if under the simplified scheme your annual turnover exceeds 6 million RSD (about €50 thousand), the tax regime or the form of the legal entity changes to a DOOO (analogous to a Russian LLC).

For a DOOO, the profit tax is 15%, VAT here is 20%. In addition, if the DOOO has employees, all standard insurance and pension contributions are quite large. The tax burden is about 40-50%, this is the standard European rate.

Serbia is a super English-speaking country, there are no problems with the language barrier. Only when interacting with government agencies may Serbian be required, they may refuse to speak English. In the business environment, law firms, on the streets, everyone speaks English perfectly, because of this, it is even difficult to learn Serbian.

Egor Zolotukhin, co-founder of the platform for online and hybrid events Beams, participant of Skolkovo

If we compare Moscow or St. Petersburg with the capital of Serbia, let's be honest, Belgrade loses in a number of parameters. You can feel that it is 10 years behind the major Russian cities.

There is not much here that we are used to: transport is not so developed, there is no metro, normal taxi services, car sharing, kick sharing. There are deliveries, but they are much worse in terms of speed and quality, banking is much worse, there are no normal marketplaces.

Belgrade is more, let's say, a shabby city: often unkempt, sometimes there is garbage and a lot of graffiti. And this is not graffiti at the level of Lisbon. Serbs smoke a lot, which many Russians who have come here do not really like.

But Belgrade has a very pleasant climate, lots of sun and greenery. Walking around the city is a pleasure, despite many "jambs". If you want the sea, Montenegro is nearby, it's a 40-minute flight away, or you can drive there via mountain routes.

Serbs are very nice and open people, always ready to help. The Serbian language is similar to Russian, so adaptation will be quick. Oddly enough, there are also those who speak Russian. In general, there are no problems with local people and language.

Egor Zolotukhin and his co-founders chose the country for relocation among several jurisdictions.

UAE, Turkey and Cyprus turned out to be too expensive. The jurisdictions of Armenia, Georgia and Kazakhstan, according to the company owners, did not guarantee a reduction in legal and financial risks, and could also receive less trust from European and American partners.

The USA (Delaware) was not suitable for relocation, because the company is opening and operating remotely there. Despite its disadvantages, Serbia suited Egor and the co-founders due to its proximity to the center of Europe, visa-free regime, and the prospect of developing an IT hub due to the fact that the country is applying for membership in the European Union.

Milica Djokic, founder of the business relocation service to Serbia Relocation.rs

An important advantage of Serbia is its economic proximity to Europe and the status of a candidate for EU membership. In fact, Serbia has a free trade agreement with the EU, which makes it easy to enter the European market.

In 2023, an agreement was signed to begin simplifying economic relations with China. There is no free trade agreement yet, there are few Chinese goods, import duties are quite high - about 35% on any Chinese product. I think a free trade agreement will be adopted in 2024. Free trade with the European Union is much more important, because it is a market of 440 million people.

The level of digital transformation in Serbia is much lower than the level of digital transformation in Moscow, but on average higher than that of some European countries. Serbia is among the three countries with the greatest dynamics of digital transformation. The level of public digital services for business is very high here, for B2C - still modest.

FinTech is not yet developed here, it does not exist in the usual sense of the word for Russians. Banking applications - with very limited functions, an analogue of the fast payment system appeared in Serbia only in 2023. The personal account of a legal entity and an individual is Russia ten years ago: no super apps like Tinkoff and Sber.

Serbia, as a candidate for EU membership, is focused on EU legislation: local regulations are written in accordance with the GDPR directive, where privacy, security of personal data, multiple restrictions on their storage, processing and transfer are at the forefront.

The measured pace of life combined with the habits of citizens to visit institutions in person and solve most problems offline give rise to bizarre practices that can be called "hybrid" - by analogy with a combination of remote and office employment.

For example, logins and passwords for your personal account are provided upon personal appearance at the bank, the same applies to statements in relation to FinTech: you can see the transaction number, but you will receive transaction details and a statement with the movement of funds for the last three years only by contacting a bank branch. It cannot be said that this is a problem of an imperfect IT infrastructure: it is precisely a combination of traditions, multiplied by the paranoid concern for the cybersecurity of users who are not very sophisticated in “digital” brought in by the GDPR.

