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Doing Business andInvesting in Serbia
2013 Edition
Doing Business andnvesting in Serbia
Doing Business andnvesting in Serbia
Contents1. Serbia: Country Profile ...................................................................1
1.1 Introduction ......................................................................................................... 2
1.2 Government structure ........................................................................................ 2
1.3 Legal system......................................................................................................... 3
1.4 People ................................................................................................................... 3
1.5 Economy ............................................................................................................... 4
2. Business Environment................................................................... 5
2.1. Business climate ................................................................................................. 6
2.2. International Agreements ................................................................................ 6
2.3. Regulations for Businesses............................................................................... 6
3. Foreign Investment....................................................................... 11
3.1 Foreign investment ........................................................................................... 12
3.2 Regulatory legislation ...................................................................................... 13
3.3 Law on Foreign Investments........................................................................... 13
3.4 Foreign Exchange Regime............................................................................... 15
3.5 Public-Private Partnership and Concessions................................................ 16
4. Banking, Finance and Insurance ..................................................18
4.1. Banking System ................................................................................................ 19
4.2. Insurance .......................................................................................................... 21
4.3. Leasing .............................................................................................................. 22
4.4. Protection of ‘users of financial services' ..................................................... 22
4.5. Capital Market.................................................................................................. 23
5. Importing and Exporting............................................................. 25
5.1 Trends in customs policy ................................................................................. 26
5.2 Import restrictions ........................................................................................... 27
5.3 Customs duties .................................................................................................. 27
5.4 Temporary importation relief ......................................................................... 29
5.5 Customs duties incentives ............................................................................... 30
5.6 Documentation and procedures ..................................................................... 31
5.8 Re-exports ......................................................................................................... 31
6. Business Entities.......................................................................... 32
6.1 Legal Framework .............................................................................................. 33
6.2 Choice of entity ................................................................................................. 33
6.3 Joint Stock Company (a.d.)............................................................................. 33
6.4 Limited Liability Company (d.o.o.)................................................................ 33
6.5 Partnerships and Joint Ventures.................................................................... 34
6.6 Branches ............................................................................................................ 35
6.7 Representative Office ....................................................................................... 35
7. Labour Relations and Social Security .......................................... 36
7.1 Labour Market ................................................................................................... 37
7.2 Labour Relations............................................................................................... 37
7.3. Working Conditions ........................................................................................ 37
7.4. Social security system ..................................................................................... 39
7.5. Foreign personnel ............................................................................................ 39
8. Accounting and Audit Requirements........................................... 40
8.1 Accounting ......................................................................................................... 41
8.2 Chart of accounts .............................................................................................. 43
8.3 Audit requirements .......................................................................................... 45
9. Tax System and Administration .................................................. 47
9.1 Tax system.......................................................................................................... 48
9.2 Direct and indirect tax burden ....................................................................... 48
9.3 Principal taxes ................................................................................................... 49
9.4 Legislative framework...................................................................................... 49
9.5 Tax treaties ........................................................................................................ 50
9.6 Tax returns and payments............................................................................... 53
9.7 Assessments....................................................................................................... 54
9.8 Appeals............................................................................................................... 54
9.9 Withholding Taxes ........................................................................................... 54
9.10 Tax Audits ........................................................................................................ 56
9.11 Penalties............................................................................................................ 56
10. Taxation of Corporations ..............................................................57
10.1 Corporate Tax System .................................................................................... 58
10.2 Tax Incentives ................................................................................................. 58
10.3 Taxable income ............................................................................................... 59
10.4 Deductibility of expenses............................................................................... 60
10.5 Related party transactions............................................................................. 62
10.6 Foreign exchange gains and losses .............................................................. 63
10.7 Tax computations ........................................................................................... 63
10.8 Other taxes ...................................................................................................... 63
10.9 Branch versus subsidiary............................................................................... 65
10.10 Holding companies....................................................................................... 65
11. Taxation of Individuals ................................................................ 66
11.1 Territoriality and residence ............................................................................ 68
11.2. Taxable Income .............................................................................................. 68
11.3. Non-taxable Income ...................................................................................... 69
11.4. Taxation of non-residents ............................................................................. 69
11.5. Tax compliance ............................................................................................... 70
12. Value Added Tax .......................................................................... 70
12.1 Introduction ..................................................................................................... 71
12.2 Scope of VAT.................................................................................................... 71
12.3 Zero-rating supplies (exemptions with credit) ........................................... 72
12.4 Exempt supplies (exemptions without credit)............................................ 72
12.5 Supplies to Kosovo and Metohija ................................................................. 73
12.6 Taxable amount (base)................................................................................... 73
12.7 Non-deductible input VAT............................................................................. 73
12.8 VAT compliance .............................................................................................. 74
Introduction to PwC .......................................................................... 76
Contacts ............................................................................................. 82
Guide to Doing Band Investing in Serbia
2013 Edition
The information in this book is based on taxation law, legislative proposals and currentpractice, up to and including measures passed into law as of 31 December2012. It is intended to provide a general guide only on the subject matter and isnecessarily in a condensed form. It should not be regarded as a basis for ascertainingthe tax liability in specific circumstances. Professional advice should always be takenbefore acting on any information in the booklet.
Guide to Doing Businessnvesting in Serbia
The information in this book is based on taxation law, legislative proposals and currentup to and including measures passed into law as of 31 December
provide a general guide only on the subject matter and isnecessarily in a condensed form. It should not be regarded as a basis for ascertainingthe tax liability in specific circumstances. Professional advice should always be taken
formation in the booklet.
usinessnvesting in Serbia
The information in this book is based on taxation law, legislative proposals and currentup to and including measures passed into law as of 31 December
necessarily in a condensed form. It should not be regarded as a basis for ascertainingthe tax liability in specific circumstances. Professional advice should always be taken
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1.Serbia: Country Profile
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1.1 Introduction
History
Serbia has a long and turbulent historywrought with conflict and struggle forindependence. The most recent example wasthe war-torn 1990’s which saw the collapseof communist Yugoslavia and the emergenceof its former republics as independentstates. The conflicts ended in 1999 withNATO led air strikes which resulted inSerbia agreeing to the introduction of UNadministration in Kosovo and Metohijaprovince in accordance with the UN SecurityCouncil Resolution 1244.
October 2000 saw Serbia defeat SlobodanMilosevic’s regime and establishment of ademocratic government led by PrimeMinister Zoran Djindjic that set a firmreformist course geared towardsprivatization and free market economy.
Following a referendum held in Montenegroin 2006 (which signalled the dissolving ofthe State Union of Serbia and Montenegro)and the adoption of a new constitution in thesame year, Serbia has re-established itsstatus as an independent state.
In February 2008 Kosovo unilaterallydeclared independence from Serbia, whichSerbia vehemently opposes. The issue hasbeen brought before the International Courtof Justice in an effort to determine thelegality of such an action. In July 2010 theInternational Court of Justice issued itsadvisory ruling stating that “the adoption ofthe declaration of independence of17 February 2008 did not violate generalinternational law”.
At the elections held in May 2012, TomislavNikolic was elected as a new president ofSerbia and Ivica Dacic as a new primeminister.
The current government follows the path ofeconomic and social reform centred ontransition to free market economy andprivatisation of the public sector. Ascensionto the European Union remains a top
priority for Serbian administration. Effortstowards realising this goal are made throughadopting new legislation as well as throughbilateral application of the Interim TradeAgreement (which is a part of theStabilisation and Association Agreementsigned with the EU) as of February 2010. InMarch 2012 Serbia was awarded with anofficial EU candidate status.
Geography and climate
The Republic of Serbia is located in SouthEast Europe, central part of the BalkanPeninsula and covers 77,474 km2 (excludingKosovo and Metohija). It is situated at theintersection of Pan European Corridors Nr.10 and Nr. 7 linking Europe and Asia. RiverDanube runs through Serbia (588 km).
The climate is temperate continental, withgradual transition between the four seasonsof the year, warm summers and snowywinters. The average annual temperature isaround 12oC. The temperatures in Januaryand June average 0oC and 22-23oCrespectively.
The average annual precipitation rangesfrom 660 mm to 800 mm in the plains tobetween 800 mm and 1,200 mm in themountains.
Major cities are, the capital Belgrade(population around 1.6 million), Novi Sad(popn. 300,000), Nis (popn. 250,000),Kragujevac (popn. 175,000).
1.2 Governmentstructure
The national legislature of Serbia is aunicameral assembly of 250 deputies chosenin direct general elections for a period offour years.
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The deputies in the National Parliamentelect the Government of the Republic ofSerbia, which, together with the President ofthe Republic, represents the country'sexecutive authority. The judiciary isindependent.
1.3 Legal system
Legislative framework
Serbia has a civil law system, meaning thecourts interpret legislation rather than beingbound by preceding rulings on the issue.
The Parliament is the supreme legislator.Certain bodies with executive powers, suchas the government and ministries, arecompetent to pass decrees and by-laws inspecific areas. Decrees and by-laws must bein compliance with parliamentarylegislation. Legislative acts, decrees and by-laws come into force after publication in theOfficial Gazette of Serbia.
Courts
The organisation of the court system inSerbia and jurisdiction of courts is regulatedby the Law on Organisation of Courts,applicable as of 1 January 2010.
The court system consists of theConstitutional Court, courts of generaljurisdiction and courts of specialjurisdiction. The courts of generaljurisdiction are the following: basic courts,higher courts, appeal courts, and theSupreme Cassation Court. The courts ofspecific jurisdiction are the following:commercial courts, Commercial AppealCourt, misdemeanour courts, HigherMisdemeanour Court, and AdministrativeCourt.
Constitutional Court decides onconstitutionality and legality of laws andbylaws, and protects human and minorityrights and freedoms.
Basic courts are courts of first instance andare established to cover one or more
municipalities. Higher courts are establishedto cover the territory of one or more basiccourts and are also courts of first instance,while in limited numbers of cases they act ascourts of second instance to basic courts.Commercial courts adjudicate commercialmatters, with the Commercial Appeal Courtbeing the second instance court for thesematters. Appeal courts are second instancecourts to both basic and higher courts(except in limited number of cases whenhigher courts act as second instance courtsto basic courts), Supreme Cassation Court isthe highest court in Serbia and is competentto decide on extraordinary judiciaryremedies and conflicts of jurisdiction.
Misdemeanour courts are second instancecourts for misdemeanours ruled by stateauthorities in first instance, as well as firstinstance courts for misdemeanours forwhich state authorities are not competent inthe first instance. Administrative Court iscompetent for adjudicating in administrativedisputes.
Since in certain cases it may take severalyears to receive a final judgement, manybusiness entities opt for arbitration,providing for it in their contracts. There is aForeign Trade Court of Arbitration at theSerbian Chamber of Commerce in Belgrade.It is international, general (all conflictsarising from international business relationsare considered), open (domestic and foreigncitizens are on its list), independent andautonomous. Its judgments are final.Specific rules of procedure can be agreedbetween the parties and specialistarbitrators can be chosen. The UnitedNations Commission on International TradeLaw (UNICITRAL) book of rules may beapplied.
1.4 People
Population
According to the recent data the populationof Serbia (not including Kosovo andMetohija) is approximately 7.2 million,around 69% of which is of working age.
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Statistics show that Serbia has, on average,an old population (the average year of agebeing cca. 41.3 according to recentinformation) which has been identified as aleading concern and is attributed mainly toemigration.
The country’s population is mostly Serbian(83.3%) with the most significant ethnicminorities being Hungarian (3.5%), Bosnian(2%) and Roma (2%).
Language
Serbian is the only official language whilemembers of ethnic minorities are entitled touse their own language. English is taught asa compulsory foreign language, while inmany areas students choose an additionallanguage from German, French or Russian.
Religion
Religion is practiced freely. OrthodoxChristianity is the dominant religion(85%),while other prominent religions are RomanCatholic 5.5%, Islam 3.2% and Protestant1.1%. Most Catholics reside in Vojvodina,Serbia’s northern province, while Muslimsare predominant in the region of Raska tothe south of the country.
Education
Elementary and high school education inSerbia is free with eight years elementaryschooling being compulsory. Around 78% ofthe population completes elementaryschooling while 11% achieves highereducation.
Living standards
The total percentage of the population livingbelow the poverty line is 8.8%, according to2010 estimates. The distribution of povertyis uneven with the gross average income
being significantly higher in cities (Belgradein particular) than in rural areas.
According to the recent data averagemonthly gross salary in Serbia in 2012amounts to RSD 58 thousand, while inBelgrade amounts to RSD 72 thousand.
1.5 Economy
General description
Serbia is considered an upper-middleincome economy by the World Bank, with aestimate of GDP for 2012 at $79.7bn($10,528 per capita PPP). Since the politicalreforms of 2000, the country hasexperienced fast economic growth and hasbeen preparing for membership in theEuropean Union.
Currency
Serbian official currency is Dinar (RSD). On31 December 2012 the exchange rates were 1EUR = 113.7183 RSD and 1 USD = 86,1763RSD, according to the National Bank ofSerbia (NBS).
Transport
In Serbia all means of transportation arepresent. The total length of roads is 41,913km. Railway network enables cost effectivetransportation thanks to good connectionswith all major European destinationsthrough the Pan European Corridor 10.
There are 3 major airports in Serbia:Belgrade Nikola Tesla Airport, Nis Airportand the Vrsac international airport. Serbianrivers belong to the basins of the Black,Adriatic and Aegean Seas. Three of them,the Danube, Sava and Tisa, are navigable.The longest river is the Danube, which flowsfor 588 of its 2,857 kilometre course throughSerbia. Serbia does not have access to sea.
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2. Business Environment
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2.1. Business climate
Aims of government policy
The key goals and instruments of theeconomic policy are:
Maintaining exchange rate stability andcurbing domestic aggregate demandthrough restrictive monetary policy,
Further reduction of public spending,freezing public sector wages throughtight fiscal policy,
Price stability,
Stimulative subventions for the economy
Economic Development
Over the past ten years of extensive politicaland economic reforms, Serbia has developedinto a stable democratic country with a fastgrowing market economy. As a member ofthe International Monetary Fund, Serbiaexercises a sound and consistent economicpolicy resulting in a strong economic growthand rapid export expansion. The country’sprogress is fully supported by leadinginternational development institutions, suchas the World Bank and the European Bankfor Reconstruction and Development, whilethe processes of the European Union and theWorld Trade Organization accession areunder way.
2.2. InternationalAgreements
Current status:
Serbia’s application for the WTOaccession has been accepted; accession isexpected in 2013,
The Stabilization and AssociationAgreement and Interim Trade Agreementwith the EU was signed in April 2008;status of candidate was granted in March2012,
Regional free trade agreement (CEFTA),was ratified by Serbia in 2007, integrates
the countries of the South East Europe,thus creating a possibility for companiesto place their goods customs free to amarket of close to 30 million people,
Serbia is the only European country withfree trade agreements with the EU,Russia, Belarus and Turkey.
The trade with US is pursued underGeneralized System of Preferences(GSP). The GSP program providespreferential duty-free entry for morethan 4,650 products,
Serbia is a member of the Black SeaEconomic Cooperation (BSEC).
2.3. Regulations forBusinesses
Competition Law
The new Competition Law was adopted inSeptember 2009.
The law applies to all market players,including state authorities and state-ownedcompanies undertaking activities of publicinterest (except in the case when applicationof the law would prevent such activities).
Thresholds for concentration are set at:
worldwide annual income of allconcentration parties in previous yearexceeding EUR 100 million, where atleast one concentration party hasgenerated income in Serbian marketexceeding EUR 10 million;
annual income of at least twoconcentration parties generated inSerbian market in previous yearexceeding EUR 20 million, where at leasttwo concentration parties generatedincome in Serbian market exceeding EUR1 million each.
The deadline for notifying the CompetitionCommission of an event falling within thescope of a concentration event is set to 15days as of the SPA signing date or the date oftaking control.
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The Competition Commission has the powerto impose fines (of up to 10% of a company’sannual income) in case of a breach ofcompetition rules. In the past, a breach ofcompetition rules was regarded only asmisdemeanour, for which proceedings hadto take place through a relevant court.
The law introduces new procedural penaltiessuch as ordering of de-concentration and/orother structural/behavioural remedies. Inaccordance with the Law, the CompetitionCommission has broad procedural powerssuch as site investigation and access tocompanies’ premises.
The procedure for determining a breach ofcompetition rules may be initiated only exofficio; therefore, third parties have nolonger the right to initiate proceedings. Inaccordance with the Law, third parties havethe right to submit an initiative fordetermining a case of a breach ofcompetition rules while the CompetitionCommission decides whether or not it willinitiate proceedings.
Consumer Protection
The Law on Consumer Protection (the LCP)was adopted in October 2010 and has beeneffective as of 1 January 2011. The LCP isharmonised with European standardsimplementing 15 key European consumerprotection directives with the aim to provideadequate consumer protection in Serbia.
The LCP regulates the fundamental rights ofthe consumers, conditions and means ofconsumer protection, rights andresponsibilities of the consumer protectionorganisations, establishment of the systemof out-of-court settlement of consumerdisputes and the rights and responsibilitiesof the state institutions in the area ofconsumer protection. It regulates, inter alia,indication of prices, unfair commercialpractice, distance and off-premisesagreements, unfair terms in consumeragreements, product liability, warranties etc.
The consumer is defined exclusively as anatural person who procures goods and
services on the market for his/hers personalneeds. A consumer must be clearly informedby the trader on all necessary details ongoods and services offered prior to enteringinto agreement.
For the first time there is a specialprotection of juveniles in place stipulatingthat selling tobacco products as well asselling and serving alcoholic beverages topersons aged under 18 is prohibited.
The LCP, inter alia, sets in more detailsrights and obligations arising out of distanceagreements, off-premises agreements, salesagreements and specific agreements intourism and time sharing.
The competent authorities involved in theconsumer protection rights are the SerbianMinistry of Trade and Telecommunicationsand the National Consumer ProtectionCouncil.
