How can a foreigner open a company in Serbia

Serbia is a European country with a developed industrial sector, with excellent prospects for starting and successfully running a business. Serbia has achieved significant economic growth in recent years. The reforms carried out made it possible to reduce public debt and attract international capital. The procedure for registering a business in the country is simple and easy.

Company forms in Serbia

According to the Law on Companies of the Republic of Serbia, there are several types of legal entities (legal forms of business entities). This is:

• Entrepreneur
• Limited liability company
• Partner company
• Limited Liability Partnership
• Joint stock company

Additional legal forms are:

• Branch of a domestic legal entity
• Branch of a foreign legal entity
• Representation of a foreign legal entity

According to this legislation, a foreign investor can create companies and other forms of business. Investor rights in Serbia:

• create your own company, up to 100% ownership.
• buy and sell shares of an existing company in accordance with current legislation.
• obtain a license to exploit natural resources (oil, gas, water), public goods or carry out activities in the general interest in accordance with the provisions of the law.
• obtain permission to construct, transfer or operate an object, division or plant, infrastructure and communication facilities.

 The most popular organizational and legal forms of companies are the following:

Limited Liability Company (LLC)

Limited liability company — This is a type of company that may have one or more founders. In this company, each participant has a share in the authorized capital of this company. The authorized capital of an LLC is the sum of all shares contributed by the founders (monetary and non-monetary). The value of the share contributed by founders and participants does not have to be the same, so it may differ for each participant. The minimum authorized capital is 100 dinars (less than one euro).

Advantages

• This is the most popular form of legal entity established by foreign companies or individuals in Serbia.
• The participants of an LLC are liable for the obligations of the company only for the value of their share. They are not personally liable for their property, but bear a risk proportionate to their share. Thus, the real risk remains in the Serbian company and cannot be transferred to the shareholder located abroad.
• This form of company allows you to employ an unlimited number of local and foreign citizens.

Disadvantages

• In the case where a foreign legal entity is the founder of a Serbian company, to begin the registration process it is necessary to provide notarized documents of the foreign company (extracts from the register of foreign enterprises).
• There is an obligation to keep accounting records of all company transactions and regularly file tax applications with the tax authorities.

Entrepreneur

Entrepreneur — a natural person registered with the Commercial Register Agency to carry out activities. An entrepreneur is registered as a legal entity by one individual and created to carry out business activities with the aim of generating profit (or benefit). Every person (local or foreign) can be registered as an entrepreneur.

Advantages

• The registration process for entrepreneurs is quite simple; it can be completed in 5 working days with a minimum set of required documents.
• Simplified accounting without the need to prepare complex reports to the tax authorities.

Disadvantages

• This form is used for small businesses in Serbia, since this legal entity is used in most cases for a company consisting of 1 person, and the employment of other persons in the company is very limited.
• There is a limit of 6 million dinars per financial year (8 million dinars per year - depends on the type of activity), since the entrepreneur’s income is not subject to the VAT system. If income exceeds these values, the entrepreneur is liable with his personal property for all obligations or damage caused.

Branch of foreign legal entities in Serbia

A branch of a legal entity is a separate organizational part of a foreign company through which, according to the Law, it conducts business in Serbia. The branch may have its own legal representative. The branch does not have the status of a legal entity in the country, but carries out activities and carries out activities on behalf and at the expense of the founders.

Advantages

• All benefits applicable to a limited liability company are the same for a branch.

Disadvantages

• Only a foreign company can be the founder of a branch.
• The foreign company acting as the founder bears full responsibility for the activities of the branch. And also bears responsibility for all obligations, debts and fines arising in the course of doing business.
• Usually this form of company is used for projects where it is necessary to implement the guarantees of the parent company from abroad.

Stages of starting a business in Serbia

Choosing a company name

Every company brand name must contain the basic elements. That is, the name of the company, its legal form and the place of registration of the company's head office.

When you choose your business name, it is important to follow all legal rules and requirements. Before submitting your application for registration, it is recommended to check whether the business name is available, and if so, reserve it in advance.

Company activity code

All legal entities are required to choose a code for their type of activity (the type of activity that they will mainly engage in).