If we compare Serbia with East Asia, Uzbekistan, Kyrgyzstan, Serbia is focused on European markets, a huge number of companies have their representative offices, development centers, assembly shops, etc.

Those wishing to integrate into the integration processes with Europe should first of all look at Serbia. This is much more productive than the UAE.

Our company has already had several cases of relocation of companies that registered in the Emirates, stayed there for a year and concluded that the climate is terrible, and life is spent under the air conditioning in an office or shopping center. Tax haven is a plus, but in Serbia you can get a similar set of preferences for IT or engineering activities. The Emirates is a difficult jurisdiction for people whose business is not very large-scale.

The eastern regulations of the UAE, multiplied by Islamic banking, make the task of development extremely different from what everyone is used to in Russia. And Serbia copies the European approach, just like Russia.

There are many expats in Serbia, not only from Russia. There are successful developers from the United Arab Emirates and Israel who are building large microdistricts.

Chinese entrepreneurs are hyperactively building Serbian infrastructure: roads, tunnels. There are a lot of direct flights to China and the Emirates, the airport receives a huge number of foreigners on these routes every month.

Based on our cases, we see a trend: more and more Russian companies are going to Serbia. It is more comfortable for children, employees, and most importantly, it is easier to adapt to the specifics of regulation. Serbia is suitable for those who want to work with Europe, living in a Slavic country with Slavic culture.

Alena Makova, founder of the agency of unusual corporate gifts and souvenirs Podarking (Russia-Serbia-Cyprus-Kazakhstan)

In Serbia, there is an easy way to legalize (obtain a residence permit for business) and today, due to the large number of Russian-speaking people and companies that have relocated, it is a fairly large and solvent target audience - the Serbian market itself is tiny.

A lot of projects by Russian-speaking founders are opening now, and I am delighted to watch their work. I jokingly call this time the Renaissance of Russian emigration: everyone has recovered from the move, sorted out everyday and organizational issues and started creating, creating and opening.

If we talk about my business, the merch and corporate gift market in Serbia is very small in terms of the range of goods and brands, and European goods need to be brought in and cleared through customs.

Since Serbia is not part of the EU, it seems that few people are involved in this, and the selection of items at local agencies is very limited. There is only one souvenir catalog with its own warehouse inside the country. Therefore, with our Russian experience, habits, creativity and speed, there is a large field for work here. We had to learn from scratch, but we have already mastered a lot.

It was a discovery for me that the level of customer service that is usual in Moscow is a very high bar and a great rarity in Europe. Therefore, clients who have worked in Russia and tried to get the same in Europe understand very well the advantages of the offer “we will do it as close as possible to how it was done in Russia”.

We had to significantly change our communications with contractors and manufacturers, both here and in Cyprus, where we also work. Europe and Serbia are much more relaxed and measured, there are no such deadlines and speeds as in Moscow, a different bar for creativity and lower quality requirements.

Personal relationships are very important here, it is not customary to swear, demand, it is customary to show more respect to people. Moscow habits have to be adapted and much more effort has to be put in to achieve the usual quality of results and find partners with similar approaches to work.

Ruslan Yenikeev, lawyer at Larmann Legal

Serbia's general advantages include: low bureaucracy, proximity to the EU, the opportunity to obtain a long-term residence permit for company founders, inexpensive labor and rental space.

The main advantage is many tax breaks for technology companies.

There are also 15 free economic zones in Serbia, but I would like to see more tax breaks for their residents. Compared to the Free Zone in the UAE, the virtual zone in Georgia, the Astana Hub in Kazakhstan and others, they offer much lower tax rates for companies and their employees, unlike the Serbian FEZs. The latter can only boast of exemption from VAT in some cases and the absence of customs duties.

The disadvantages include political instability and a shortage of IT specialists, although the latter has been changing for the better in recent years.

Ira Plotnikova, co-founder of BeGlobe Agency

Since 2022, we lived in Turkey, Armenia and Georgia, and eventually settled on Serbia for several reasons:

• Geographical proximity to Europe without the legal complications of European countries for people with Russian passports;
• Tax incentives for IT specialists;
• Many strong international schools with instruction in English;
• More opportunities for business development;
• Prospects for obtaining citizenship with a strong passport.