Intellectual Property (IP)Rights Protection- Patents,Trademarks, Copyrights
Most of the existing IP laws were enactedduring the 2009 and are generally incompliance with the internationalconventions and EU standards. The set of IPlaws regulates legal relations pertaining tothe literary, scientific and artistic works,symbols, names and images used incommerce, computer programmes,inventions and topographies of integratedcircuits. The laws dedicated to the protectionof IP rights are:
The Law on Copyright and related rightsenacted on 2009, and amended in 2011and 2012
The Law on Protection of Topographiesof Integrated Circuits enacted on 2009
The Law on Patents, enacted on 2011
The Law on Trademarks, enacted on2009
The Law on Legal Protection of IndustrialDesign enacted on 2009
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The Law on Geographical Indicationsenacted on 2010
The Law on Special Powers for EfficientProtection of Intellectual Property Rightsenacted on 2006 and amended in 2009
The most important IP conventions relatingto IP protection ratified by Serbia are theBerne Convention, the Paris Convention, theEuropean Patent Convention, Madrid andNice Arrangements and other.
The authority involved in IP protection isthe Intellectual Property Office of Serbia.
Acquisitions
Acquisitions of limited liability and jointstock companies are subject to differentlegal treatment.
Transfers of stakes in limited liabilitycompanies are not subject to restrictionsunless otherwise stipulated by thecompany’s Memorandum of Association orthe Law on Companies, meaning that stakescan be sold or otherwise disposed of freely.The specific requirements of the Law onCompanies relate to the right of first refusalof other stake-holders.
Takeover rulesAcquisitions of shares in joint stockcompanies are subject to the Law onCompanies and Law on Takeover of JointStock Companies (Takeover Law).
The Takeover Law regulates the conditionsand procedure for the takeover of joint stockcompanies headquartered in Serbia, rightsand obligations of participants in thetakeover procedure, and supervision overthe takeover of joint stock companies.
The Takeover Law distinguishes mandatoryand voluntary takeover bid.
Legal entity/individual is obliged to make atakeover bid when directly or indirectly,solely or jointly, acquires voting shares ofthe target company, in a way that togetherwith the shares already acquired, exceeds
the threshold of 25% of voting shares of thetarget company.
The Takeover Law stipulates a number ofexemptions from the obligation to publish atakeover bid, as in the case of inter alia:
acquisition of the shares through thechange in the company’s legal status;
acquisition of the shares of the targetcompany from another legal personwhose members or shareholders are,directly or indirectly, the same persons;or when shares are acquired through atransfer carried out for restructuringpurposes within a holding;
acquisition of the shares of the targetcompany by inheritance or by means ofdivision of the joint marital property;
acquisition of the shares on a temporarybasis only, while engaging in registeredbusiness activity of taking over(underwriting) the issue or reselling thesecurities on the market;
acquisition of the shares of the targetcompany as a bankruptcy debtor inbankruptcy proceedings;
Additionally, the Takeover Law shall notapply to the trade of shares of a particularissuer when shares are sold through a publictender on a regulated market, specifically,shares that were transferred to the ShareFund, shares whose legal holder is theRepublic of Serbia Fund for Pension andDisability Insurance of the Employees, theRepublic of Serbia Development Fund, aswell as in other cases prescribed by theTakeover Law.
The competent body responsible for theimplementation and supervision of theTakeover Law is the Securities and ExchangeCommission (SEC).
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Squeeze out rulesIn addition to the above, the Law onCompanies regulates so called squeeze outprocedure. Namely, a legal entity/individualholding at least 90% of shares of the targetcompany and 90% of votes of allshareholders with ordinary shares (so calledacquirer) may decide to squeeze outminority shareholders by means of cashcompensation (forced sale). However, thesqueeze out rule goes in both directions,meaning that in case that minorityshareholders offer their shares for sale,acquirer would be obliged to purchase suchoffered shares (forced purchase). In bothcases, compensation i.e. price whichacquirer must paid to the minorityshareholders should be determined by usingthe highest of three prices, as follows: (i)book value of shares, (ii) market value ofshares, and (iii) valued value of shares doneby an independent evaluator.
Land Ownership
Law on Planning and ConstructionThe new Law on Planning and Construction(the Construction Law) was enacted inSeptember 2009 replacing the old Law onPlanning and Construction, adopted in May2003 and amended during 2006.
The Construction Law introduced severalpositive amendments aimed at improvingdisadvantages of the old law that have beennoted in practice and harmonization withEU legislation and the Constitution ofRepublic of Serbia, relating to:
privatization of the state-ownedconstruction land
issuance of construction permit
zoning and spatial planning
legalization
The Construction Law introduces differentcategories of construction land, namely:
City Construction Land and
Construction Land outside the CityConstruction Land.
In line with the Constitution of Republic ofSerbia, the Construction Law allows forprivate ownership over any type ofconstruction land and for further transfer ofownership rights. The provisions are aimedat replacing the right of use which wascommonly used during previous periodswhen city construction land was state ownedand when owners of buildings were entitledto the right of use over the land beneaththem.
The Construction Law provides forautomatic conversion of the right of use onstate-owned developed construction landinto ownership at no fee, subject tonumerous exceptions. The main exception isrelated to the right of use on state-owneddeveloped construction land currently orformerly held by companies that weresubject to privatization, bankruptcy orenforcement laws which can be convertedinto ownership subject to the payment of afee equal to the difference between themarket value of the land at the conversiondate and the amount paid for the acquisitionof the right of use on such land.
Building permitA building is lawfully constructed if abuilding permit has been issued by thecompetent authority. The permit is issuedon the basis of a location permit andtechnical documentation - main design.
One of the main features of the ConstructionLaw is the possibility of a building permittransfer together with a transfer of propertyrights over building / land.
Municipalities are authorised to issuebuilding permits. The competent Ministry isin charge of issuing building permits for theconstruction of nuclear plants, oil and gasproduction/processing industry objects,hydro-power stations, airports, trafficinfrastructure and similar.
Upon construction, the investor will applyfor a utilization permit.
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New legislation on denationalisationThe Law on Property Restitution andCompensation (Restitution Law) that iscrucial to resolving issues of land ownershipand restitution, has been enacted in 2011. Itregulates terms, method and procedure forthe restitution of and compensation for theproperty which was confiscated on theterritory of the Republic of Serbia with theapplication of regulations on agrarianreform, nationalization, sequestration, andother regulations, on the basis ofnationalization acts, after 9 March 1945. TheRestitution Law also applies to restitution ofthe property whose confiscation was theconsequence of the Holocaust on theterritory which now forms the territory ofthe Republic of Serbia.
The Restitution Law stipulates that propertyshall be recovered in its natural form or bycompensation in the form of governmentbonds of the Republic of Serbia, or in cash.The law proclaims the principle of priority ofnatural restitution, meaning that confiscatedproperty shall be returned to the formerowner to his or her possession andownership, and if this is not possible, the
former owner shall have the right tocompensation. Subject of restitution areimmovable and movable properties in thepublic ownership of the Republic of Serbia,Autonomous Province and/or a local self-governments, as well as property in state,social and cooperative ownership, except forthe property owned by co-operatives andproperty in the social and cooperativeownership which the holder acquired for afee.
The property acquirer, who, after thenationalization of property, has legitimatelyacquired the property right, shall remainowner and holder of the property, and theacquired rights shall not be violated.Compensation shall be paid in the form ofgovernment bonds of the Republic of Serbiaand in cash for the payment of advancecompensation.
Under the Law on the Application forRestitution of Deprived Property,approximately 500.000 restitution claimswere submitted to the Government ofSerbia.
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3. Foreign Investment
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3.1 Foreign investment
Investment Climate
Since January 2001, Serbia has shown a strong commitment to establishing a modern marketeconomy and re-entering European and global markets. Substantial reforms have been initiatedto that end, particularly in creating a business-friendly environment. These include legal andeconomic reforms in all areas, aimed at ensuring legal security and harmonization with EUlegislation and economic policies.
In March 2012 Serbia became an EU candidate country. It is expected that by June 2013 Serbiawill open the process of negotiations with the EU, while the full accession is not expected beforeyear 2019. Notwithstanding its current position, the harmonization of local legal and regulatoryframework with acquis communautaire, will remain a fundamental factor driving Serbia’sstability and economic growth, which is expected to accelerate to some 3.9% by year 2015. Stepstoward accession into the EU should lead to market improvements in the business environmentof the country, enabling greater access to the export markets of EU member states and othercountries.
Table - Main indicators
Current status in the EUaccession process
In March 2012 Serbia was awarded with a candidate status
Capital: Belgrade
Currency: Republic Serbian Dinar (RSD)
Population: 7.24 million (2012)
Government system:Parliamentary republic. National Assembly (250 members)names executive authority – prime minister
Main industry sectors:Agriculture, Automotive, Food Processing, Metals andChemicals
Foreign direct investments: USD 3,125 (year 2011) source: NBS
Major trading partners 2012: Germany, B&H, Italy, Russian Federation
Real GDP/ GDP per capita: EUR 28.63 billion/EUR 3,959
FX rates (December 2012) : 113,72 RSD / 1 EUR
VAT rates: 20%/8% (reduced rate for basic foods and etc.)
Corporate/individual tax: 15%/10-15%
Next parliamentary elections 2016
International organisationsMember in more than 50 of them, such as UN, Interpol,EBRD, UNHCR, WTO (observer status)
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The key institutions responsible for foreigninvestment regulations are the following:
Ministry of Foreign Affairs(www.mfa.gov.rs)
Ministry of Finance and Economy(www.mfp.gov.rs)
Ministry of Regional Development andLocal Self-government(www.mrrls.gov.rs)
Ministry of Foreign and Domestic Tradeand Telecommunications(www.mtt.gov.rs)
Serbian Investment and ExportPromotion Agency (www.siepa.gov.rs)
Serbian Chamber of Commerce andIndustry (www.pks.rs)
3.2 Regulatorylegislation
The legal framework relevant for foreigninvestment encompasses the following laws:
Law on Foreign Investment
Law on Free Zones
Law on Foreign Exchange Operations
Law on Foreign Trade Transactions
Law on Customs
Law on Privatisation
Law on Companies
Law on Capital Market
Law on Takeover of Joint StockCompanies
Law on Procedure of Registration beforethe Business Registers Agency
Law on Public Private Partnerships andConcessions
Law on Insurance
Law on Bankruptcy
Law on Games of Chance
Law on Energy
3.3 Law on ForeignInvestments
Foreign investments in Serbia are regulatedby the Law on Foreign Investment (LFI).The fundamental aim of the SerbianGovernment is to create a business-friendlylegal, economic and political environmentfor all foreign individuals and companiesinterested in doing business in Serbia, byequalizing the rights and responsibilities ofdomestic and foreign investors, andproviding other necessary conditions. Along-term goal is also to create a legalsystem compatible with European Unionlegislation as a first step towards futureintegration.
The LFI regulates foreign investment inenterprises and other forms ofestablishment engaged in profit generatingactivities in Serbia.
Definitions
A foreign investor is:
а foreign entity whose headquarters are located abroad,
а foreign natural person,
а national of Serbia who has residency abroad for a period exceeding one year.
A foreign investment is:
Investment in a local company throughwhich a foreign investor acquires a stakeor shares in the initial capital of thatcompany,
Acquisition of any other property rightsin the sense of a realisation of a businessinterest in Serbia.
Main forms of foreign investment are theones in which a foreign investor alone ortogether with another foreign or domesticinvestor performs one of the followingactions:
incorporates a local company
buys shares in an existing local company.
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Legal status
A foreign investor is guaranteed nationaltreatment, which means that any legal entityand natural persons who are investing inSerbia enjoy full legal security andprotection, equal to those of localcompanies.
A stake held by a foreign investor or acompany with a foreign investment cannotbe the subject of expropriation, except whenso required by the public interest asestablished and determined by the law.Moreover, in case of expropriation, theforeign investor or the company with foreigninvestment is entitled to compensation notlower than its market price.
The contribution of a foreign investor maybe in the form of convertible foreigncurrency, contribution in kind, intellectualproperty rights and securities. A foreigninvestor may also convert confirmedreceivables into capital i.e. shares in acompany (debt to equity swap).
Repatriation of capital andearnings
If the prescribed tax requirements and otheroutstanding commitments have been settledin Serbia, the foreign investor may, withoutany further limitation or delay, transferfinancial assets relating to the foreigninvestment such as:
Profit that was realised through thebusiness activities of the company,
Remaining property of the company,after dissolution of the company (so-called: liquidation surplus),
Money assets relating to sale of shares,
Money assets after decreasing the initialcapital of the company ,
Additional payments
Compensation in the case ofexpropriation of the company property,as well as any indemnity.
Import of equipment representing theforeign investor’s contribution is free,
subject only to environmental protectionregulations.
Procedural obligations
Companies are obliged to keep books andfinancial statements in accordance withSerbian legislation which has been broughtin line with International FinancialReporting Standards (IFRS).
Any dispute related to foreign investmentmay be settled either before the Serbiancourt or in domestic or internationalarbitration, as agreed between the parties.
Foreign Investors’ Rights andProtection
The legal security of investments isguaranteed. No entity can be deprived ofproperty nor can the property be limited,except in the case of invocation of a vital andindisputable public interest, in full respect ofthe procedure in which the existence of suchinterest is determined, and followed by theimmediate payment of compensation, in theamount of the market value of the propertybefore expropriation. The rights of a foreigninvestor gained upon registration of aforeign investment may not be curtailed bysubsequent changes of a law or otherregulations.
A company with foreign share capital has theright to freely perform payments underinternational business arrangements. Also,apart from the obligation to maintainaccounts in accordance with Serbianregulations the company has the right tomaintain accounts according tointernational accounting standards as well.If a bilateral or international treaty providesfor conditions more beneficial for a foreigninvestor, its implementation has primacyover the provisions of relevant domesticlegislation. The equipment which representsan investment may be imported free ofcustoms and other import duties, except formotor vehicles and entertainment andgambling machines.
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Restrictions
Foreign entities are not permitted to own amajority interest in the management ofcompanies or enterprises engaged in theproduction or trade of weapons or located inrestricted zones. These kinds of foreigninvestments are subject to prior approvalfrom the competent authority. Meeting allenvironmental protection standards andregulations is compulsory.
Foreign investments in certain fields areregulated separately by other laws, e.g.investment in insurance companies, banks,games of chance, customs free zones.
3.4 Foreign ExchangeRegime
The foreign exchange regime is regulated byLaw on Foreign Exchange Operations (FXLaw) and relevant regulations issued byGovernment (Ministry of Finance) and NBS.
General information on foreignexchange regime
Generally speaking, the Serbian foreignexchange regime is still strictly regulatedand rigorously supervised by localregulators. These often tend to have a heavy– handed approach when interpreting FXLaw, adhering to a principle that everythingthat is predicted by law is deemedpermissible, and vice versa – everythingwhich is not, is deemed restricted. Hence, ifcertain transaction is not clearly predictedby FX Law (or supplementary regulations),an investor should seek a professional advicein order to avoid or mitigate potential risks.
Current transactions
Payments based on current transactions arefree and without limitations. FX Lawspecifies which transactions should beregarded as current (payments in foreigntrade – sale of goods and services,repayment of a portion of the principal sumplus interests on credits, return payments ofinvestment funds, as well as transfers
abroad and repatriation of profit from directinvestments, etc).
There is an obligation to inform NBS aboutimport and export which are not paid /collected within 12 months, which isconsidered as commercial creditfacilities/loans.
A resident may not perform collection,payments or transfers or issue paymentorder towards or from non-residents basedon agreements lacking real price orconcluded on the basis of falsedocumentation.
Banks, residents (except resident – naturalperson),and non-residents may transfer, i.e.pay or collect claims and payables arisingfrom residents’ foreign trade of goods andservices which are not consideredcommercial credit facilities or loans.
Resident-legal entity, branch of a foreignlegal entity and entrepreneur can performset-off of debts and claims arising out ofrealized foreign trade of goods and servicesof residents, which are not consideredcommercial credit facilities and loans. TheGovernment prescribes in which mannerand under which conditions this can beexecuted.
Bank, resident-legal entity, entrepreneur orbranch office of a foreign legal entity canperform set-off of debts and claims arisingout of international credit facilities inforeign currency with claim or debt arisingout of them, realized foreign-trade of goodsand services, as well as arising out of directinvestments in immovables, in a mannerclosely prescribed by the NBS.
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Capital transactions
Payments and transfers of capital withregard to direct investments abroad, ofresidents-legal entities, entrepreneurs andnatural persons as well as payments andtransfer of capital of non-residents withregard to direct investments in Serbia maybe executed freely.
Residents – legal entities, entrepreneurs andnatural persons can perform payments andcollections for the purpose of buying orselling of share in capital of a foreigncompany abroad which are not considered adirect investment, and non-residents canperform payments and collections for thepurpose of buying or selling of share incapital of a resident company which are notconsidered a direct investment.Residents can freely perform payments forthe purpose of purchase of real estate abroadand non-residents for the purchase of realestate in Serbia.
Payments, collections, transfers, set-off, aswell as reporting on operations withfinancial derivatives are performed underthe conditions and in a manner closelyprescribed by the NBS.
Furthermore, FX Law regulatesinternational credit operations. For residentlegal persons and entrepreneurs, banks mayapprove foreign currency loans for thepayment of import of goods and services.
Banks can keep foreign currency deposits onbank accounts abroad without anyrestrictions. Still, residents (including legalentities) may open and keep foreigncurrency account in foreign banks only inspecific conditions and in the mannerclosely prescribed by the NBS.
Non-resident which transacts businessthrough a local non-residential account andresident - branch of a foreign legal entity,which transacts business through aresidential account, may conduct transfersfrom such accounts abroad, provided that alltax liabilities towards the Republic of Serbia,arising from the relevant business operation,have been settled.
Payment transactions
Contracting in foreign currency in thecountry is allowed. However, payment andcollection has to be effected in RSD. By wayof derogation from this rule, FX Lawenumerates certain cases when payment andcollection can also be effected in a foreigncurrency. Some of such exemptions include,inter alia, payments in respect of lifeinsurance, sale and lease of real estate.
3.5 Public-PrivatePartnership andConcessions
Foreign investment can also take a shape ofa public-private partnership (PPP). Theentire PPP area is regulated by the Law onPPPs and Concessions, enacted in November2011.