The activity code of the company you select is called the main activity (leading or dominant activity). These are jobs that the firm will primarily perform to make a profit. A legal entity carries out additional activities and other work (in the absence of legal restrictions).

If an additional activity becomes dominant, it must be replaced by the main activity. For an LLC, this means changing the Articles of Association.

The legal address of the company is in Serbia — virtual office

Instead of renting premises for a business, you can rent a virtual office and register the main office of the company, regardless of the location of the activity. This is a very effective model for small and new companies starting their business in Serbia.

Virtual office is a modern and very effective business concept that allows you to save a significant amount of money on rent and additional costs for commercial premises.

Virtual offices are rented for registering a company's address and receiving messages, administrative support for companies, receiving phone calls, and so on. These offices are very flexible and allow companies to successfully carry out their activities regardless of where they are located.

Memorandum of Association (MoA)

The creation of a limited liability company (the most common form of legal entity) in Serbia begins with the signing of the Memorandum of Association (MOA). Memorandum of Association — It is the general legal instrument of a company created by one or more founders. The articles of association must be notarized and must contain at least the following information:

• Data about the participant(s) / shareholder(s) of the company
• Company name
• Company address in Serbia
• Selected activity code
• Total amount of authorized capital
• Moment of payment of a monetary share or contribution of a non-monetary share
• Individual share of each participant
• Powers of persons representing the company (directors)

Documents required for company registration

LLC as a legal entity may have one or more participants. Members can be founders, so an LLC can have one or more founders. It can also be installed by individuals or legal entities. After delivery of documents to the register of enterprises, the registration process is completed within 5 working days.

The most important documentation required to open a company in Serbia:

• A unique application for registration of an LLC and entry into the Register of Taxpayers signed by an authorized representative.
• Identity card of a company member — a photocopy of an identity card for domestic citizens (a copy of a passport for a foreign citizen; if the founder is a legal entity, then he submits an extract from the Register in which the foreign company is registered).
• Memorial agreement (Decision for a company with one participant or Agreement for an LLC with more than one participant) with certified signatures of all founders or participants.
• Confirmation of paid registration of LLC fees.

The application to establish a company can be submitted by the founder, an authorized person or a trustee. Having a partner in Serbia with a power of attorney to complete the process and create a company can be done without foreign founders visiting Serbia.

Opening a bank account

Before opening a bank account, you need to obtain information about the bank's tariff compensation for payment services, compensation for monthly maintenance of a bank account, as well as whether a certain bank provides services through electronic banking, etc.

To open a bank account, you usually need to provide basic documentation:

• Application for opening a bank account
• Form with certified signatures of persons authorized to represent (Form SS, certified by a notary)
• Decision on company registration (from the Serbian Enterprise Register)
• Card with signatures from the bank
• Identity documents of directors
• Additional bank documentation, such as an agreement to open an account in each currency, Internet banking requirements
• Documents submitted to open a bank account may differ from bank to bank

Submitting an application to the tax administration after registering a company

After completing the initial steps, you must file your tax return by the legal deadline to become a new taxpayer. A tax return is filed with the Internal Revenue Service and is a statement of payment of income taxes.

The tax application is usually completed and filed by an authorized accountant of the accounting firm that provides accounting support. The legal deadline for filing a tax application is 15 days from the date of formation of the company or from the date of issue of the BRA registration decision.

Qualified electronic signature

A qualified electronic signature makes it possible to provide electronic services for signing, submitting and certifying documents in electronic form. The electronic certificate is also used to submit the company’s annual financial and tax reports. To obtain it, you must submit an application for issue to the appropriate institution in Serbia (five of them issue such a certificate). After submitting the application, an electronic certificate should usually be generated within 15 working days. After this, the certificate is issued to the director of the company, and only the director can obtain it from the relevant institution.

Legal aspects

Opening a company in the country is regulated by the provisions of the Serbian Companies Law and legal requirements. A safe working environment, as well as providing the necessary equipment for the company's personnel, are among the conditions and obligations of the company in this country. The same Company Law mentions that most activities in Serbia can be organized as soon as all licenses and permits have been obtained from the competent authorities.