The government is adapting its legislation and creating conditions for the development of technology businesses in the country, there are many advantages for them. IT entrepreneurs are less likely to be refused and accounts are opened in international banks faster.

When we arrived in Belgrade, I wanted to take a break from PR and digital, so I decided to open BEBA beauty bar with my friends. The concept is that it is both a bar and a nail studio, the format of “your best friend's apartment”, something like a mini-club, where it is cool not only to get a manicure, but also to just spend time with friends.

It turned out really great, we have been working for more than six months now. In general, I recommend an offline business from burnout.

We had a small start-up capital, but in Serbia it is much cheaper to launch a business than in Russia: the low cost of commercial real estate rental (for & euro; 1000 can remove a good room in the center of 70-80 sq. M.)

Less necessary documents and taxes at the start Sabitova appeared PR agency for technological companies Beglobe, by that time I managed to miss PR, and the concept answered my request not to work in Russia: Beglobe helps startups and venture funds to go to the markets of America, Europe, India, OAE.

Currently, communication packaging and adaptation to the international market are in great demand, we help launch or develop LinkedIn, Twitter, list the company on all important startup platforms, get publications in international media, be represented at the most important international conferences. At the same time, we work only with companies that have decided to develop abroad.

Yulia Sabitova, co-founder of the agency, lives in Zurich, Switzerland, and I live in Belgrade, and we have our own local community of entrepreneurs, employees of technology companies. Every week it is replenished with new participants and interesting collaborations are obtained.

Recently we realized that early-stage startups sometimes urgently need to announce an investment round, but at this stage they do not have the resources for a full-scale PR campaign, so we launched a short-term service “Round Announcement”, within the framework of which we help to tell about success and plans for the future in international media.

Ekaterina Zhidkova, founder of the cultural and educational project Adaptacija

Belgrade is a large progressive city. It is quite easy to open an individual entrepreneur in Serbia. There are several tax systems, I chose the paushalac (lump-sum tax system) - an analogue of the Russian patent, a fixed tax. You do not have to hire an accountant. The maximum turnover amount under this form is 6 million dinars per year or €50 thousand.

In Serbia, I am registered as an individual entrepreneur with a fixed tax. The downside is that this fixed tax is quite high and depends heavily on the type of activity, city, and district where you live or to which your business activity is attached. My tax is now about €250. I know that developers have taxes of about €400, and you also need a virtual office. So expenses can reach €500.

As an entrepreneur, it was initially very unusual for me to work with locals due to the difference in cultural codes in work (for example, you can’t just come to the “landlord” and bring money, it’s impolite, it’s customary to talk first).

There is another difficulty. My business does not need to make purchases abroad. But those who do face this have difficulties due to high customs duties. If you order goods from Amazon or iHerb worth more than $50, customs clearance will most likely cost the same, or even more. (Almost no one orders goods from "outside" to Serbia, unless they are large suppliers. Deliveries from the US and China are subject to a 35% tax, from Europe - up to 12%. - RB.RU.).

The most annoying myth about Serbia is that Serbs understand or know Russian. This is not true. When Russians speak Russian to locals, for me it is a sign of disrespect, unwillingness to assimilate and understand the country you have come to. Yes, our languages belong to the same group, but it is impossible to understand a Serb without knowing Serbian.

The first thing that relocators in Serbia stop doing is calling a taxi for short distances or in the middle of the night. At night, taxi drivers may not work at all, the car takes a long time to arrive. You need to contact special services like Naxis to be sure that the driver will arrive. There is no metro here, but there are buses and trams.

Business climate and ecosystem

The startup scene in Serbia, according to StartupBlink, has grown and moved up one position compared to the previous year, ahead of Thailand. The country took 51 place in the global ranking and 14th place among startup ecosystems in Eastern Europe.

The economy of Serbia is developing dynamically, its base is the agricultural sector. But in 2022, the ICT sector exceeded 10% of GDP and took first place. The Serbian government is striving to make the country an IT hub for Europe, and perhaps even for the Middle East, and is making a lot of efforts to achieve this.

For example, it is developing the country's startup ecosystem, for which it created the Startup Portal - a resource where information about opportunities and programs for founders in Serbia is collected in one place. Here you can learn about blockchain and artificial intelligence, FinTech, cybersecurity, marketing, intellectual property. And also get advice on starting a startup and financing.