According to the said law, a PPP isconsidered as long term cooperationbetween public and private partner for thepurpose of securing financing, construction,reconstruction, management ormaintenance of infrastructural and otherobjects of public importance and performingservices of public importance. It can becontractual or institutional.
Contractual PPP is a form of PPP wheremutual rights and obligations in therealization of a PPP project are regulated bya public contract made between the parties.Institutional PPP is based on therelationship between public and privatepartner as members of a joint companywhich executes the PPP project. Suchrelationship can be based on contributionsin a newly formed company or acquiringshares or capital increase of an alreadyexisting company.
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A public partner is a public body (stateauthority, organisation, institution, andother user of state budget defined by law onbudget, public company) A private partnercan be a local or foreign natural person orlegal entity. The procedure of choosing aprivate partner can be either a procedure ofpublic procurement or the procedure forgranting a concession depending of thenature of PPP.
Concession is a form of contractual PPP. Assuch a concession is granted by a publiccontract concluded between a public andprivate partner. A foreign investor may begranted a concession for the exploitation ofnatural resources, goods in general usewhich are public property or for performingan activity of public interest.
The duration of a public contract may rangefrom 5 to 50 years with a possibility toconclude another after the expiration of theprevious term, together with selectingprivate partner in accordance with the law.When a concession is granted by a publiccontract the duration is determined inaccordance with the above given rule, unlessstipulated otherwise by a special law.
Grantor of concession as a public partnercan be the Government of Serbia,government of the autonomous province,Parliament of the local self-government(municipality) or state-owned enterprise i.e.legal entity authorised by special regulationsto grant concessions. As the private party,the participant in the procedure of grantingof a public contract can be both a foreignand local entity and natural person.
The parties can agree to settle disputesarising out of the public contract in a local orforeign arbitration. Foreign arbitrationcannot be agreed if the private partner is alocal legal entity or natural person, i.e.consortium made up solely of local legalentities or natural persons.
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4. Banking, Finance andInsurance
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4.1. Banking System
Banking system
The banking system of Serbia consists of thecentral bank i.e. the National Bank of Serbia(NBS), commercial banks and otherfinancial organisations. The founding,organisation, business activities andgoverning of banks are regulated by the Lawon Banks and the corresponding by-laws ofthe NBS.
Domestic and foreign legal entities andnatural persons may be founders of a bankin Serbia, which must be established in theform of a joint stock company. The NBS isauthorised to supervise the activities ofcommercial banks and to issue or revokeoperating licences for commercial banks inSerbia. The operating licence is issuedwithin 30 days by the NBS following theissue of the preliminary approval (90 days)and filing of the request for issuing of thislicence. The initial capital of the bank can becontribution in both money and in kind,which must be evaluated by an authorisedperson. The monetary portion of the sharecapital of the bank must be a minimum ofEUR 10 million in RSD counter value.
Banking Regulations
Significant characteristics of the Law onBanks are:
Prescribed foundation procedures
Strong role (ultimate) of the NBS as aregulatory and supervising authority
Low shareholding threshold approvalrequirement
Corporate Governance
Supervision on Consolidated basis
Merger Control
Definitions and Management of Risks
Definition of Credit
Minimum capital requirements prescribedby the Law on Banks are similar to Baselregulations and NBS is currently in theprocess of drafting by-laws that will beadjusted to Basel II regulations. The mostsignificant requirements are listed below:
The monetary portion of the share capitalin RSD equivalent should at all timeamount to at least EUR 10 million,calculated at the daily average exchangerate.
A minimum capital adequacy ratio of 12percent has to be retained, calculated asthe ratio of the bank’s capital to its risk-weighted assets.
Large exposure of a bank meansexposure of the bank to a single person ora group of related persons amounting toat least 10 percent of the bank’s capital.
The largest exposure of a single borroweris restricted to 25 percent of capital.
The largest exposure of an affiliatedborrower is restricted to 5 percent ofcapital.
Aggregate exposure of the bank topersons related to the bank may notexceed 20 percent of the Bank’s capital.
Total of all large exposures of a bank,which may not be less than 400 percentor more than 800 percent of the bank’scapital.
Total foreign exchange risk position isrestricted to 30 percent of capital.
Investment of a bank in a single non-financial sector person must not exceed10 percent of the bank’s capital.
Permanent investments (in the capital oflegal entities and fixed assets) arerestricted to below 60 percent of capital.
Banks to have the stock of grosshousehold dinar lending at the end ofeach calendar month lower than or equalto 200 percent of the value of their sharecapital.
Compliance with these ratios is supervisedby the NBS on a quarterly basis.
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The NBS may determine a higher capitaladequacy ratio than that prescribed for abank (12 percent). Banks that do not meetcapital adequacy criteria are divided intothree groups:
Undercapitalized bank
Significantly undercapitalized bank
Critically undercapitalized bank
Special measures for undercapitalized andsignificantly undercapitalized banks areimposed by NBS.
At the end of 2012 the Law on Takeover ofCertain Assets and Liabilities of Banks forthe Preservation of Stability of the SerbianFinancial System was adopted. It allows thetransfer of assets and liabilities of state-owned banks that are facing great financialdifficulties to the financially viable andstable banks.
Banking Market
The Serbian banking market is stillcharacterized by a large number ofcommercial banks. A large number ofprivate banks have been successful infinding foreign partners such as Delta(Banca Intesa – Italy), Meridian (CreditAgricole- France), Atlas (Piraeus Bank-Greece), Nova Banka (Findomestic Banca -Italy), Centrobanka (Laiki group – Cyprus),Kulska, Niska and Zepter banka (OTP –Hungary), Nacionalna stedioncia (EFGEurobank – Greece), A banka (KBC Group-Belgium) Vojvodjanska (National Bank ofGreece). In 2008, the NBS granted its firstgreen field license to Moskovska banka ADBeograd which is 100% owned by Bank ofMoscow-Russia. There are currently 9 state-owned banks.
In 2011, after completion of solvency controlin Agrobanka it was determined that thebank is significantly undercapitalised andadministrative receivership was introduced.As it failed to improve its businessindicators, in 2012 the NBS revoked thelicence of Agrobanka and gave the licence toNova Agrobanka, a special purpose bank to
which assets and liabilities of Agrobankawere transferred. In December 2012, theParliament adopted a new Law on Takeoverof Certain Assets and Liabilities of Banks forthe Preservation of Stability of the SerbianFinancial System. Under the said law, it isexpected that all the assets and liabilities ofNova Agrobanka will be transferred toPostanska stedionica Banka in the course ofyear 2013.
As for Razvojna banka Vojvodine, (anotherstate-owned bank) it is still uncertainwhether it will be sold, merged or its capitalwill be increased.
Banking Products
The Serbian banking system has yet to reachwestern standards in the scope and qualityof its services and capital market operations.The following types of operations arecurrently available:
Deposit operations (acceptance of allkinds of deposits),
Credit operations,
Foreign exchange and foreign currencytransactions,
Issuing operations (issue of securitiesand credit cards),
Treasury operations (money marketforeign exchange),
Custody operations (safekeeping andhandling securities),
Stock exchange related operations(purchase and sale of securities),
Guarantee operations (extendingwarranties, guarantees, endorsements),
Documentary operations,
Cash management,
Intermediation i.e. assuming the role of abroker in trading in securities,
Purchasing and collection of claims,
External payment operations andexternal loan operations, both of whichare subject to special licences, issued inline with the federal law on foreignexchange operations,
E-banking.
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The availability of banking services is notconsistent throughout the country, with thehighest concentration of banking facilitiesand services being in Belgrade.
The financial instruments market iscurrently undeveloped. It is expected toexpand in the near future, as Serbiaadvances in the EU accession process.
National Bank of Serbia
The role of the NBS is regulated by theConstitution and the Law on NBS (enactedin 2003 and amended in 2004, 2005, 2010and 2012).
In accordance with the Law on NBS, thisinstitution is authorised to perform thefollowing functions:
Determine and implement monetarypolicy;
Autonomously pursue the dinar exchangerate policy and determine the dinarexchange regime with the consent of theGovernment;
Hold and manage foreign currencyreserves;
Issue banknotes and coins;
Regulate, control and promoteunhindered functioning of internal andexternal payment operations;
Issue and revoke operating licenses, carryout supervision of banks, insurance andleasing companies and enacts regulationsin this field;
Issue and revoke licenses, i.e.authorization for carrying out insuranceoperations； perform control, i.e.supervision over insurance operations；carry out other duties in line with legalregulations governing insuranceoperations;
Perform statutory tasks for the Republicof Serbia;
Provides for the minimum scope ofauditing and the minimum audit reportcontent for banks, insurance and leasingcompanies;
Perform other tasks provided for by thisand other laws in accordance with theprinciples of central banking.
The NBS co-operates with the SerbianGovernment and other state institutions inorder to execute its functions. The Republicof Serbia guarantees for all NBS’s liabilities.
For more details on NBS, please visit thefollowing site: www.nbs.rs
4.2. Insurance
The Insurance law, introduced in May 2004and amended in 2007, 2009 and 2011,entrusted the NBS with supervision ofinsurance companies.
Within its function, the NBS carries outsupervision of insurance activity; issuelicenses for performing insurance,reinsurance, intermediation and agencyoperations as well as those directlyassociated with insurance activity; givesapproval for legally required enactments andactions; adopts regulations prescribed bylaw; processes statistical and other data, andconsiders complaints filed by the insuredand other insurance beneficiaries.
In line with relevant EU directives, theInsurance Law divides the insurancebusiness into life and non-life insurances. Asof 31 December 2012, insurance companiesare not be able to perform both life and non-life insurance activities within one legalentity.
Minimum capital requirements were alsoincreased, depending on the activityperformed by the company: EUR 1 million –accident and voluntary health insurance,EUR 2 million – life insurance and otherproperty insurance, other liability insuranceand other types of non-life insurance, EUR2.5 million – motor vehicles insurance – fullcoverage, railway vehicles and obligatorytraffic liability insurance; EUR 3 million –voluntary superannuation insurance, EUR 4million – all types of life insurance and EUR4.5 million – all types of non-life insuranceand re-insurance operations.
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The local insurance market remainsrelatively underdeveloped and needs morestructural changes. Insurance products suchas life, health, real estate, remain highlyunderdeveloped.
The total premium in the Serbian insurancemarket has reached over EUR 400 million in2012.The predominant share i.e. 82.4%oftotal premium is held by non life insurance.Premiums from life insurance haveincreased from 15.8% in 2011 to 17.6% in2012 reaching EUR 72.7 million.
4.3. Leasing
Financial leasing is regulated by the Law onFinancial Leasing. It defines financialleasing activity and basic rights andliabilities of participants in financial leaseoperations. It also entrusts the NBS withsupervision of leasing companies’ operationsas well as issuing of financial leasinglicenses, approvals of appointment of leasingcompanies’ managing bodies and enforcingcorrective measures in respect of thecompanies if supervision reveals illegalitiesand irregularities in their operations. TheNBS also enacts secondary legislation asprovided in the law, whereby it regulatesmore closely the operations of leasingcompanies.
A subject of financial lease may be bothmovable and immovable property.Depending on the subject, the law sets outdifferent minimum capital requirements. Inparticular, for dealing with movableproperty, a leasing company must haveminimum capital of EUR 500,000, whilstfor dealing with immovable property it musthave minimum capital of EUR 5,000,000.
In order to establish a leasing company, theshareholders must obtain prior approval ofthe NBS. The NBS will grant approval onlyupon fulfilment of mandatory conditionspertaining to minimum pecuniary capitalrequirements, as well as technical andhuman capacities of the future company.Relevant NBS regulations provide a detailedlist of necessary requirements andprocedural information.
There are 16 registered leasing companies,with total assets amounting to EUR 1,350million, operating in the Serbian market.Ten financial lease companies are owneddirectly or indirectly by foreign investors,five companies are owned wholly orpredominantly by local owners, whereas onecompany is owned 50/50 by a local andforeign owner.
Four major leasing companies comprised47.5 percent of the total market as at Q32012 (2011: 49.6 percent).
Corporate customers make up to 86.1%percent of the total leasing portfolio.Furthermore, motor vehicle leasingcontracts make up to 61.7 percent of allleasing contracts whereas equipmentcontracts comprise 27.2 percent of allleasing contracts, as per Q3 2012 data.
4.4. Protection of ‘usersof financial services'
In May 2011 the Law on Protection of Usersof Financial Services was introduced. Thepurpose of the said law is to provideadditional protection to natural persons whouse financial services provided by variousfinancial institutions that are generallystronger parties and, as such, could imposeunfavourable terms and conditions ontotheir “weaker” customers.
The said law is applicable only to naturalpersons, (as users of financial services), whodo not use these services for the purpose oftheir business or any other commercialactivity (entrepreneurs are excluded). Thefinancial institutions subjected to this laware local banks and leasing companies.
The principles that represent the core of theaforementioned law are as follows:
The right to equal treatment with theprovider of financial services;
The right to information;
The right to a determination ordeterminability or contractualobligations;
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Protection against discrimination and
The right to protection of rights andinterests.
Important to note is that no receivables abank has toward the natural persons asusers of financial services may betransferred / assigned to another person /entity that is not another bank. This ruleapplies mutatis mutandis to leasingcompanies.
4.5. Capital Market
Capital market regulations suffered majorchanges in 2011, when the Law on CapitalMarkets was enacted. The new lawintroduced many novelties in the financialmarket regulations, with the main aim tosynchronise the Serbian legislation andpractice with the European Union directives.
The main changes impacted the organisationof the capital market. The law introducestwo major segments of trading (i) regulatedmarket, and (ii) multilateral tradingplatform (MTP).
In practice, the Belgrade Stock Exchange(BELEX) remained the only institutionorganising and dealing in securities’ tradingon the Serbian financial market. Theregulated market encompass Prime andStandard market (listing), where generallybetter performed securities are listed, andOpen market (so-called: Over-the-Counteror OTC). MTP is also organised by BELEX(pursuant to the Law on Capital Markets,MTP can be organised by broker-dealercompanies as well).
The vast majority of securities issued bylocal companies are placed and traded onMTP and Open market.
The structure BELEX being the only marketorganiser in Serbia is presented in the chartbelow:
Source: Belgrade Stock Exchange web site
In general, the global financial crisis tooktoll on securities’ trading and BELEX. In thelast couple of years BELEX records smalltrading activity, which makes the Serbianfinancial market still underdeveloped andbarely liquid.
For more details on BELEX and securitiesplaced thereon, please visit the followingsite: www.belex.rs
Public offering
The process is initiated by publishing apublic announcement and ‘prospectus’ onissue and offering of the securities. Theprospectus must be previously approved bySerbian Securities and ExchangeCommission (SEC), followed by a series ofactions required for subscribing and payingfor the securities and obtainingauthorisation on the issue of securities fromthe SEC.
It ends with the transfer of securities to thesecurities account of the new owner.
Trade in securities throughsecondary markets
Trade in securities on the secondary marketscan be performed only through investmentcompanies or authorised banks.
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Public company is obliged to include theirsecurities on regulated market for trading,and if these securities do not meet specifiedconditions for Listing than their securitieswill be included on the market segment thatis not Listing i.e. Open market or MTP.
The law now regulates trading of debtsecurities in a new manner as with thesesecurities may be traded on the regulatedmarket, MTP and OTC simultaneously.
Public companies
Upon the entry into force of the Law onCapital Markets a new institute called the‘public company’ was introduced. In formalterms, the public company is any companythat has successfully completed a publicoffering of its securities or whose securitiesare included in a trading on a regulatedmarket or MTP. The status of publiccompany includes a number of additionalobligations and restrictions under the newregulations, which the company is exposedto. For instance, the obligation of regularaudits of the financial statements,prohibition of performing more than five (5)consecutive audits by the same auditor,reporting to and control by SEC, theincompatibility of performing the audit andconsulting services by the same entity in thesame year, etc.
Investor Protection Fund
Investor Protection Fund is a new institutionin the financial market which performs theactivity of protection of investors whoseassets or financial instruments are exposedto the risk in case of bankruptcy ofinvestment companies, credit institutions ormanagement companies that provide certainservices, i.e. other failures to fulfilobligations towards the clients.
The Investor Protection Fund is not a legalentity but it is organised and managed bythe Fund Organiser that possess theauthorisation of the SEC.
Securities ExchangeCommission
The SEC has a crucial role and significantpower in supervising the local financialmarket. It is responsible, inter alia, for therules relating to the application of the Lawon Capital Markets and its sub-laws, issuingof licences and supervising the operations ofauthorised participants in the market,setting standards for registration of stockexchange trade operations, establishing thecontents of mandatory information that is tobe submitted to it and published, monitoringthe state of affairs in the securities marketand undertaking corrective measures.
For more details please visit the followingsite: www.sec.gov.rs
Central Securities, Depositoryand Clearing House
The Central Securities, Depository andClearing House (CSD) represents andinstitution organised for keeping the recordsof all types of securities issued in Serbia. Itsoperations encompass registration ofsecurities, including shares, bonds andtreasury bills. To that end, all owners ofsecurities in Serbia have to have theirsecurities’ accounts opened in the CSD.
The CSD operations also include transfersfrom one securities account to another,registering the collaterals over the securities,and clearing and settlement of bothsecurities and money transactions.
More information can be found on thefollowing link: www.crhov.rs
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5. Importing and Exporting
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The main principles of the foreign trade inSerbia are regulated by the Foreign TradeLaw (the Law). This Law regulates foreigntrade in a rather liberal way especially incomparison with the previous version of thesame Law.
Import is the entrance of goods i.e. deliveryof goods on the territory of Serbia from theterritory of another state and should bemade in accordance with Serbian customsregulations. This means, amongst others,that received goods should be declared forfree circulation. However, this general rulehas exceptions in cases when goods,although paid and delivered into Serbia, donot have to be imported if declared for oneof the special customs procedures (e.g.customs warehousing, inward processingrelief, transit).
The flow of goods designated for import issupervised by the Serbian Customsauthorities. Customs supervision generallyends when goods are customs cleared andimport duties paid.
Customs rules must also be adhered whencarrying out export operations. Export(including re-export operations) isstimulated by the various incentives e.g.exemption from import duties on rawmaterial that is processed in and re-exportedfrom Serbia, more efficient VAT refundprocedure for predominant exporters.