An important milestone for the Serbian startup ecosystem is the creation of the first Center for the Fourth Industrial Revolution (C4IR) in the region. Its goal is to developments in the field of biotechnology, artificial intelligence in healthcare.

The country is home to R&D centers of Microsoft, IBM, Luxoft, IBM, Wargaming Studio Belgrade, HYCU. About 200 Russian IT companies have relocated here. Yandex recently built an office for 2,000 employees.

“The IT community and ecosystem are developing so rapidly in Serbia that I have attended more meetups, conferences and coworking spaces here than in Russia as a participant of Skolkovo. They even host international startup and venture forums, such as the Belgrade Venture Forum,“ says Egor Zolotukhin, co-founder of the Beams platform.

Examples of events: Heapcon or HighLoad++ with the support of Yandex.

According to Pavel Smirnov, Serbia is a suitable location for business in the field of blockchain and Web 3.0. The legislation here differs from the EU, it is more progressive, loyal and simple.

“There is a law on digital assets and the use of blockchain. It is not just signed and released, but there are even several successful cases with projects that have gone through the entire chain: they issued digital assets, attracted investments, paid dividends.

Nearby is Montenegro, where one of the main crypto enthusiasts, Vitalik Buterin, the developer of Ethereum, is based, and a community is growing around him.

In Serbia, there are companies with a large portfolio of projects that hold events and conferences. MVP Workshop is a very large company that makes blockchain projects using the outsourcing scheme. If a project needs to be developed using blockchain technologies, European companies turn to them. In Serbia, there are good programmers who receive compensation below the European average, while the quality of work is sometimes even higher than that of their "expensive" colleagues, — continues Pavel.

The state of IT business in Serbia

In the first half of 2023 alone, Serbian ICT (information and communications technology) exports amounted to €1.6 billion. This is 40% more than in the record year of 2022.

The high growth rates will continue, Serbian Prime Minister Ana Brnabić emphasized in her recent speech. Serbia exports most of its IT services to the United States (€453 million), followed by the United Kingdom (€220 million) and Switzerland (€183 million). In 2023 alone, 3,700 new jobs were created in the ICT sector.

Zoran Mitic, Director of SEECAP Consulting

These high figures are is the result of the government's ongoing efforts to improve the business environment for the IT sector in Serbia and attract investment. Today, these efforts are starting to pay off.

The main investor in the industry is the Serbian government, followed by private sources of funding.

The ecosystem that the state is building has prompted several major IT giants to open development centers, campuses and offices in Serbia. They may be of interest  startups as partners.

For example, NCR Corporation has created a campus in Serbia, investing over $100 million; the American company has over 5,000 employees.

SEECAP specialists are currently consulting a large Russian IT company, which is opening an office in Serbia, moving some of its specialists and planning to hire about 100 local employees over the next 12 months.

To digitalize healthcare, social services, taxation and other services, the Serbian government has created an Office for IT and eGovernment - something like Gosuslugi in Russia.

A large government data center with a powerful supercomputer and an Artificial Intelligence Platform is located in the city of Kragujevac. Startups can apply to use this Platform to develop projects.

In June, Serbia joined the Digital Europe program. Now companies, institutes and enterprises in the country can apply for European funding, and Serbia has become a practically full-fledged member of the EU in this area.

IP BOX Regime

Serbia has an IP Box - a special tax regime for companies that receive income from intellectual property. This regime is available in many European countries (sometimes called Patent Box) and has local application features.

The Law on Corporate Income Tax in Serbia provides significant tax benefits for legal entities that receive income from patents, software and computer program development, as well as technical solutions (utility models, trademarks, design).

The regime allows exempting up to 80% of income from intellectual property from the company's tax base, allows startups to receive tax credits for investments and not pay wage tax and social contributions for three years.

A legal entity can reduce income tax from 15% to an effective 3% for income from intellectual property created in Serbia. The main difference between IP Box in Serbia and similar regimes in other countries is the wide range of intellectual property objects, the income from which is subject to the benefit.

For example, Malta, Hungary and France have a Patent Box, which applies to patents and software, while Switzerland and the UK only apply to patents.

Egor Larichkin, Larmann Legal

“IP Box benefits may be received by startups that hold copyright or related rights to intellectual property and receive income from their use or disposal.

At the same time, the company must conduct research and development (R&D) in Serbia, which is then licensed in exchange for remuneration,” notes Egor Larichkin, a lawyer at Larmann Legal. — Also, startups that have patented their work are entitled to the IP Box benefit.”

In addition to the IP Box regime, founders and startups in Serbia can receive the following benefits:

• Company expenses directly related to R&D (research and development) are deductible from the taxable base at a double rate (up to 0%);
• Possibility to receive a tax credit for investments in start-up companies (up to RSD 100 million);
• Credit for income tax in the amount of 30% of investments;
• Tax credit for annual income in the amount of 50% of investments;
• Founders of startups do not pay personal income tax and social contributions for the first three years;
• Tax base for paying taxes and contributions from wages for employees who are citizens of Serbia, if their wages are higher than the national average;
• As of 1 March 2022, the Law on Personal Income Tax introduced the category of “new persons”, for whom 70% of their wages are exempt from taxation and 100% of their wage income is exempt from social contributions. The benefit is valid until December 31, 2024;
• No capital gains tax when introducing IP into a company.

Free Economic Zones (FEZ)

Yegor Larichkin notes that there are 15 FEZs (full list) operating in Serbia, which provide the following benefits:

• Goods imported into the free zone are not subject to VAT, as well as the provision of transport and other services related to the import of goods;
• Duty-free supply of goods and services in the free zone;
• The company is exempt from paying VAT on the rent of commercial premises in the free zone and cargo handling services;
• Supplies of goods between users of two free zones are exempt from VAT;
• Residents of the economic zone engaged in production are exempt from paying VAT on energy consumption.

At the same time, in the FEZ you will have to pay income tax, personal income tax, and social contributions. A citizen of Serbia or a foreigner can register in free economic zones; any company, including IT, is suitable.

The most suitable zones for technology startups are the Belgrade FEZ, Subotica FEZ, Novi Sad FEZ, and Apatin FEZ.

Milica Djokic emphasizes that “FEZs in Serbia are not what you might think of when imagining free economic zones in other countries. In Serbia, FEZs are related to manufacturing.

If you manufacture electrical equipment, you can get zero customs duties and optimize your income tax. Serbian FEZs will be useful for the IT sector if you assemble something and work only for export. That is, if you localize production from China to Serbia and plan to work for the European market, it is super profitable. If you plan to work for the Serbian market, then the legislation regarding foreign goods is applied in the FEZ."

"If compared with Dubai, Singapore, the state of Delaware in the USA and other popular jurisdictions for business, then Serbia can hardly be called a global IT hub, but there is a tendency towards this. Serbian authorities are now actively attracting IT companies from all over the world, offering preferences for startups and their founders," Ruslan Enikeev emphasizes.

In-demand startup areas

According to experts from the Belgrade Venture Forum, green energy is the most popular in Serbia. Also popular areas: FinTech, MedTech and cryptocurrency.

“Alternative energy, biotech, energy efficiency and gamedev are key areas for startups,” says Pavel Smirnov. “Biotechnology and alternative energy are the path to the European Union. Heat conservation and reduction of heat loss in transit and homes are relevant. Most of the architecture in Serbia is old, and in the cold winter, operation is expensive.”

Head of the relocation company AskMe Agency Veronika Morignevich

“If you are registering a preschool educational institution, before registration you need to decide on a legal address, prepare a memorandum of association, decide whether you want to be in the VAT system, and select a type of activity. It is important that during registration we can indicate one main and two auxiliary types of activity.

Before submitting documents to the registration center, you certify the documents with a notary. If the memorandum of association is only in Serbian, and you do not speak Serbian, at the time of certification you will need an official court translator with the appropriate seal.

You or your representative (for example, a lawyer or attorney) submit an application to the registration center, which reviews the package of documents for up to ten days for compliance with current legislation.

In the case of registering an individual entrepreneur, documents do not need to be certified by a notary; you need to submit an application to the registration center, which reviews your package of documents for up to five days. You can also submit your application online using an electronic digital signature."

"Serbia has high salary taxes - about 62% in total. If a person receives €1000, then it costs the employer €1620 (together with the employer's and employee's taxes).