5.1 Trends in customspolicy
Serbian Customs Law (the Law) applicableas of 3 May 2010 represents a step forwardin the aligning Serbian customs legislationwith Community Customs Code of the EU,and incorporates relevant customsstandards, regulations and practice of theEuropean Union (EU).
In the areas of the customs valuation, originof goods, tariff classification and customsprocedures, Serbia also tends to applyrecommendations and views of the WorldTrade Organisation (WTO), World Customs
Organisation (WCO), and to implementglobal trading rules set by the GeneralAgreement on Tariffs and Trade (GATT).Continuing trend is to bring customsregulations and practice fully in line withthose of the EU and also with guidelines setby international organisations, as much aspossible in the forthcoming periods.
For example, the Customs Tariff Lawprovides that Decisions on the classificationof goods enacted by the Harmonized System(HS) Committee, as a body of the WCO, aswell as those enacted in the EU andpublished in the Official Journal of EU, areenforceable in Serbia. These decisions arepublished in the Official Gazette of theRepublic of Serbia.
Additionally, the Serbian Government isannually reconciling national Customs Tariffwith the Combined Nomenclature (CN) ofthe EU.
One of the main customs issues in Serbia inthe past was the fact that simplified customsprocedures (e.g. simplified declaration,authorised exporter) were not implementedalthough provided by the regulations. Thesituation improved since the beginning of2010 as simplified procedures andauthorized exporter status started to beapproved under the instructions issued bythe Serbian Customs Administration.
With regard to regional integrations, Serbiaratified CEFTA in September 2007. In April2008 Serbia signed the Stabilization andAssociation Agreement (SAA) and theInterim Agreement on Trade and TradeRelated Matters (the Interim Agreement)with the EU. The Interim Agreement startedto fully apply as of 1 February 2010. EUgranted Serbia candidate status in March2012. Serbia is also in the final stage of theprocess of accession to the World TradeOrganisation (WTO), and it is expected thatSerbia become its member in 2013.
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5.2 Import restrictions
Serbian regulations do not imposesignificant restrictions on foreign trading.However, there are some restrictions on theimport of certain types of goods, i.e. importlicenses are required for certainpharmaceutical substances, precious metals,arms and dual-use goods.
Furthermore, restrictions are imposed onimport/export payment and collectionoperations as defined by the Law on ForeignЕxchange Operations.
Exports and imports of goods or services forwhich payment has not been collectedand/or made for longer than one year fromthe day of execution of exports or imports,as wellas goods or services that were not exportedand/or imported for longer than one yearfromthe day the advance payment was madeand/or collected are considered as foreignloans and as such have to be registered withthe National Bank of Serbia.
5.3 Customs duties
Classification of goods
Serbia is a member of the WCO as well as asignatory to the Convention on HarmonizedCommodity Description and Coding Systems(HS Convention). Furthermore, the SerbianCustoms Tariff Law requires theGovernment to perform the reconciliation ofthe national Customs Tariff and theCombined Nomenclature (CN) of the EU onan annual basis. The current version of theSerbian Customs Tariff system is in line withthe CN 2012 providing up to eight digits ofthe HS tariff codes.
A Binding Tariff Information (BTI) is ameans available to Serbian importers whichhelps ensure proper tariff classification. TheCustoms Administration’s Head Office is incharge of issuing BTIs.
Valuation rules
Customs duties are charged on the customsvalue of imported goods. Serbia is applyingglobally accepted customs valuation rulesi.e. those defined in the Agreement onImplementation of Article VII of the GATT.These rules are transposed in the SerbianCustoms Law.
Tariff rates
Goods imported in Serbia are subject tocustoms duty rates provided in the Law onCustoms Tariff. These rates are ad valorem(with certain exceptions) and apply on goodsoriginating in countries which have the MostFavoured Nation (MFN) status in tradingwith Serbia. Goods originating in othercountries are subject to MFN rates increasedby 70%.
At the moment, only Taiwan is out of theMFN clause in trading with Serbia.
Customs duty rates in Serbia are in therange between 0% and 57.6% and are asfollows: 0%, 1%, 3%, 5%, 7%, 8%, 10%, 12%,12.5%, 15%, 18%, 20%, 22%, 25%, 30% and57.6% (the last rate currently applies only toother cigarettes containing tobacco - tariffcode 2402 20 90 00).
The customs policy aims to protect thefollowing sectors with high duty rates, butmainly on finished products:
1. Agriculture2. Leather industry3. Furniture industry4. Textile industry5. Household electrical appliances industry
On the other hand, customs rates are fairlylow for the following groups of goods:
Raw materials and semi-finished goodsnot produced in Serbia
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Inputs for export-orientatedorganisations as well as those producingfor domestic market where there is highdemand, especially in the followingsectors:
1. Black metallurgy2. Coloured metals3. Aluminium4. Wood industry5. Textile industry6. Graphics industry
Free trade agreements
In April 2008, Serbia signed SAA and theInterim Agreement with the EU, however,their entering into force is delayed due topolitical reasons. In January 2009, Serbiadecided to unilaterally abolish or graduallyreduce import duties for goods with EUpreferential origin as envisaged by theInterim Agreement. Finally, as of February2010, both Serbia and the EU started to fullyapply the Interim Agreement, thus enablingpreferential trading between Serbia and theEU to become a two-way regime instead ofthe earlier two autonomous ones.
As previously mentioned, Serbia also ratifiedCEFTA in September 2007. This FTA shouldbe the first step for all the parties concernedin their accession to the Pan-Euro-Medsystem of origin and a step forward in theEU accession process (Albania, Bosnia andHerzegovina, Croatia, Macedonia, Moldova,Montenegro, Serbia and UNMIK/Kosovo).The rules of origin defined in CEFTA arebased on the Pan-European preferentialrules of origin.
The main purpose of CEFTA is that itsparties establish a free trade area inaccordance with its provisions and inconformity with the relevant rules andprocedures of the WTO. The aim of this freetrade agreement was to establish free tradearea in the region by 31 December 2010.
Serbia has in force the FTA with the RussianFederation, which is one of Serbia’sadvantages for attracting foreign investors.However, this FTA is not modelled by FTAtemplate based on the Pan-European
preferential rules of origin, and therefore ithas certain specificities that have to beconsidered.
As an example, rules of origin are rathersimplified. For the purpose of obtainingpreferential Serbian origin, goods areconsidered to be sufficiently worked orprocessed if these goods are worked orprocessed as a result of which the value ofnon-originating materials (raw materials,semi-finished goods and final products)used in that process does not exceed 50% ofthe EXW price of goods exported fromSerbia. In July 2011, Serbia signed theaccompanying Protocol on FTA agreementwith Russian Federation that allows thecumulation of origin for material originatedin Customs Union of Russian Federation,Belarus and Kazakhstan.
As of 31 March 2009, the FTA signed withBelarus started to temporarily apply, withrules similar to those envisaged in the FTAbetween Serbia and the Russian Federation.In June 2011 Protocol on amendments ofFTA was signed which prescribes the rulesfor preferential origin that which considerthe material originated from Customs Unionof Russian Federation, Belarus andKazakhstan as material with preferentialorigin.
The Free Trade Agreement of Serbia andKazakhstan was signed on 7 October 2010and it is temporarily applied as of 1 January2011. This Agreement is intended to enhanceand deepen mutual trade and economiccooperation between the parties.Contractual parties agreed their mutualtrade in accordance with FTA as well asWTO rules. Rules on Preferential Originprovide the possibility of origin cumulationfor goods originated in members of CustomsUnion of Russian Federation, Belarus andKazakhstan.
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FTA with Turkey was signed in 2009 andentered into force on 1 September 2010. ThisFTA is modelled in accordance with the Pan-European Rules of Preferential Origin andenvisages annulment or gradual reduction ofcustoms duty rates for industrial products aswell as preferential customs duties withinagreed quotas for importation of certainagricultural products.
Finally, FTA with EFTA countries wassigned in 2009, and entered into force 1October 2010 for Serbia, Lichtenstein andSwitzerland, 1 June 2011 for Norway and 1October 2011 for Iceland. The rules of origindefined in EFTA are based on the Pan-European preferential rules of origin. Bysigning EFTA, Serbia also concluded a set ofbilateral agreements on trade withagricultural products with each individualEFTA member state, which actuallyrepresent constituent part of the Agreement.
Excise tax
The Serbian Customs authorities are also incharge of assessing the excise duties payablefor the importation of excisable goods – oilderivatives, tobacco products, alcoholicbeverages and coffee (green, roasted andground coffee and coffee extracts). Exciseduty in Serbia is specific (for oil derivatives,alcoholic beverages, cigars and cigarillos), advalorem (for coffee and pipe tobacco), andcombined (for cigarettes - specific + advalorem on retail price).
Import VAT
VAT is payable on all imports, assessedtogether with customs duty. For most typesof goods, the general VAT rate of 20%applies, calculated on the customs value andinclusive of customs and excise duty (if any).For the importation of certain goods (e.g.fruit and vegetables, meat, cereals,pharmaceuticals) the reduced VAT rate of8% is applicable.
Customs processing fees
There are a small number of specific types ofadministrative fees relating to Customs
processing, charged when customsdeclarations or requests for certain customsprocedures are submitted. However, thesefees are relatively low.
Payment of customs duties
Import duties are payable after customsdeclaration is accepted and customs bill withcalculated amount of duties is issued by therelevant customs office. The assessed dutyamount should be paid within eight days onthe special budget account for import dutypayments. Import goods can be releasedafter payment is being evidenced in theCustoms IT system, or appropriateinstrument for securing payment of dutyamount is submitted (bank guarantee orcash deposit).
5.4 Temporaryimportation relief
Temporary importation, with total or partialrelief from import duties, is possible forforeign goods intended for re-export withouthaving undergone any change except normaldepreciation due to the use made of them.
The amount of import duties payable inrespect of goods placed under the temporaryimportation procedure with partial relieffrom import duties is set at 3%, on amonthly basis, of the amount of dutieswhich would have been payable on the saidgoods had they been released for freecirculation on the date on which they wereplaced under the temporary importationprocedure, in other words, the import dutieswill be due for approximately 34 months.
The amount of import duties to be chargedshould not exceed that which would havebeen charged if the goods concerned hadbeen released for free circulation on the dateon which they were placed under thetemporary importation procedure, leavingout of account any interest which may beapplicable.
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Prior to allowing temporary importation, theCustoms authorities shall determine theperiod within which import goods must havebeen re-exported or assigned a new customsapproved treatment or use.
Such period must be long enough for theobjective of authorised use to be achieved,but not longer than 24 months.
One of the most important requirementswhen declaring goods for temporaryimportation is to present legal basis forreceiving goods that are to be temporarilyimported. Usually this is in the form of therental agreement.
Additionally, when placing goods undertemporary importation, it is highlyrecommended to present customsauthorities with an invoice for customspurposes only, showing the value of rentedgoods, in order to make the procedure asefficient as possible. In this way they will beable to easily assess partial 3% importduties. However, if it is impossible to assesscustoms value in this way, the Customsauthorities shall apply the customs valuationrules 2–5, and if that too is impossible, theyshall determine the customs value as therent for the agreed period of lease.
5.5 Customs dutiesincentives
In addition to previously prescribedincentives for investments (contribution inkind) in the capital of Serbian companies,the new Serbian customs regulations alsoincentivise import of new equipment andlocal production intended for export.
Contributions to capital
Importation of equipment which representscontribution in kind of foreign investors tothe share capital of Serbian companies isexempted from customs duties, with theexception of passenger cars and gamblingand amusement machines. This equipmentmay not be sold, given for use, or used forpurposes other than exemption from
customs duties within three years of the dateof importation unless customs duties arepaid. Additionally, this equipment may notbe pledged.
In case of duty free import of equipmentcontributed by a foreign investor, VAT willnevertheless be due, but generallyrecoverable.
Import of new equipment
The Customs Law envisages exemption ofcustoms duties for import of new equipmentintended for improvement andmodernization of production process or forintroduction of new technology, providedthis type of equipment is not produced inSerbia.
This exemption is not applicable for importof passenger motor vehicles and apparatusfor conducting games of chance. Theprocedure for application of this incentive isrelatively simple: besides written statementthat the equipment in question is intendedfor improvement and modernization ofproduction or for introduction of newtechnology, the importer has to submitexcerpt on company’s registration andconfirmation from the Serbian Chamber ofCommerce that the type of equipment forwhich exemption is requested is not beingproduced in Serbia.
Toll manufacturing
The Internal Processing Relief (IPR)procedure is a special customs regimeenabling foreign goods designated for re-export to enter Serbia for processingpurposes, either free of import duties(suspension system) or with a possibility ofremission of the paid import duties(drawback system).
Processing of goods under IPR is possiblewithin toll or contract manufacturingscheme. Within toll manufacturing scheme,the title over goods does not pass to theprocessing entity, whereas within thecontract manufacturing scheme goods aresold to the processing entity.
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Further sale of compensating products(either back to the seller or to the thirdparty) should be agreed in advance i.e.before the approval for IPR is required.
IPR is limited in time, i.e. the approval forcertain quantity of goods can be granted forthe period up to 12 months. Usually, theapproval for IPR can be obtained veryquickly.
If import goods or compensating productsare released for free circulation in Serbia,the holder of the approval would be liable topay, apart from the customs debt, the annualcompound interest of 23.5% on the customsdebt payable on import goods.
Compensating products obtained within IPRcould qualify for preferential Serbian origin.
Entrance of import goods, either within tollor contract manufacturing scheme, declaredfor IPR in the suspension system is notsubject to Serbian VAT, i.e. VAT is not due.Furthermore, re-export of goods is exemptfrom Serbian VAT with the right to creditinput VAT.
Processing fee charged for the processingservice within toll manufacturing scheme isVAT exempt with the right to credit inputVAT provided the compensating productsare re-exported from Serbia.
5.6 Documentation andprocedures
There is no prescribed list of mandatorydocuments that has to be filed with thecustoms declaration and declaration ofcustoms value. There is only a generalprovision saying that Customs authoritiescould ask from importer/exporter anydocuments they consider necessary toconfirm information stated in the customsdeclaration. Customs are also allowed totake samples of goods on import/export.
In practice, invoice is one of the maindocuments within the customs procedure.Therefore, it is advisable to present proper
invoice to Customs office containing allrelevant elements (buyer, seller, descriptionof goods, value, terms for payment anddelivery). It is also quite common andusually required to enclose transportdocumentation, i.e. CMR. The Customsauthorities may often require declarants toprovide them with a contract which wouldrepresent legal basis for certain transaction.
Serbian regulations do not require importersand exporters to be registered for customspurposes within the special register.
5.8 Re-exports
Import goods which have not been releasedfor free circulation but have been placedunder one of the customs procedures havinga suspensive effect (customs warehousing,temporary importation with total relief fromimport duties, inward processing relief withsuspension system, processing undercustoms control) may be re-exported fromSerbian customs territory without paymentof import duties.
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6. Business Entities
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6.1 Legal Framework
Company law
The legal status of business entities in Serbiais regulated by the Law on Companies (theCompany Law). The law sets out detailprovisions on legal forms of businessentities, its corporate governance structure,minimum capital requirements, statuschanges (mergers, spin-offs), management,liquidation of companies.
6.2 Choice of entity
Foreign investors may establish a companyin the form of:
Associations of capital: Joint-StockCompany (a.d), Limited LiabilityCompany (d.o.o.)
Partnerships: General Partnerships(o.d.), Limited Partnerships (k.d.)
In addition to the above, a foreign companymay set up a branch or representative officeof a foreign company.
In practice, foreign investors usually preferto incorporate a limited liability companydue to its simple form and easyincorporation requirements. Its advantagesinclude the following:
Capital increase may be made withoutsupervision of the regulators
Minimum share capital is less then EUR1, (opposed to approx. EUR 27,000)
6.3 Joint StockCompany (a.d.)
A joint-stock company is a company theshare capital of which is divided into sharesheld by one or more shareholders who arenot liable for the company’s obligations. Ajoint stock company can be founded by oneor more natural persons and/or legalentities in the capacity of shareholders.
The initial share capital is divided intoshares of specific value. The minimum initialcapital of a joint stock company is approx.EUR 27,000 (RSD 3,000,000). Theminimum par value of a share cannot belower than RSD 100.
Before the registration of a company, itsfounding shareholders must pay in or makecontributions representing minimum 25% ofshare capital, it being understood that thepaid-in amount of money contributed toshare capital cannot be lower than theminimum share capital prescribed by theCompany Law.
Contributions of founders may be in moneyor in kind and are expressed in RSD. In kindcontributions can be in the form of assetsand rights.
Management of the company may beorganised as a single-tier managementsystem or as a two-tier management system.In case of a single-tier management system,company bodies shall include: (i) GeneralMeeting; and (ii) one or more directors (incase there is more than two directors theyform the Board of Directors). In case of atwo-tier management system, companybodies shall include: (i) General Meeting; (ii)Supervisory Board, and (iii) one or moreexecutive directors, (in case of more thantwo executive directors they form theExecutive Board).
6.4 Limited LiabilityCompany (d.o.o.)
A limited liability company is a company inwhich one or more company members holdequity interests in the company’s sharecapital. The liability of members is up to thevalue of their investment.
Minimum initial capital of a limited liabilitycompany is RSD 100 (less than EUR 1).Contributions of founders may be in moneyor in kind and are expressed in RSD. In kindcontributions can be in the form of assetsand rights.
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Management of the company may beorganised as a single-tier managementsystem or as a two-tier management system.In case of a single-tier management system,company bodies shall include: (i) GeneralMeeting; and (ii) one or more directors. Incase of a two-tier management system,company bodies shall include: (i) GeneralMeeting; (ii) Supervisory Board, and (iii)one or more executive directors.
In a sole-member company, the function ofthe General Meeting is exercised by the soleshareholder. The Articles of Associationshall specify whether a company’smanagement is organised according to asingle-tier management system or a two-tiermanagement system.
In a sole-member company, the function ofthe General Meeting is exercised by the soleshareholder. The Memorandum ofAssociation should specify whether acompany’s management is organisedaccording to a single-tier managementsystem or a two-tier management system.
6.5 Partnerships andJoint Ventures
General Partnership (o.d.)
General partnership may have two or morepartners – legal entities or natural persons.There are no requirements forminimum/maximum contribution.Contribution can be made in money, assetsand rights, as well as in labour or services.
All partners bear unlimited liability forpartnership debts and obligations.
Limited Partnership (k.d.)
A Limited Partnership may be founded bytwo or more legal entities and/or naturalpersons, out of which at least one (thegeneral partner) bears unlimited liability forthe obligations of the partnership, and atleast one (the limited partner) bears liability
for the obligations of the partnership limitedto the value of his/her equity.
There are no requirements forminimum/maximum contribution.Contributions of a limited partner may bemade in money, assets or rights, as well as inlabour or services
Joint ventures, strategicpartnerships
Generally, Serbian legal system recognizesno major restrictions as to the rights offoreign investors to form/enter into jointventures or strategic partnerships. Namely,a foreign investor may freely establish acompany together with a local entity orinvest in a local company, without anylimitations. The choice depends on theterms established by the contractual parties.The amount of investment and thepercentage of share ownership should be setout in a Memorandum of Association.
However, there are certain restrictionsdepending on the industry in which aninvestor wishes to invest. For instance, aforeign investor, alone or together withanother foreign investor, may not establish acompany for the manufacture and trade ofweapons in Serbia or in an area specified asa restricted zone under the law. However, aforeign investor may establish companytogether with a local legal entity or investinto a company in mentioned sector as longas it does not acquire a majority share /management of such company. Also, in suchcase a foreign investor must obtain approvalfrom a competent state authority. Apartfrom this there are no restrictions on jointventures and strategic partnerships.
Generally, local partners will seek a partnerwho can:
Preserve or extend their market position
Provide financing (e.g. resolve liquidityand local financing problems)
Leverage international brand power
Provide know-how
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6.6 Branches
A branch is considered to be a separateorganisational unit of a foreign companythrough which that company carries on abusiness activity in Serbia. Therefore abranch does not have an independent legalcapacity, and acts on behalf and for theaccount of the founder company in alltransactions. A founder company bearsunlimited joint and several liability forobligations towards third parties that arisein the operations of its branch.
Branch is incorporated upon the decision ofthe founder company, and must beregistered in the public companies’ register.
6.7 RepresentativeOffice
A foreign entity may establish arepresentative office in Serbia. Arepresentative office of a foreign company isa separate organisational unit of a foreigncompany that may carry out preliminary andpreparatory work leading to the conclusionof a transaction by that company. Since it isconsidered as a separate organisational unitof a foreign company it does not have anindependent legal capacity. A representativeoffice may only enter into transactionsrelating to its current operations. Foreigncompany is liable for any obligationstowards third parties that may arise in theoperations of its representative office.
Similar to branch, a representative office hasto be duly register with the publiccompanies’ register
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7. Labour Relations andSocial Security
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7.1 Labour Market
The Serbian labour force is skilled and welltrained, particularly those under 45 years ofage. It is also still relatively inexpensive,although this is likely to change as salaryexpectations rise, especially with employerswho are foreign investors.
According to the last available datapublished by the Republic Statistics Office,the officially registered unemployment ratein July 2012 was 25.5 percent. Accuratestatistics on unemployment are difficult toobtain, as a significant proportion of thepopulation works in the grey economy.
7.2 Labour Relations
Employer/employee relations
The employment is established byconcluding an employment contract.General work ability assumes that anemployee is over 15 years of age. Specialrequirements may be determined at thediscretion of the employer, depending on thetype of job.
Unions
Representative labour unions (organised ondifferent levels: state, territorial unit,branch, and the employer) have the capacityto bargain and conclude collectiveagreements on respective levels. Unionactivity including the criteria forrepresentativeness of unions is regulated bythe Labour Law.
Labour Code
The Serbian Labour Law (the Labour Law),enacted in 2005 and amended in 2009,regulates rights, obligations and liabilities ofemployers and employees. The Labour Lawapplies on all employment relations, exceptthose in state institutions where there is aspecific regime established by the Law onState Officials.
The Labour Law complies with EUstandards and recommendations of theInternational Employment Organisation.
The Labour Law does not regulate manyissues in detail, but leaves them to beregulated by collective agreements (CAs) oran internal act of the employer, that must bein compliance with the Law. CAs areconcluded as a result of bargaining betweenthe labour union and employer/union ofemployers, and can be concluded at differentlevels (within a company/employer, for aparticular sector of economy, for a unit oflocal government or territorial autonomy, orfor the territory of the Republic of Serbia.
The General Collective Agreement signed in2008, ceases as of 17 May 2011, uponexpiration of the 3 year period. Currently,there is no valid General CollectiveAgreement in place.
7.3. Working Conditions
Salaries and Wages
Salaries are normally paid at least once amonth. The minimum salary is determinedby the Social Economic Committee followingthe criteria prescribed by the Labour Law.Minimum net salary for the period April2012 –April 2013 amounts to RSD 115 netper working hour (approx. 1 EUR net perworking hour).
The base salary has to be defined in theemployment contract. An employee isentitled to increased salary on the basis ofovertime, work at night, work duringholidays and work in shifts and to anincrease of 0.4 percent for each year ofemployment.
Employment contracts
Employment contracts set the rights andobligations of the employee and must beconcluded in writing, before commencementof work. The required minimum of contentsof an employment contract is prescribed bythe Labour Law.
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An employment contract may be concludedeither for indefinite period of time, or fordefinite period of time (up to 12 months, andonly in the cases prescribed by the LabourLaw).
Working hours
Full time employment may range between36 and 40 hours a week, subject to thedecision of the employer. Overtime cannotexceed four hours a day and eight hours aweek.
Paid holidays
The minimum annual vacation is 20 days.Employees are entitled to annual leave aftersix months of continuous employment. Thegrounds and duration of the paid leave inother cases is specified in the Labour Law.
Equal opportunities
Employees are to be paid the same forequivalent work, or for the same value ofwork, with the same employer. The LabourLaw prohibits discrimination on anygrounds towards employees as well ascandidates for employment.
Obligatory employing ofdisabled persons
As per the legislation in force as of May2010, employers having 20 or moreemployees are obliged to employ a certainnumber of disabled persons, depending onthe total number of employees. An employermay be exempt from this obligation byexecuting payments towards funds forprofessional rehabilitation and employmentof persons with disabilities, or paymentsbased on contract concluded in theprocurement procedure, all under theconditions and in the minimum amountsdefined by legislation.
Termination of employment
Employment may be terminated unilaterallyby either employer or employee, or by
mutual agreement of employer andemployee. An employer may terminateemployment with an employee in case thereare justified reasons related to employee’sworking ability, behaviour or the employer’sneeds, i.e. in the following cases:
Underperformance or lack of requiredknowledge and skills
Violation of working duties
Violation of working discipline
An employee committing a crime at or inconnection with the work
Failure of an employee to return to workwithin 15 days from expiry of paid leaveor dormancy of employment
Misuse of sick leave by the employee
Refusal of an employee to sign the annexto the employment agreement offered inaccordance with the Labour Law, i.e. onspecific legal grounds
Cessation of the need for performance ofa job or decrease of the volume of workdue to technological, economic ororganisational changes at the employer.The employer is obliged to payredundancy compensation to theemployee. Furthermore, if employment isterminated on these grounds, theemployer is prohibited to employ anotherperson at the same position in the periodof six months following termination. Ifthe demand for work on the sameposition arises before expiry of the sixmonth period, preference shall be givento the employee whose employment onthe same position was terminated.Adoption of a Redundancy Programme isthe obligation of the employers if acertain number of employees, dependingon the total number of employees, are tobe declared redundant.
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7.4. Social securitysystem
Compulsory social securityinsurance
Compulsory social insurance in Serbiacovers pension and disability insurance,health insurance, and insurance for case ofunemployment. Social securitycontributions are levied on both theemployer and employee.
7.5. Foreign personnel
Restrictions on employment
There are no general restrictions as to thenumber of foreign employees or duration oftheir employment in Serbia. There is nonationality that will encounter unusualdifficulties entering the country for businesspurposes, nor will any enjoy favourabletreatment.
ID number for foreigners andTax Identification Number
Upon the issue of residence permit, anevidence ID number is given to theforeigner, which is further used forobtaining Tax Identification Number fornatural persons.
Residence permit
The Law on Foreigners that is effective as of1 April 2009 regulates inter alia visa regimeand residence of foreigners.
Temporary residence enables a person tostay in Serbia for more than 90 days, up toone year, with the possibility of extension. Ifa foreigner holds a temporary residence visa(type D visa), there is no additional need toobtain residence permit upon arrival inSerbia. However, foreigners not holdingsuch visa, who intend to stay in Serbia for
more than 90 days, must apply for aresidence permit with the Police Office forExpatriates.
The conditions for issuing visas fortemporary residence and temporaryresidence permits are the same. Grounds fortemporary residence are: work,employment, execution of commercial orprofessional activity, education and trainingpurposes, family reunion, and other justifiedreasons. In order to be issued a temporaryresidence certificate, a foreigner mustdemonstrate proof of health insurance,sufficient means for support, and groundsfor temporary residence.
Extension of residence permit may besubmitted 30 days before expiry of suchpermit at the latest.
A foreigner is required to register with thePolice Station in the place where he/sheintends to reside for more than 24 hours,within 24 hours of coming to that place.When staying in a hotel, or staying withsomeone, the hotel/host shall register theforeigner within 24 hours.
Work permit
The general preconditions for foreignersgetting employed in Serbia are:
temporary residence permit/permanentresidence permit; and
work permit.
However, the work permit is not requiredfor holders of temporary/permanentresidence permit, entering into employmentin Serbia for the purpose of executing workdetermined in a business cooperationagreement, long-term productioncooperation, technology transfer, andforeign investment.
Work permit is issued by the Agency forEmployment. For holders of temporaryresidence permit, request for work permit issubmitted by the employer.
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8.Accounting and AuditRequirements
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8.1 Accounting
Introduction of IFRS
In 2006, the Serbian Government adopted the Law on Accounting and Auditing (amended in2009) by which legal entities are to apply the International Financial Reporting Standards (IFRS)in preparing their financial statements. The application of these standards and accountingframework are prescribed by Decrees of the Minister of Finance for companies, entrepreneurs,and broker-dealers, and the Governor of the National Bank of Serbia for banks. The Decrees andthe Law differ in some aspects from IFRS, resulting in some deviations of local accountingstandards actually applied from IFRS as explained in section entitled Significant accountingdifferences between Serbian standards and IFRS below.
This Law is applicable to: all legal entities, entrepreneurs who keep accounting records,subsidiaries of Serbian companies abroad if the host country does not require them to keepaccounting records, branches and representative offices of foreign legal entities in Serbia (unlessstipulated otherwise in other regulation), banks, pension funds, asset management companies forpension funds, investment fund, management companies for investment funds and leasingcompanies.
Preparing financial statements
For the purpose of determining the legal requirements in terms of accounting and auditing, allentities are classified as Small, Medium and Large as follows:
Company Size Criteria for Classification as per current Law on Accounting
SmallIf the value of at least two criteria is lower than those for medium-sized entities, the entity is classified as Small.
Medium1) Average number of employees: 50 - 250;2) Annual total income: EUR 2.5 – 10 million in RSD equivalent;3) Average assets value: EUR 1 – 5 million in RSD equivalent.
Large
If the value of at least two criteria is higher than those for medium-sized entities, an entity is classified as Large. Banks, insurancecompanies, stock exchanges and stock brokers are considered as largelegal entities.
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An entity determines its size in accordancewith the above criteria at the date ofpreparing financial statements and uses it inthe following accounting period. Newlyestablished entities are classified based onthe information from the current accountingperiod and the number of months ofoperation and the classification is used forthe current and the following accountingperiod. Entities are obliged to submit theinformation on their classification togetherwith the financial statements for theprevious accounting period to the Businessregister (“Agencija za privredne register”)for the companies and to National Bank ofSerbia for financial institutions.
Small legal entities may, and Medium andLarge legal entities are obliged to preparefinancial statements in accordance with Lawon Accounting and Auditing as explained inthe first paragraph. The Minister of Financeprescribes recognition, measurement andvaluation rules for Small legal entities.Annual financial statements must besubmitted to the National Bank of Serbia by28 February and consolidated financialstatements by 30 April. Approvedconsolidated and stand-alone financialstatements together with the auditor’sopinion must be submitted by 30 September(All companies which are required to havean audit must publish their financialstatements together with the auditor’sopinion by 30 September.
Statutory requirements
Entities are obliged to perform inventory ofassets and liabilities at the end of eachfinancial year and to send a list of openinvoices to its customers and reconcilebalances with them. Any unreconciledbalances should be disclosed in the notes tofinancial statements. The financial year forall entities ends December 31. Serbiansubsidiaries of foreign entities with adifferent financial year end may, with thepermission of the Minister of Finance or theGovernor of the National Bank of Serbia (forfinancial institutions), have a financial yearend the same as to the year-end of theparent company.
Financial statements consist of:
Balance sheet
Income statement
Cash flow statement
Statement of changes in equity
Notes to financial statements, and
Statistical annex
Entities are obliged to file the prescribedforms for balance sheet, income statement,statement of changes in equity andstatistical annex. The classification andpresentation of certain balance sheet andincome statement items as required by theseforms is not in accordance with IFRS. Cashflow statement form is based on the directmethod. Statistical annex contains somegeneral entity information (number ofmonths of operation, size, foreignshareholders, the average number ofemployees) and an analysis of a number ofbalance sheet and income statementpositions. There are no restrictions on thestructure and content of the notes tofinancial statements.
Entities with one or more subsidiaries arealso obliged to prepare consolidatedfinancial statements unless theirconsolidated assets and revenues (excludingintercompany transactions and balances)show that the consolidated entity would beclassified as Small.
Small companies submit only balance sheet,income statements and statistical annex.
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Significant accountingdifferences between Serbianstandards and IFRS
Although the Law on Accounting andAuditing requires full scope IFRS to beapplied, due to additional regulation issuedby the Ministry of Finance the followingSerbian accounting procedures differ fromIFRS:
The prescribed format of financialstatements does not comply with therequirements of IAS 1 – Presentation ofFinancial Statements.
Off-balance sheet assets and liabilitiesare recorded on the face of the balancesheet. According to accountingframework, off-balance sheet assetsshould include: leased assets,consignment stock, other third party’sinventory held at the company’s premisesand guarantees. Counter entries of theseitems are off-balance sheet liabilities.
Where total shareholders’ equity is lessthan zero, an asset is recorded in thebalance sheet under the caption “Lossexceeding equity”, so that the totalshareholders’ equity equals zero.
Exchange rate gains or losses on unpaidsubscribed capital are credited /debitedto equity in the balance sheet. Entitiesare obliged to prepare financialstatements using Serbian Dinar (RSD) asa functional currency even where IAS 21–The Effects of Changes in ForeignExchange Rates would require them touse different functional currency.
Consolidated financial statements for thecurrent year are required to be filed bythe end of April the following year, whilestand-alone financial statements arerequired to be filed by the of February thefollowing year.
In 2009, the Ministry of Finance issued arule by which in preparing 2008 financialstatements entities were allowed to deferforeign exchange differences in thebalance sheet. The rule was alsoapplicable for 2009, 2010 and 2012 aswell. The rule is optional and if applied,
net foreign exchange differences arerecorded within accruals andprepayments in the balance sheet andreleased to the income statement whenrelated asset or liability is realised. If anentity decides to apply this rule, that factshould be disclosed in the notes tofinancial statements.
Profile of accounting profession
The Chamber of Certified Accountantsissues certificates to Certified Accountants.In order to obtain the certificate, a personmust have a university degree, three years ofexternal or internal audit experience or fiveyears of accounting experience, and musttake the certification exam. The Chamber ofCertified Accountants publishes the list ofmembers on their website.
8.2 Chart of accounts
Chart of accounts for companies isprescribed by the Ministry of Finance, andchart of accounts for banks and otherfinancial institutions is prescribed by theNational Bank of Serbia. Separate charts ofaccounts are issued for:
Companies
Banks
Stock exchanges and brokerage firms
Voluntary pension funds
Companies for management of voluntarypension funds
Insurance companies
National Bank of Serbia
State budget
Investment funds
The current chart of accounts was publishedin 2006 and updated in 2009. It is used (i)for working out typical accounting entriesand (ii) as the basis in the preparation offinancial statements. The main categoriesincluded in a chart of accounts are presentedbelow.
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The main categories of balance sheet accounts:
Description Number
Subscribed capital unpaid 00
Intangible assets 01
Property, plant and equipment and biological assets 02
Long-term financial investments 03
Inventories and advances paid to suppliers 10 -13, 15
Non-current assets held for sale and discontinued operations 14
Receivables, prepayments and short-term financial investments 20 -28
Deferred tax assets 288
Off-balance sheet assets 88
Shareholders’ equity 30 -35
Long-term liabilities and provisions 40 -41
Short-term liabilities and provisions 42 -49
Deferred tax liability 498
Off-balance sheet liabilities 89
The main categories of income statement accounts:
Description Number
Revenues 60 -62
Operating expenses 50 -55
Finance income 66
Finance expenses 56
Other income 67 -68
Other expenses 57 -57
Net profit /loss attributable to discontinued operations 69 /59
Current corporate profit tax 721
Deferred tax 722
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The prescribed chart of accounts is based onthree digit accounts but companies mayhave more detailed accounts within thesecategories if they consider it necessary.
8.3 Audit requirements
Large and medium-sized entities are obligedto audit their financial statements. Auditreports must be submitted to the BRA by 30September (31 October for consolidatedfinancial statements). If financial statementsfiled by the last day of February are adjustedbased on auditor’s recommendation,companies should submit adjusted financialstatements together with the audit report. Ifno adjustments have been made to theoriginally filed financial statements, onlyaudit report is submitted.Audit of financial statements is performed inaccordance with the International Standardsof Auditing (ISA). Audit must be performedby certified auditors, members of theChamber of Certified Auditors andemployed by an audit company. Audit
companies must have at least three licensedauditors to be allowed to perform an audit ofa Large entity or at least one licensed auditorfor an audit of a Medium-sized entity. Auditmay be performed by the same auditcompany for no more than five consecutiveyears or, exceptionally, if licensed auditor isrotated after that period, for another fiveyears. Audit companies are obliged tosubmit to the Ministry of Finance a list ofconcluded audit contracts by the end of thecurrent financial year.