As the salary increases, the percentage of the total burden decreases, and there are a number of benefits for the return of part of the social contributions under certain conditions, but this works with high salaries. The minimum salary in Serbia by law is about €350 per month, — notes the founder of the international agency Podarking Alena Makova. — I am currently working with the same Russians who have arrived, I have not looked for local employees.

There are several Telegram channels for searching for vacancies in Serbia — for example, “Work in Serbia”, as well as Linkedin — a working tool among locals. I found production and contractors mainly through recommendations. “Google” is difficult here, online is not very developed and basically everything is built on personal contacts”.

• For IT vacancies in Serbia, they use the Russian-language Telegram channel Serbia IT Jobs and the Serbian websites Joberty and Helloworld.
• The most popular website in Serbia for renting and buying real estate is City Expert, where the expensive segment predominates. Relocators also note the services Nekretnine, Halooglasi.com, 4zida.

The cost of office space depends greatly on the area and your needs; a small shop or office can be rented for €300-500 per month, or even for several thousand. In general, as business owners note, rates are significantly lower than in Russian capitals.

However, Alena Makova reminds us that when searching for square meters, you need to be prepared that, despite basic knowledge of English, some advert owners prefer to communicate in Serbian. Viber is very popular in Serbia, so it is preferable to write there - in addition, this messenger has an option to translate the answer. (A dictionary of terms can also be useful when searching for real estate in Serbia, but it will work for residential premises. — RB.RU.)

Investment environment to help the founder: funds, incubators, accelerators

«There are many communities and funds for startups in Serbia - Serbian, Russian, Russian-Serbian. I would note the Haos Community Space coworking space. It was opened by a girl with Serbian roots, who lived in Silicon Valley and Moscow.

«Her mission was to unite Russian and Serbian startuppers and expats from all over the world and establish connections with the Valley,», says Pavel Smirnov. — Haos Community Space works on an invite-only principle, everything is through interviews, but the guys are expanding, they are going to open a second office. A large group of enthusiasts gathered around them. There have already been several very cool events here, when large venture investors from the States came. In a word, life is very busy.

The second important company is Founder Institute, which operates all over the world. It constantly holds events and recruits groups of startups for incubation, acceleration, builds connections, helps enter the market, find investors, and also invests at the preseed level itself. They have a cool office, events and an excellent composition of mentors and connections.

It is much easier for a startup to start in Serbia than in other countries. Everything related to the preseed round, hypothesis testing, pilot is easy here, you can go through the accelerator, find people who will help with mentoring. Any initiative is worth its weight in gold for now. Here in this regard, the market is emerging. Early stage companies in Serbia can practice and test their skills.”

Incubators and accelerators

• Innovation Fund of the Government of Serbia is the key government institution in Serbia that manages funding. It offers various programs for funding startups. It publishes two calls for funding per year, providing 10 to 18 grants for each call. They have a separate “Serbian Venture Program”, which is designed to encourage private investors, high net worth individuals and organizations to participate in funding startups with high growth potential by including venture capital funds in Serbia.
• European Bank for Reconstruction and Development (EBRD) is an international non-governmental banking organization that provides funding, often indirectly through commercial banks and regional venture and investment funds (some of which are mentioned below) and rarely — directly through various investment programs in the field of IT.
• Startup Serbia helps creative individuals and teams with know-how to create their dream company and run a business.
• Impact Hub Belgrade - will increase investment readiness and connect the company with international markets and investors.
• In-Centre for the development of entrepreneurial ideas and initiatives.
• Initiative “Digital Serbia” - an NGO with the strategic goal of developing a strong, globally competitive digital economy in Serbia.
• ICT Hub and ICT Hub Venture - an ICT hub that offers startups a workspace, mentoring, meetups, an international network and funding. ICT Hub Ventures offers early round funding, looks for interesting startups, invests up to €50k.

Business Angels

The Serbian Business Angels Network is the first such network, has existed since 2009, and has been registered with EBAN since 2013.

• Belgrade Venture Forum is an annual three-day event held since 2012. It aims to bring together early stage startups with business angels and venture funds. The next event is being prepared for November 2023 in Belgrade.
• StartLabs is a business accelerator and business angels with offices in San Francisco and Belgrade. Provides seed funding up to €50k and some other options: mentoring, office space, etc.
• SEE ICT - NGO established in 2010 to provide comprehensive support to Serbian startups, increase employment and economic growth. Funded by government agencies - US Aid, GIZ, EU Commission, etc., which offer technical and advisory support.

Venture Capital Funds - VC

• Fil Rouge Capital - regional fund, located in Croatia, early stage development, investments - from €10k to 2 million.
• South Central Ventures is a regional fund with an office in Belgrade, financing of development at an early stage, investments - from €500 thousand to 5 million.
• Silicon Gardens Fund is based in Slovenia, can invest in South-Eastern Europe, including Serbia, provides pre-seed and seed investments in the amount of €50 thousand to 200 thousand.
• ZAKA Ventures is a European company with an office in Belgrade. Invests at the idea stage, pre-seed and seed stages.
• Elevator Ventures Capital - typically invests in early and growth stage fintech startups in the CIS and Serbia, post-seed Series A and B, up to €3 million per investment.
• Other funds, such as Credo Ventures or Moonfire Ventures, are not focused on Serbia, but will consider investing in Serbian companies. Moonfire may pool financial resources from other startup accelerators, such as YCombinator.

Private equity funds

• Integral Venture Partner — specializes in private equity and growth capital. Operating in London, Belgrade and Budapest. Provides seed capital up to €1 million. Manages funds from international organizations such as EIF, EBRD and IFC.
• TS Ventures—something between a venture capital fund (VC) and a private equity fund (PE). Offers seed capital up to €1 million, typical investment check is €200 thousand. Created by Telecom Serbia and located in Serbia. Actively seeks startups.
• WBPEF (Western Balkans Private Equity Fund) —invests in Round B €5-10 million.
• Invera EP Fund is an EBRD-backed PE fund based in Croatia with a mandate to invest in the CIS and Serbia, with an investment package of €3m to €12m and a mid-cap of €7m.
• CEECAT Capital PE is another EBRD-backed private equity fund headquartered in Istanbul with an office in Belgrade. It invests in growing SMEs in various industries, including ICT.

Science and Technology Parks

There are four technology parks (IT campuses) in Serbia: in Belgrade, Novi Sad, Nis and Cacak. In June 2023, the European Bank for Reconstruction and Development (EBRD) allocated €70 million for the development of IT campuses in Niš and Čačak and the creation of a fifth one in Krusevac.

“It is profitable for startups to work with science and technology parks and go through all the stages — from receiving expert support to profit,— says Zoran Mitic. — Serbia stimulates the influx of digital nomads through a simplified visa policy and obtaining a residence permit, citizenship, as well as investing in IT centers located near attractions. For example, next to the mountain of the same name there is the Zlatibor Innovation Center, for the development of which the government has allocated a grant.

The Serbian government can provide grants, free land for construction, corporate and income tax breaks, and employee salary benefits to companies that create new jobs — depending on the size of the company, location and other conditions. Additional incentives for startups in Serbia: a number of agreements on the avoidance of double taxation and simplified work permits.

Today, Serbia is a profitable country for technology startups and small IT companies. The key problem for them remains financing. Serbia entered the IT financing arena relatively late, but is confidently catching up."

However, according to Milica Djokic, founders with knowledge of Serbian should go to technology parks, without which it may be difficult.

"From the point of view of investments in Serbia, everything is not very good. Investors from other countries, America, Europe are not actively coming here, because Serbia is not yet a member of the European Union.

Movement of money, customs issues, legal registration, organizational structures - opaque, because the legislation is different from the EU, — added Pavel Smirnov. — People invest in Serbia with less enthusiasm than in the Schengen countries. 

But the scene in Serbia is small, you can immediately reach the right people and present your project to them."

“Despite the difficulties, Western companies and investors are still looking at Serbia, since tax rates here are much lower than the European average, add to this the benefits and active state support for startups,” adds Ruslan Yenikeev.

Summary

Serbia continues to be on the list of leaders in IT relocation and opening of technology startups among Russian founders. Many managers have moved their companies to this jurisdiction and found Russian colleagues here, but there are also those for whom the disadvantages outweighed the disadvantages.

To summarize, it is profitable for IT startups to launch in Serbia due to low competition, but the disadvantage is the small startup scene.