Draft Law on Accounting andDraft Law on Auditing
Ministry of Finance has published Draft Lawon Accounting and Draft Law on Auditing inNovember 2011, which will introducechanges in classification of entities anddeadlines for submitting audited financialstatements. It is expected that these draftlaws will be submitted to the Parliament inthe course of 2013.
Company SizeCriteria for Classification as per draft on changes of Law onAccounting
Small1. Average number of employees 50;2. Average annual gross revenues EUR 8.8 million in RSD equivalent3. Average assets value EUR 4.4 mil in RSD equivalent.
Medium
If the value of at least two criteria is higher than those for small-sizedentities, the entity is classified as Medium but not exceeding followingcriteria:1. Average number of employees not higher than 250;2. Average annual gross revenues not higher than EUR 35 million in
RSD equivalent;3. Average assets value not higher than EUR 17.5 mil in RSD equivalent.
LargeIf the value of at least two criteria is higher than those for medium-sizedentities, an entity is classified as Large. Banks, insurance companies,stock exchanges and stock brokers are considered as large legal entities.
As per Draft Law on Accounting, companiesare obliged to submit the information ontheir classification together with thefinancial statements for the previousaccounting period to the BusinessRegistration Agency. With Draft Law onAccounting only financial intuitions will be
submitting information on classification toNational Bank of Serbia.
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Small and medium entities may decide toapply IFRS for small and medium entities.IFRS for small and medium entities isapproved by International AccountingStandards Board. Instruction for firstapplication of IFRS for small and mediumentities can be prescribed by Ministry offinance.
Statutory deliverables as per Draft Law onaccounting have been amended for smalland medium entities, and consist of:
Balance sheet
Income statement
Notes to financial statements
Approved financial statements together withthe auditor’s opinion must be submitted by30 June (31 July for consolidated financialstatements). All companies which arerequired to have an audit must publish theirfinancial statements together with theauditor’s opinion by 30 June. Companieswhich have different reporting period thancalendar year need to submit auditedfinancial statements not later than 6 monthsafter financial period ends.
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9. Tax System andAdministration
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9.1 Tax system
Serbia’s tax environment is competitive compared to other Central and Eastern Europeancountries.
Investors seeking room to reduce their overhead costs can take advantage of the numerousbenefits, the following being the major ones:
Favourable corporate income tax regime:
- 15% tax rate- 10 year tax holiday for qualifying investments- Tax credits for investing in fixed assets of up to 40% of the invested amount
VAT and personal income tax among the lowest in Central and Eastern Europe
State subsidies for new employment.
Administration of the tax system
In principle, taxes are administered by the central government, with a few exceptions such asproperty taxes.
Registration requirements
A legal entity applies for a Tax Identification Number (PIB) at the moment of registration with theBusiness Registers Agency. The application is forwarded by the Agency to the Tax Administrationwho is also in charge of issuing a PIB to natural persons.
9.2 Direct and indirect tax burden
According to the information presented by the official Government statistics, the largestpercentage of public revenues is collected from VAT and social security contributions, followed byexcise duties and personal income tax.
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9.3 Principal taxes
Below is a brief overview of major tax rates in Serbia.
Tax Tax Rate
Value Added TaxStandard rate – 20%Lower rate – 8% and 0%
Corporate Income Tax Uniform rate – 15%
Withholding Tax onPayments to Non-residents
20% (for dividends, shares in profits, royalties, interest income,lease payments for real estate and other assets, income fromentertainment, sporting, artistic and similar performances that wasnot subject to personal income tax)25% (for payments to non-residents from preferential jurisdictions(i.e. tax heavens) in respect of royalties, interest income, leasepayments for real estate and other assets and service fees)
Tax on Capital Gains ofNon-residents
20% (tax return is submitted by the non-resident taxpayer or itsSerbian tax representative; tax is assessed by the Tax Authorities’decision)
Personal Income TaxSalaries – 12%Other income – 20%
Annual Income Tax 10% to 15% (for annual income above three average annual salaries)
Property TaxIndividuals – Progressive rates ranging from 0.4% to 2%Companies – Flat rate up to 0.4%, depending on municipality
Social SecurityContributions
Individuals – 17.9%Employers – 17.9%Maximum social security contributions base is capped to fiveaverage salaries in Serbia.
9.4 Legislative framework
Serbian legislation is based on continental law; therefore, basic legal framework for taxation inSerbia encompasses the following acts:
Personal Income Tax Law (enacted in 2001, amended in 2002, 2004, 2006, 2009, 2010, 2011,2012)
Corporate Income Tax Law (enacted in 2001, amended in 2002, 2003, 2004, 2010, 2011,2012)
Value Added Tax Law (enacted in 2005, amended in 2005, 2007, 2012)
Law on Tax Procedure and Tax Administration (enacted in 2003, amended in 2003, 2004,2005, 2006, 2007, 2009, 2010, 2011, 2012)
Property Tax Law (enacted in 2001, amended in 2002, 2004, 2007, 2009, 2010, 2011, 2012)
Excise Duty Law (enacted in 2001, amended in 2001, 2002, 2003, 2004, 2005, and 2007,2009, 2010, 2011, 2012)
Customs Law (enacted 2004, amended in 2005, 2006, 2007, 2010, 2012)
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Local Self-Government Financing Law (enacted in 2006, 2011, 2012)
Law on Taxation of Non-Life Insurance Premiums (enacted in 2004)
In addition to acts and accompanying by-laws, legal framework includes opinions of the Ministryof Finance which are not legally binding, but they can help in clarification of tax regulations.
Laws are enacted by the Parliament, and are applied prospectively. In principle, retroactiveapplication of law is not permitted by the Constitution. However, a few amendments to the taxlegislation were enacted retrospectively during the past few years.
9.5 Tax treaties
Serbia imposes 20% withholding tax on the following income of non-residents: dividends,interest, royalties, leasing fees, income from entertainment, sporting, artistic and similarperformances that was not subject to personal income tax. Specific 25% withholding tax rateapplies for payments made to residents of jurisdictions with preferential tax system (i.e. taxheavens) in respect of royalties, interest income, leasing/rental fees and service fees. Capital gainsof non-residents realized on sale of immovable property, shares and industrial property in Serbiaare subject to 20% tax.
Serbia continues to honour the double taxation treaties concluded by the former Yugoslavia (TheSocialist Federal Republic of Yugoslavia, Federal Republic of Yugoslavia and the State Union ofSerbia and Montenegro). Besides Serbia has concluded a number of double taxation treaties afterbecoming an independent state. The chart below shows the tax rates on dividends, interest androyalties according to these treaties:
Country Dividends1 Interest2 Royalties3Applicable
from
Albania 15/5 10 10 2006
Austria 15/5 10/0 10/5 2011
Azerbaijan 10 10/0 10 2011
Belgium 15/10 15 10 1982
Belarus 15/5 8 10 1999
1 If the recipient company owns/controls at least 25 percent of the equity of the paying company, the lower of the two ratesapplies.2 In case of rate “10/0”, a zero percent rate is applicable in cases when the income recipient is the Government orgovernment owned banks.3 In case of rate “10/5”, a tax rate of five percent will be applicable to literary, artistic and scientific works, including filmsand works created like films or other sources of sound and picture reproduction. A tax rate of ten percent will beapplicable to: patents, petty patents, brands, models and samples, technical innovations, secret formulas or technicalprocedure.
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Country Dividends4 Interest5 Royalties6Applicable
from
Bosnia andHerzegovina
10/5 10/0 10 2006
Bulgaria 15/5 10 10 2001
Canada7 10/5 10/0 10 N/A
China 5 10/0 10 1998
Croatia 10/5 10 10 2005
Cyprus 10 10 10 1987
Czech Republic 10 10/0 10/5 2006
Denmark 15/5 10/0 10 2010
Egypt 15/5 15 15 2007
Estonia 10/5 10/0 10/5 2011
Finland 15/5 0 10 1988
France 15/5 0 0 1976
Germany 15 0 10 1989
Ghana4 15/5 10 10 N/A
Greece 15/5 10 10 2011
Georgia5 10/5 10/0 10 N/A
Hungary 15/5 10 10 2003
India 15/5 10/0 10 2009
Indonesia4 15 10/0 15 N/A
4 If the recipient company owns/controls at least 25 percent of the equity of the paying company, the lower of the two ratesapplies.5 In case of rate “10/0”, a zero percent rate is applicable in cases when the income recipient is the Government orgovernment owned banks.6 In case of rate “10/5”, a tax rate of five percent will be applicable to literary, artistic and scientific works, including filmsand works created like films or other sources of sound and picture reproduction. A tax rate of ten percent will beapplicable to: patents, petty patents, brands, models and samples, technical innovations, secret formulas or technicalprocedure.7 Treaty will come into force once diplomatic notes confirming its ratifications in both countries are exchanged.
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Country Dividends8 Interest9 Royalties10Applicable
from
Iran 10 10 10 2012
Ireland 10/5 10/0 10/5 2011
Italy 10 10 10 1986
Kuwait 10/5 10/0 10 2004
Latvia 10/5 10/0 10/5 2007
Libya 10/5 10/0 10 2011
Lithuania 10/5 10/0 10 2010
Macedonia 15/5 10 10 1998
Malaysia 06 10 10 1991
Malta 10/57 10/0 10/5 2011
Moldova 15/5 10 10 2007
Montenegro 10 10/0 10/5 2012
Netherlands 15/5 0 10 1983
North Korea 10 10/0 10 2002
Norway 15 0 10 1986
Pakistan 10 10/0 10 2011
Palestine5 10 10/0 10 N/A
Poland 15/5 10 10 1999
Qatar 10/5 10/0 10 2011
Romania 10 10/0 10 1998
Russia 15/5 10 10 1998
8 If the recipient company owns/controls at least 25 percent of the equity of the paying company, the lower of the two ratesapplies.9 In case of rate “10/0”, a zero percent rate is applicable in cases when the income recipient is the Government orgovernment owned banks.10 In case of rate “10/5”, a tax rate of five percent will be applicable to literary, artistic and scientific works, including filmsand works created like films or other sources of sound and picture reproduction. A tax rate of ten percent will beapplicable to: patents, petty patents, brands, models and samples, technical innovations, secret formulas or technicalprocedure.
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Country Dividends11 Interest12 Royalties13Applicable
from
Slovak Republic 15/5 10 10 2002
Slovenia 10/5 10/0 10/5 2004
Spain 10/5 10/0 10/5 2011
Sri Lanka 12.5 10 10 1987
Sweden 15/5 0 0 1982
Switzerland 15/5 10 10 2007
Tunisia14 10 10 10 N/A
Turkey 15/5 10/0 10 2008
Ukraine 10/5 10/0 10 2002
United Kingdom 15/5 10 10 1983
Zimbabwe15 15/5 10 10 N/A
9.6 Tax returns and payments
The tax year in Serbia is consistent with the calendar year. Tax returns must be signed andsubmitted on a prescribed form, together with other necessary documentation. Tax return can besubmitted electronically or in hardcopy format. For “large taxpayers” the legislation prescribesshorter time limits and a different procedure. From 1 July 2014 the obligation to submit taxreturn electronically applies to entrepreneurs and legal persons (not just large taxpayers).
The tax procedure allows filing of amended tax return no later than the expiry of statutelimitation period. Amended tax return can be submitted twice for the same tax period, and mustbe submitted in hard copy. Under these conditions, the error in original tax return will not beconsidered a tax offence. Taxpayers are prohibited from submitting an amended tax return oncethe audit of the concerning tax period has commenced.
The Tax Procedure and the Tax Administration Law prescribe an absolute statute of limitations often years for all tax liabilities, except for pension and disability insurance contributions, startingfrom the end of the year in which the tax became due.
11 If the recipient company owns/controls at least 25 percent of the equity of the paying company, the lower of the tworates applies.12 In case of rate “10/0”, a zero percent rate is applicable in cases when the income recipient is the Government orgovernment owned banks.13 In case of rate “10/5”, a tax rate of five percent will be applicable to literary, artistic and scientific works, including filmsand works created like films or other sources of sound and picture reproduction. A tax rate of ten percent will beapplicable to: patents, petty patents, brands, models and samples, technical innovations, secret formulas or technicalprocedure.14 Treaty will come into force once diplomatic notes confirming its ratifications are exchanged.15 The treaty has not been ratified by both or one of the parties.
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Tax collection can be performed on a regular basis or enforced. Regular tax collection isperformed when tax liability becomes due; otherwise enforced collection rules are applied.
Tax collection is performed by depositing the amount of tax due in the prescribed TaxAdministration account within prescribed payment date.
9.7 Assessments
Assessment of most taxes is performed either based on a self assessment or a tax decision issuedby tax authorities. Tax authorities are entitled to issue the tax decision where self assessment isnot prescribed by law or during the tax control where a taxpayer did not comply with theapplicable laws and regulations.
Tax authorities are entitled to use the parification method, i.e. method of indirect assessment ofthe tax base. The parification method encompasses investigation of relevant taxpayerdocumentation upon which tax authorities determine the tax base. In addition to this, tax basecan be determined as a difference between the net value of property at the end and at thebeginning of calendar year respecting corrections prescribed by the legislation – indirect method.
9.8 Appeals
Taxpayers are entitled to file an appeal against tax assessments issued by the Tax Authorities.General deadline for filing an appeal is 15 days of the date of receiving the act. However, in somesituations legislation may prescribe a different deadline.
Upon conducted second-level procedure, the second level tax authority may:
Reject appeal;
Annul administrative act entirely or in part;
Amend the act.
The appeal generally does not delay execution of the appealed act.
9.9 Withholding Taxes
Serbian Corporate Income Tax Law imposes 20% withholding tax on a passive income of a non-residents realized from a Serbian resident. The following types of passive income are taxable:dividends, interest, royalties, leasing and rental fees, as well as income from entertainment,sporting, artistic and similar performances that was not subject to personal income tax.
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Specific 25% withholding tax rate applies for payments made to residents of jurisdictions withpreferential tax system (i.e. tax havens) in respect of royalties, interest income, leasing/rental feesand service fees. Jurisdictions which are considered to have preferential tax system (i.e. taxhavens) are prescribed by the Rulebook of the Serbian Ministry of Finance and are listed in thetable at the end of this section.
The withholding tax may be reduced or even eliminated by a bilateral Double Taxation Treatybetween Serbia and the country of residence of the recipient of such income.
One of the requirements for use of the lower Double Tax Treaty rate is that the recipient presentsa valid tax residency certificate. Only Serbian bilingual form prescribed by the Ministry andstamped by the relevant tax authorities of the recipient’s country of residence represents a validcertificate.
List of the countries with preferential tax systems:
1. Andorra 27. Macao
2. Anguilla 28. Maldives
3. Antigua and Barbuda 29. Marshall Islands
4. Aruba 30. Mauritius
5. Bahamas 31. Monaco
6. Bahrain 32. Montserrat
7. Barbados 33. Nauru
8. Belize 34. Netherlands Antilles
9. Bermuda 35. Niue
10. British Virgin Islands 36. Normand Isles
11. Cayman Islands 37. Palau
12. Christmas Islands 38. Panama
13. Cook Islands 39. Saint Kitts and Nevis
14. Dominican Republic 40. Saint Lucia
15. Falkland Islands 41. Saint Vincent and the Grenadines
16. Fiji 42. Samoa
17. Gibraltar 43. San Marino
18. Grenada 44. Seychelles
19. Guam 45. Solomon Islands
20. Guernsey 46. Tonga
21. Guyana 47. Trinidad and Tobago
22. Hong Kong 48. Turks and Caicos Islands
23. Isle of Man 49. Tuvalu
24. Jersey 50. US Virgin Islands
25. Liberia 51. Vanuatu
26. Lichtenstein
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Under the Serbian legislation, corporations paying income to an individual are obliged to assessand withhold tax at the moment of payment of such income. For example, an employer needs towithhold both personal income tax and social security contributions at the moment of payment ofsalaries.
9.10 Tax Audits
Tax Audit can be performed as:
Office control;
Field control;
Activities in order to reveal tax crimes.
Office control encompasses verification of the data presented in tax returns and other relevantdocumentation by the tax inspector. In order to verify the presented information, tax inspectorcompares data declared in tax return to the information of a taxpayer kept in the TaxAdministration official records.
The aim of field control is to verify legality of business activity and accomplishment of taxliabilities. Field control is performed by the tax inspector in the business premises of a taxpayer orpersonal premises presenting a warrant for control. The taxpayer is obliged to present to the taxinspector all necessary documentation as per his request.
The Tax Police has authorities similar to those of the Internal Affairs. It is in charge of revealingtax crimes and performing various activities prescribed by the Criminal Law (interrogation,inquest of premises etc). Based on collected evidence, the Tax Police is entitled to initiate criminalprocedure by informing the Public Prosecutor of the crime committed.
9.11 Penalties
Various penalties are prescribed if a taxpayer fails to submit a tax return, calculate and pay taxwithin the prescribed period. Tax penalties range from 1% to 20% of the tax due.
Penalty interest applied for late payment of tax is equal to annual discount rate published by theNational bank of Serbia increased for ten percentage points, using simple interest calculationmethod.
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10. Taxation ofCorporations
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10.1 Corporate TaxSystem
Taxation of corporations in Serbia isregulated by the Corporate Income Tax(CIT) Law (last amended in November 2012and by subordinate by-laws issued by theMinistry of Finance.
Taxable Entities
A taxable entity includes a companyregistered as a joint stock company, alimited liability company, a generalpartnership, a limited partnership, a sociallyowned company, a public enterprise, acooperative selling on the market, or otherform of legal entity which generate incomepredominantly by sale of products andservices on the market. Serbian taxlegislation does not recognise the concept oftax transparent entities.
Dividends
Dividends paid to a non-resident entity aresubject to 20% withholding tax, unless anapplicable Double Tax Treaty stipulatesotherwise. Dividends paid to a Serbian taxresident company are not subject towithholding tax.
Territoriality
Serbian tax resident entities are taxed ontheir income generated on the territory ofthe Republic of Serbia, as well as on theirworldwide income. An entity is considered aresident of Serbia if it is established or hasits place of effective management andcontrol in the territory of the Republic ofSerbia. Non-residents are taxed only ontheir income sourced through a permanentestablishment on the Serbian territory.
Permanent establishment /Branches
A permanent establishment is anypermanent place of business in Serbia
through which a non-resident conducts itsbusiness. Profits attributable to thepermanent establishment are subject to CIT.
A branch constitutes a permanentestablishment of a non-resident taxpayer perdefault. Consequently, CIT is payable onprofit attributable to the operations of abranch. The concept of branch wasintroduced in Serbian legislation inNovember 2004 and the practice in relationto the operation and taxation of branches inSerbia is still not very developed.
10.2 Tax Incentives
In addition to the low 15 percent CIT rate,the following tax incentives are provided inthe Serbian taxation regime:
Tax Holidays
Up to ten-year tax holidays forcompanies investing RSD 1 billion(approximately EUR 8.8 million) andemploying at least 200 workers,determined as the ratio between value ofthe investment and total property, plantand equipment.
Tax Credits
Tax credit of 20 percent (smallenterprises 40 percent) for investment infixed assets, up to 33 percent (smallenterprises up to 70 percent) of CITliability. Any unused tax credit can becarried forward for ten years. Transfer oftax credits in mergers, de-mergers, spinoffs and other corporate groupreorganisations is not possible.
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Exemptions
Special rules for tax exemption apply tonon-profit organisations. Any surplus ofincome should not exceed the amountprescribed by Law (i.e. RSD 400thousand). This surplus is not allowed tobe spent on wages or transferred to thefounders. In addition, employee wagesshould not exceed the amount of twoaverage wages paid in the industrybranch to which that non-profitorganisation belongs;
The tax liability for companies employingdisabled persons is decreased inproportion to the percentage of suchpersons to the total number ofemployees;
10.3 Taxable income
Accounting period
Accounting period which is to be used fortax purposes is the financial year. Financialyear shall mean a calendar year, exceptwhen the business is dissolved, started up orstatus-related changes are made in thecourse of a year.
Financial year and calendar year can bedifferent on a taxpayer’s request, with theapproval of the Minister of Finance(governor of the National Bank of Serbia),but the tax period must cover a 12 monthperiod and once changed it has to be appliedfor at least five years.
Accounting methods
The Serbian tax regime provides for accrualbased accounting.
Business profits
Business profits for tax purposes aredetermined by adjusting the accountingprofit, as stated in the profit and lossaccount and determined in accordance withIFRS and accounting legislation, inaccordance with the provisions of the CITLaw.
Capital gains
Capital gains are taxed separately fromoperating profits. The tax rate is 15 percent.Capital losses can be carried forward for fiveyears.
Accounting for income
Revenue recognition generally follows IFRS.
Inventory valuation
Cost of materials and the purchase value ofmerchandise are tax deductible up to theamount calculated by applying the averageweighted cost method or FIFO method. Ifother methods are used, an adjustment fortax purposes should be made.
Passive income
The total amount of interest earned isconsidered part of taxable income and taxedwith 15% CIT. Interest income is recognizedon accrual basis as per IFRS.
Dividend income distributed by a non-resident subsidiary is part of taxable income.Respective tax liability can be decreased bytax credits equal to withholding tax andunderlying corporate income tax paidabroad. Tax credit cannot exceed theamount of corporate income tax that wouldhave been paid in Serbia. Tax credit can becarried forward and utilized over a ten yearperiod. In order to use dividend tax credit,taxpayer needs to hold at least 10% interestin non-resident subsidiary for at least oneyear.
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Dividends and share in profits received froma Serbian tax resident subsidiary are exemptfrom taxation.
Exempt income
The following types of income are exemptfrom CIT:
Dividends and shares in profit of residentsubsidiaries,
Interest on bonds and other securitiesissued by Serbian Government,municipalities and National Bank ofSerbia.
10.4 Deductibility ofexpenses
Business expenses
Generally, business expenditures declared inthe income statement in conformity withIFRS and accounting regulations arerecognized in the determination of taxableincome. However, the CIT Law stipulatesthat certain expenses should not berecognized for income tax purposes orshould be recognized up to a certainamount. Partially deductible expenses arepresented in a separate sub point.
Accounting for expenses
Expenses should be recognized in the periodin which related revenue is recognized.
Companies are not obliged to keep separateaccounting for tax purposes.
Depreciation
According to the CIT Law, assets qualifyingfor tax depreciation are tangible assets withuseful life over one year, which arerecognised as non-current assets underIFRS, excluding renewable naturalresources, and intangibles. Goodwill cannotbe depreciated for tax purposes.
Tax depreciable assets are divided into fivegroups, with the following depreciationrates:
1. Group I: 2.5 percent;2. Group II: 10 percent;3. Group III: 15 percent;4. Group IV: 20 percent;5. Group V: 30 percent.
A straight-line depreciation method isprescribed for the assets (mainly property)classified in the first group. A decliningbalance method is prescribed for assetsclassified in other groups.Further guidelines on the assessment of taxdepreciation are provided in by-laws issuedby the Ministry of Finance.
Interest
Interest expense is recognized on accrualbasis. Interest on debt incurred for businesspurposes is tax deductible, subject tomeeting thin capitalisation and transferpricing requirements.
Interest charged for untimely payment oftaxes, contributions and other publiccharges is not recognized as expenditure forincome tax purposes.
Dividends
As derived from profit after tax, dividendsare not deductible for income tax purposes.
Bad and doubtful debts
Provisions (indirect write-off) for bad anddoubtful debts are tax deductible if at least60 days have expired from the due date.Provision has to be made individually foreach receivable.
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Write-off of individual debts, except forthose from debtors who are at the same timecreditors, is recognised as expense onlyunder the following conditions:
the related income has already beenaccrued, and
they were written off as uncollectible, and
taxpayer has initiated court procedure tocollect debt, or duly reported thereceivables in case of liquidation orbankrupty procedure over the debtor.
Exceptionally, the first requirement abovedoes not apply to receivables which are notrecognised as income in accordance withIFRS.
Taxable income shall be increased forreceivables that are written off and do notmeet the above requirements and for whichtax deductible provisions were previouslymade.
Royalties and services fees
Royalties and service fees should be fullydeductible in case they meet general taxdeductibility requirements, i.e. they areincurred for business purposes and properlydocumented.
Leasing
Leasing fees should be fully deductible incase they meet general deductibilityrequirements for business expendituresrecognition.
Employee remuneration
Total salary costs, as disclosed in company’sbooks, are fully deductible for income taxpurposes. Salary expenditures should berecognized on an accrual basis, i.e.regardless when/whether the effectivepayment has been made.
Accrued and unpaid redundancy orretirement remuneration to employees is nottax deductible. However, the expense will berecognized for tax purposes in the year when
the actual payment is made (“cashprinciple”).
Insurance premiums
Insurance premiums should be fullydeductible in case they meet generaldeductibility requirements for businessexpenditures recognition.
Other deductions
Long-term provisions are recognised for taxpurposes if they are made for the renewal ofnatural resources, warranty period costs andretained caution money and deposits andother mandatory long-term provisions inaccordance with the Law.
Revenues recognized on the basis of reversalof long term provisions which were notdeductible in the period when they werecreated are not taxable.
Losses
Operational losses can be carried forwardfor five years. Such facility should not beterminated in the case of corporate groupreorganisations of the company.
Non-deductible expenses
1. The following expenses are not recognizedfor CIT purposes:
Expenses which cannot be documented;
Bad debt provisions for individualreceivables from persons who are at thesame time creditors, to the amount of theliability due to that person
Gifts and contributions to politicalorganisations;
Interest payable for the late payment oftaxes, contributions and other publiccharges;
Expenses arising from tax enforcedcollection procedures;
Fines and penalties;
Non-business related expenses;
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Expenses incurred on the basis ofimpairment of assets, except in the caseof damage resulting from force majeure.However, these expenses will berecognized as an expense for the taxpurposes in the tax period whenimpaired assets are disposed of or used.
2. The following expenditures are partiallydeductible for CIT purposes (up to aprescribed threshold):
Depreciation computed in accordancewith tax depreciation rules;
Expenses for health care, scientific,educational, humanitarian, religious,ecological and sport-related purposes aretax-deductible up to 3.5 percent of totalrevenue;
Expenses for cultural purposes are tax-deductible up to 3.5 percent of totalrevenue;
Membership fees paid to chambers ofcommerce and other associations (exceptpolitical parties) are deductible up to 0.1percent of gross receipts;
Advertising and promotional expensesare tax deductible up to 10 percent oftotal revenue;
Business entertainment expenses are taxdeductible up to 0.5 percent of totalrevenue.
3. The following expenses are recognised ona cash basis:
Accrued but not paid retirementremuneration and remuneration payableon the basis of employment termination;and
Provisions for issued guarantees andother securities.
Carry forward of Tax Losses
Operational tax losses can be carriedforward for five years. Tax losses should notbe terminated in the case of corporate groupreorganisations (e.g. mergers, de-mergers,spin offs etc). Tax losses cannot be offsetwith capital gains.
10.5 Related partytransactions
The price of transactions between relatedparties is taken to be the transfer price.According to the CIT Law, related partiesexist if there is a possibility of control orinfluence on business decisions betweenthem. In the case of direct or indirectownership of at least 25% of shares, it isconsidered that there is a potential control.Business decisions are subject to influencewhere an associated party holds at least 25%voting rights in the taxpayers` managementbodies. If the same persons participate inmanagement or control of both companies, aconnection between the companies will bedeemed to exist. Close family members arealso regarded as related parties.
A company must separately disclosetransactions with related parties in the taxbalance sheet and compare transfer priceswith arm’s length prices for suchtransactions. Any difference is included intaxable profit.
Serbian CIT Law recognised the followingmethods for determining arm’s lengthprices:
Comparable uncontrolled price (CUP)
Cost plus
Resale minus
Transactional net margin (TNMM)
Profit split
Any other method which allowsdetermination of arm’s length prices ifnone of the above methods can beapplied.
It is mandatory to prepare and submittransfer pricing documentation togetherwith the CIT return for periods from 1January 2013.
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Tax deductibility of interest on related partyloans is subject to thin capitalisation limits(4:1 debt to equity ratio for companies, 10:1for banks).
10.6 Foreign exchangegains and losses
Foreign exchange gains and losses have thesame tax treatment as any other financialgain or loss. That means that foreignexchange gains or losses should be takeninto account when computing income taxliability.
Foreign exchange gains and losses arerecognized on an accrual basis.
10.7 Tax computations
General aspects
The amount of tax payable should becomputed in the tax return and tax balancesheet by adjusting accounting profit inaccordance with CIT Law rules. Tax liabilityis computed by applying 15% CIT rate on thetaxable income calculated in the describedway.
Capital gains are taxed separately fromoperating profit. The tax rate is 15 percent.
Tax returns and tax balance sheets includingall necessary documents (e.g. taxdepreciation, tax credit, thin cap and otherforms) must be filed with the tax authoritieswithin 180 days from end of the tax period.A newly established company needs toregister with the tax authorities withinfifteen days of the date of registration withthe relevant registry.
Corporate income tax is payable in advancein monthly instalments (based on previousyear’s tax return) by the 15th of the followingmonth. The difference between monthlyadvance instalments paid during the yearand final tax liability as determined in the
tax return is payable on submission of thetax return.
Consolidation
Tax consolidation is allowed for a group ofcompanies where all members are Serbianresidents and one company directly orindirectly controls at least 75 percent ofshares in another company. Each companyfiles its own tax balance sheet and the parentcompany files a consolidated tax balancesheet for the whole group. In a consolidatedtax balance sheet, losses of one or morecompanies are offset by the profits of otherrelated companies. However, there is nopossibility for any company within the groupto use operational losses generated in thepast period to offset its taxable profit inconsolidated tax return. Each company isliable to tax proportional to its share in thetaxable profit of the whole group. Taxconsolidation must continue for at least fiveyears; otherwise each company will have topay all taxes that it would have paid if therehad not been any consolidation.
10.8 Other taxes
Excise tax
Excise taxes are levied on import andproduction of goods with the price inelasticdemand (measured by responsiveness of thedemand to the change of price). Exciseduties are levied on the following goods:
Oil derivatives
Tobacco products
Alcoholic beverages
Coffee
Excise duties on oil derivatives range fromRSD 20.50 per kilo of liquid oil gas up toRSD 62 per kilo for other petroleumproducts. Tobacco products are taxed usingspecific (ranging from RSD 43 per pack ofcigarettes to RSD 18.78 per piece for cigars)and proportional (33% of retail price) exciseduties.
Duties on alcoholic beverages range fromRSD 17.45 for low-alcoholic beverages toRSD 265.17 for brandies made from grainsand other agricultural products. Excise dutyon coffee ranges from RSD 80 to RSD 300per kilo.
An excise tax liability arises at the momentwhen the excisable product is produced orimported. Deferral of excise duty liability ispossible by exercising right to hold aregistered excise duty and/or customswarehouse.
Property tax and transfer tax
Property tax is levied on the following rightsrelating to real estate: ownership right, rightof occupancy, lease of property lastinglonger than one year as well as the right touse urban and/or public building land ofmore than 10 acres. For taxpayers that keepbooks, tax base is generally the market valueof the property. The tax rate is determinedby local authorities and cannot exceed0.40%.
Transfer tax is levied on the transfer (withconsideration) of real rights over real estate,intellectual property rights, ownership overused vehicles, vessels and aircrafts (unlessowned by the state), right to use urbanand/or public building land as well as rightsrelating to expropriated real estate. Thecontracted price is used as a tax base unlessit is determined to be lower than the marketprice (in which case the market price isused). Once the tax base is determined, the2.5% tax rate is applied.
Owners of motor vehicles
According to the Law on Taxes on using,holding and carrying of goods, an entity orindividual who is the owner of a passengercar is obliged to pay tax on use of motorvehicle. This tax is payable uponregistration, renewal of registration orreplacement of registration plates. Theamount of tax payable is prescribed by theLaw as fixed amount and depends on ownerof the vehicle (legal entity or individual) andvehicle’s engine capacity. This amount isannually adjusted for consumer price index
Tax on use of cars and vans
Engine capacity in cm3Tax (RSD)
Individuals Companies
up to 1150 1.030 1.030
over 1150 to 1300 2.010 2.010
over 1300 to 1600 4.440 4.440
over 1600 to 2000 9.110 9.110
over 2000 to 2500 45.000 45.000
over 2500 to 3000 91.200 91.200
over 3000 188.490 188.490
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10.9 Branch versus subsidiary
The following table summarises the main tax features of a subsidiary compared to those of abranch.
Item Subsidiary Branch
Accounting andadministration
Generally straightforward.Practice is limited, while thelegislation is vague and non-comprehensive.
CIT rate 15% 15%
Determination of taxableprofits
Rules and practice generallyclear and defined. Overall,favourable for a taxpayer.Services charged by the parententity are, in principle,deductible if at arms lengthand documented.
Allocation of management andadministration costs incurredby the head office for thebranch may be disputable inpractice.
Tax incentivesVarious tax incentives forinvestments in tangible assetsand employment of new staff.
Unclear if applicable.
Withholding tax ondistribution of profit
20%-25%, unless otherwisestipulated by the applicableDTT. However, a tax residencycertificate needs to beobtained before the payment ismade in order to apply DTT.
Repatriation of branch profitis not considered as a dividendpayment, implying that thereis no withholding tax.
Deduction of interest paidto parent/head office
Deductible up to thin cap andtransfer pricing rules.
Non-deductible (clearly statedby the Law).
Deduction of royaltypayable to parent/headoffice
Fully deductible, subject totransfer pricing.
Non-deductible (clearly statedby the Law).
10.10 Holding companies
No special holding company regime exists in Serbia. Holding companies operate under the samerules as any other company.
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11. Taxation of Individuals
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11.1 Territoriality andresidence
Tax residence
According to Serbian Personal Income Tax(PIT) Law, individuals are regarded asSerbian tax residents if they:
Have a domicile in Serbia, or
Have their habitual place of abode inSerbia (i.e. if they stay in Serbia at least183 days, whether or not consecutively,within a period of 12 months beginningor ending in the respective taxation year),or
Have the centre of their business andvital interests in Serbia, or
Are seconded abroad to carry on businessthere for a Serbian resident legal entity, aSerbian natural person, or aninternational organisation.
Residents are taxable on their worldwideincome, whereas non-residents are onlyliable to tax on Serbian sourced income.
Registration
Individuals do not have to register astaxpayers. Individual entrepreneurs do haveto register themselves.
11.2. Taxable Income
Types of taxable income and applicable PITrates are as follows:
Income from employment (12%); Income from agriculture and forestry
(10%); Income from independent activity (10%); Income from copyright, rights related to
copyright and industrial rights (20% ratewith actual/standard costs deduction);
Income from capital – interest, dividends(15 %);
Income from immovable property (20%with actual/standard costs deduction);
Capital gains (15%);
Other income – sportsmen, games ofchance, leasing of moveable property,etc. (20% with actual/standard costsdeduction) with exception of revenuefrom personal insurance (tax rate is 15%).
Income from employment
Personal Income TaxThe taxable person is the employee, but theemployer is responsible for calculating andwithholding personal income tax on behalfof its employees. The taxable base is thegross salary including fringe benefits.The PIT Law provides a non-taxablemonthly threshold of RSD 8,7761 per month.It is adjusted annually in accordance withConsumer Price Index changes.
Social security contributionsSocial security contributions are calculatedand withheld by an employer from the salarypaid to an employee up to specified cap.These contributions are payable by theemployer and employee at equal rates. Theamount borne by the employer is treated asan operating cost, while the portion payableby the employee is taken from the grosssalary. The rates are as follows:
Pension and disability insurance11 percent
Health insurance 6.15 percent
Unemployment insurance 0.75 percent
The minimum social security contributionsbase is 35 percent of the average monthlysalary in the Republic of Serbia, regardlessof the qualifications of individual employees.
The maximum tax base for social securitycontributions remains five times the averagemonthly salary in the Republic of Serbia.The new maximum base for social securitycontributions is applied, starting from thefirst day of the month following the monthin which the data is published.
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Supplementary annual taxation
Annual tax is the additional tax in Serbia. Ifthe individual is a Serbian tax resident he issubject to Serbian annual tax on his networldwide income exceeding a prescribedthreshold. The progressive rates applydepending on the income levels presented inthe following table:
The non-taxable threshold for incomeearned in 2012 was RSD 2,067,480(approximately EUR 18,470, three timesaverage annual salary).
Taxable income may be reduced by personaldeduction and allowances for supportingdependent family members. Personaldeduction is 40 percent of the averageSerbian annual salary in the year concernedand the allowance for each dependent familymember is 15 percent of the average Serbianannual salary in the year concerned. Totaldeductions cannot exceed 50 percent of thetaxable income.
Applicable deductions for 2012 were RSD275,664 (approximately EUR 2,463) pertaxpayer and RSD 103,974 (approximatelyEUR 924) per dependent.
16 As per official data published by the Statistical Officeof the Republic of Serbia
Tax and social securitycontributions incentives
Provided that certain conditions are met, taxexemptions are available for employerswhich hire:
New employees younger than 30 years
Disabled persons
Persons older than 45 registered with theNational Employment Service
Tax credits
Serbian residents are taxed on theirworldwide income. When income generatedin another country is taxed there, thetaxpayer has the right to decrease the taxliability by claiming a tax credit to taxauthorities in Serbia.
This tax credit is equal to the tax paid inanother country, but it cannot exceed theamount of the tax that would have been paidin Serbia.
11.3. Non-taxableIncome
Certain statutory allowances, such asdisability living allowance, unemploymentbenefits, parenthood allowance, healthinsurance, state pensions, redundancypayments (within certain limits) and similarare exempt from PIT.
11.4. Taxation of non-residents
Non-residents are only liable to tax onSerbian sourced income.
Double Tax Treaties between Serbia andexpatriates’ residence countries can limit theSerbian right to tax or offer relief for thedouble taxation of certain types of income.
Taxable income exceedingprescribed threshold
Taxrate
Between three and six timesthe average annual salary16
10%
For income exceeding sixtimes the average annualsalary
15%
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Double Tax Treaties provide for resolvingtax residency disputes, i.e. situations inwhich, according to the local rules of therespective countries, a person is deemed tobe a tax resident of both countries.
In certain cases, remuneration of non-residents working for diplomatic andconsular missions or internationalorganisations in Serbia is not taxable.
11.5. Tax compliance
Obligations of withholdingagents
For employment income the taxable personis the employee, but the employer isresponsible for calculating and withholdingpersonal income tax on behalf of itsemployees.
Other types of income are generally payableby method of withholding at the momentwhen the income is paid.
Tax returns for individuals
Exceptionally, capital gains, income fromindependent activity and income fromagriculture and forestry are payable on thebasis of a Decision issued by the taxauthorities. The taxpayer is obliged to filethe tax return.
Supplementary annual PIT is also payableon the basis of Decision issued by the taxauthorities. The deadline for filing the taxreturn is 15 March of the following year.
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12. Value Added Tax
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12.1 Introduction
Serbian VAT Law has been adopted in 2004and the latest amendments were made inSeptember 2012. The increase of thestandard rate entered into force on 1October 2012 while most of other changeswill be applicable as of 1 January 2013. It isin general based on the rules set out in theEU’s Sixth Directive.
Starting from 1 October 2012 standard VATrate increased from 18% to 20% and it isapplied on all supplies of goods and servicesthat are not zero-rated or do not qualify for areduced rate or exemption. The reduced rateis 8% and it is applied to certain goods andservices that include but are not limited tothe following: basic foods, supply of drinkingwater, natural gas, the first-time transfer ofresidential property as well as eachsubsequent transfer under certainprescribed conditions, personal computers,teaching aids, tickets to cultural andentertainment venues.
12.2 Scope of VAT
For VAT purposes, a taxable transaction isconsidered to be the supply of goods andservices within Serbian territory, as well asthe importation of goods into Serbia.
A taxpayer is considered to be a person whoindependently, and in the course of theirbusiness activities, undertakes the supply ofgoods or services, or imports goods.Business activity is defined as thepermanent activity of a manufacturer,salesman or service provider for the purposeof realizing income.
A branch or other operating unit can also bea taxpayer. A non-resident without a headoffice or permanent establishment in Serbiacannot register for VAT purposes and canonly appoint a tax representative. In case anon-resident appoints a tax representative,it is considered to be the tax debtor; if thereis no tax representative appointed, thedebtor is the recipient of goods and services.
Place of Supply
Goods are considered to be supplied withinSerbian territory if the following conditionsare met:
Goods are located in Serbia when thetransport begins or is arranged;
Goods are located in Serbia when theyare supplied without transport;
Goods are installed in Serbia by or in thename of the supplier;
If the recipient of supply of water,electricity, gas and heating is located inSerbia.
Under the general rule, the place of supplyfor services is the place where the serviceprovider is established. Exceptions to thegeneral rule are connected with:
Services relating to immovable property,where the place of supply is where theproperty is located;
Services of transport or those relating toculture, entertainment, movable propertyare deemed to be supplied where they areactually carried out;
Intellectual services, services providedelectronically, data processing, transferof copyright, licences, banking andinsurance services, supply of personnel,providing information by phone, clinicaltrials, providing access to the network fortransmission of electricity and naturalgas and other similar services areconsidered to be provided where therecipient is located.
Reverse charge services
If a non-resident, who has no presence or atax representative appointed in Serbia,supplies goods or provides services to aSerbian entity, the Serbian entity shallperform self-assessment of Serbian VAT ongoods acquired and/or services receivedfrom a non-resident (“reverse chargemechanism”).
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If the recipient has the right to deduct inputVAT (provided the expense is businessrelated and relates to a taxable activity), noadditional VAT liability arises from promptapplication of reverse charge mechanism.
Import of goods
The place of import is the point of entry intoSerbian territory. The rate of VAT applicableon import is the rate that applies to adomestic supply.
12.3 Zero-rating supplies(exemptions with credit)
Supplies that are exempt with credit includethe following:
Export of goods, transport and otherservices in direct relation to export,transit or temporary import of goods (notbeing exempted without recovery right)as well as transportation and otherservices relating to import of goods if thevalue of such services is included in thecustoms base;
International air or river (by boat)transport of passengers, where non-resident air/shipping companies areexempted under the reciprocity rule;
Delivery of aircraft and ships andservicing, repairs, maintenance, charterand renting of aircrafts/vessels usedmainly for international air/river traffic;delivery, renting, repair and maintenanceof goods used for equipping suchaircrafts/vessels;
Sale of goods and services for the directneeds of the above aircraft/vessel;
Goods carried in personal luggage up tothe value of EUR 150 and dispatchedabroad prior to the expiration of threecalendar months from the delivery ofsuch goods;
Entry of goods into a free zone,transportation and other services relatedto entry of goods into a free zone;
Supply of goods and services in the freezone for which the taxpayer would havethe recovery right if the supply has beencarried out outside the free zone;
Supply of goods in the customswarehouse;
Dispatch of goods to duty-free shops;
Work performed on movable propertyobtained by a foreign user of the servicein Serbia or imported for the purpose ofrefinement, repair or installation, andwhich is to be transported or dispatchedabroad upon completion of the work;
Supplies of goods and services carriedout in conformity with donation andcredit agreements stating that tax is notto be paid from the funds received, aswell as supplies of goods and services inrelation to other Internationalagreements that provide tax exemption;
Mediation services in relation to theabove.
12.4 Exempt supplies(exemptions withoutcredit)
The following supplies are exempt withoutcredit:
Most banking transactions;
The business of investment and pensionfund management companies inaccordance with the relevant regulations;
Insurance and reinsurance services,including the accompanying services ofan insurance mediator and agent(representative);
Land (agricultural, forest, construction,built or not built) and buildings (exceptthe first-time transfer of the right to usenew buildings);
Shares, securities, postal orders,administrative fees and stamps by theirvalue in Serbia;
Supply of medical equipment andservices;
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Public interest activities performed bynon-profit organisations (e.g. education,welfare, culture, scientific research,sports, religion);
Property (flats and buildings) rentalservices, if used for residential purposes;
Postal services rendered by a publiccompany, as well as delivery of therelated goods;
Public broadcasting, except services of acommercial nature; and
Services of organising games of chance.
12.5 Supplies to Kosovoand Metohija
In accordance with the relevant VAT Decreeand during the period to which the UNSecurity Council Resolution 1244 applies,supplies carried out by taxpayers from theterritory of Serbia (apart from Kosovo andMetohija territory) to Kosovo and Metohija,are VAT exempted with credit. Theexemption applies only if certainrequirements are met (e.g. confirmation onsupply to Kosovo and Metohija issued byTax Authorities, proof that the supply hasbeen paid by the recipient).
12.6 Taxable amount(base)
Generally, the value of supply (i.e. thetaxable base) is the total fee, includingincidental expenses that have been receivedor are to be received by the recipient or athird person for the goods delivered orservices provided. The fee is assumed to beVAT exclusive, but includes excise, customsduty and other import charges, as well asother public revenues (VAT exclusive) andsecondary expenses for which the taxpayercharges a recipient of goods.
In cases of an exchange of goods or services,the taxable base is the actual market value ofgoods or services on the date of their supply.The same rule is envisaged in the case of thefree of charge supply of goods or services.
The VAT regulations provide the possibilityto change VAT base in certain cases (e.g.return of the goods, cancellation of thecontract etc.).
12.7 Non-deductibleinput VAT
Generally, input VAT incurred by a VATregistered person upon the purchase ofgoods and services and imports for thepurpose of its own business activity can berecovered either by way of a credit againstoutput VAT or as a refund.
Input VAT is non-deductible for exemptedsupplies without credit as listed above.
VAT cannot be recovered on supplies linkedwith motor vehicles (cars, motorcycles,yachts and boats, and aircraft),entertainment and decorative furniture andsmall value appliances.
Direct attribution andproportional recovery
Serbian VAT Law has a system of directattribution according to the EU model. InputVAT must first be attributed on the basis ofeconomic affiliation of costs. It is onlyapportioned if it cannot be attributed eitherto the sale of goods and services to whichinput tax recovery applies or to the sale ofgoods and services to which recovery ofinput tax is not allowed. The apportionmentcalculation takes the form of the percentageof sales with the right to recover the fullamount of sales (VAT exclusive). Thepercentage is then applied to the amount ofinput VAT that could not be attributeddecreased by the input VAT without theright of recovery.
An annual adjustment of the total annualrecovery is required at year end.
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Adjustment to VAT recovery
When VAT liability is determined by thedecision of the Tax Authority, the recipientof goods and services has the right to recoverinput VAT, provided that the VAT inquestion is paid to supplier.
If within a period of five/ten years since firstuse in the case of acquisition ofequipment/structures, and improvements inproperty, changes occur in the conditionsthat were crucial for the deduction of inputVAT, correction of the previously recoveredinput VAT must be made for the periodfollowing the change.
The adjustment is done in the period whenthe conditions on the basis of which inputVAT was recovered are changed. Thecorrection is proportional to the differencebetween the ten/five year period and thetotal time of use of building/equipment.
Taxpayer has possibility of subsequent inputVAT recovery for acquisition of equipmentand buildings, and related investments ifprescribed conditions are met.
Amendments to the Law also enabletaxpayers to recover input VAT on stocks ofgoods acquired in 12 month period priorVAT registration providing that the taxpayerhas performed stock count and submittedstock count list to the Tax Authority, heobtained invoice issued by the supplier withstated VAT amount and input VAT was paid.
VAT cash accounting scheme
Taxpayer whose total turnover in theprevious 12 months is not greater than RSD50 million and who fulfils certain conditionscan submit a request for VAT cashaccounting scheme. Under this schemetaxpayer pays VAT only on the part ofcollected receivables, but also exercisesrecovery right on paid liabilities towards hissuppliers.
If VAT payer does not collect the receivablewithin six months from the supply date, heis obliged to pay outstanding VAT.
12.8 VAT compliance
Registration
Compulsory registrationTaxpayers whose annual turnover exceeds,RSD 8 million (approximately EUR 80,000)are obliged to register for VAT.
Voluntary registrationTaxpayers whose turnover/estimation doesnot exceed RSD 8 million (approximatelyEUR 80,000) are eligible to opt for VATregistration.
DeregistrationIf a taxpayer ceases to perform its businessactivity, he/she must file an application toderegister. The request for deregistrationhas to be submitted no later than 15 daysprior to removal from the public register.
The tax authorities will conductderegistration procedure only on the basis oftaxpayers request.
Information on VAT invoice
The taxpayer is obliged to issue an invoice,or another document serving as an invoice,with all required data for every supply madeto other taxpayers. The following data mustbe included from VAT perspective:
Name, address and tax identificationnumber (TIN) of the taxpayer/invoiceissuer;
Location, date of issue and invoicenumber;
Name, address and TIN of thetaxpayer/invoice recipient;
Type and quantity of goods delivered, ortype and volume of services;
Date of sale of goods or services and theamount of advance payments;
Taxable base amount;
Applicable tax rate;
VAT amount calculated;
An appropriate note on tax exemption (ifapplicable).
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Note that VAT cash accounting schemeapplies (if applicable).
In the case of providing of a time-limited orunlimited service which is longer than oneyear, interim bill shall be issued, providedthat the period for which the bill is issuedmay not exceed one year
Taxpayer does not issue invoice in the casethat VAT liability is determined by thedecision of the Tax Authority.
Two copies of the invoice are obligatory.
Self-billing by the recipient of goods andservices is considered as an invoice,provided certain conditions are met.
Records
The taxpayer must keep VAT records in amanner that enables a tax audit/control tobe conducted. VAT records must bepreserved for a statute of limitation periodfor determination and payment of VAT or atleast for a period of ten years from themoment of first use of structures andleasehold improvements.
Returns and payments
The VAT Law requires that monthlytaxpayers file VAT returns and pay VATwithin 15 days while quarterly taxpayerssubmit VAT returns and pay VAT within 20days of the end of each taxable period. Taxdebtors who are not taxpayers submit taxreturn within 10 days of the end of taxableperiod. The usual taxable period is acalendar month, but if a taxpayer’s totalannual turnover is less than RSD 50 million
(approximately EUR 500,000), or isestimated (for the next 12 months) to be so,the taxable period is calendar quarter.
Any import VAT must be paid along withany customs duty. The customs authoritiesare in charge of collecting VAT on theimportation of goods.
Refunds
If the input tax amount is higher than thetax liability amount, the taxpayer is entitledto a refund of the difference. The taxpayercan choose to either receive the refund incash or to have it offset against futureliability.
The tax authorities must pay the refund nolater than 45 days (15 days for those whohave the status of predominant exporter)after the expiry of the time limit for filing taxreturns.
Reimbursements to a foreigntaxpayer
According to the amendments of the VATLaw which are adopted and in effect startingform 1 January 2013, a foreign taxpayer whodoes not supply any goods or services inSerbia (except in case of transportationservices) would have the right to VAT refundunder certain conditions (inter alia VAT isstated on the invoice and paid, the amountrequested for refund is greater than EUR200).
Refund is available under terms ofreciprocity.
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Introduction to PwC
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PwC worldwideprofessional network
PwC helps organisations and individualscreate the value they’re looking for. We are anetwork of firms in 158 countries with morethan 180,000 people who are committed todelivering quality in assurance, tax andadvisory services. Tell us what matters toyou and find out more by visiting us atwww.pwc.com.
PwC in Serbia
PwC in Serbia provides a full range ofassurance, tax and business advisoryservices. Our clients are drawn from the fullspectrum of the business community inSerbia and include local state owned andprivate enterprises, central governmentbodies, and leading internationalcorporations present in Serbia. PwC inSerbia is fully incorporated into PwCSoutheast Europe (SEE) cluster and Centraland Eastern Europe (CEE) region. Wecombine our knowledge and experience withcolleagues from other countries in order todevelop fresh perspectives and practicaladvice to our clients. The key element of oursuccess is the quality of our people. Ouroffice is staffed with over a 170 localspecialists with knowledge of localconditions and regulations and with eightinternational consultants with expertise intackling issues faced by global enterprises.Our staff of local and expatriate assurance,tax and business advisors combines PwCworldwide experience with in-depth localknowledge to provide unparalleled solutionsfor the local business environment. Theglobal PwC network enables our specialiststo solve problems, supported by experiencefrom different parts of the world.
Our Services
Assurance Services
The Assurance practice comprisesinternationally trained local and foreignauditors and accountants. All PwC staff arefamiliar with local and internationalaccounting practices. As a part of our long-term development strategy, PwC Serbiarequires its local employees to gaininternationally recognised professionalqualifications in accounting (UK ACCA), andto specialize in IAS/IFRS. Due to Serbia’stransition to a market economy, thecountry’s accounting and auditinglegislation is changing rapidly. We are wellplaced to understand the practicalimplications of the new laws and practiceson your company’s activities, and we canhelp you develop appropriate strategies toobtain maximum benefit from each newsituation.
Our services:
Financial, operational and organisationalaudit under international and statutoryregulation;
Financial and accounting review,investigation and due diligence;
Restatement of accounting records inaccordance with standards of Serbia andin compliance with IAS/IFRS, UK GAAP,US GAAP;
Accounting and consulting services infinancial audit, general and managementaccounting, organisational restructuring;
IAS/IFRS accounting training;
Assistance in setting up an efficientinternal audit department.
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Advisory Services
PwC Advisory Services are provided bytrusted professionals with ample knowledgeof business processes and technology,financial and accounting expertise, industryinsight, and customer relationship skills.Through the use of these capabilities and theexperience and resources offered by a globalorganisation, we assist clients in addressingmany of the important business issuesinvolved in enterprise management.Particular emphasis is placed on thepriorities of performance improvement,transactions and forensic services. Due tothe close regional cooperation of PwCAdvisory Team we can provide assistance toall those companies that are thinking ofentering South East Europe as a region andnot only individual countries. This differs usfrom other competitors in the region. PwCSerbia has excellent knowledge of localmarket and has strong relationships with themost significant companies and state bodiesin Serbia. These relationships enable us toresolve many issues quickly and to identifyreliable sources of information. We servedifferent type of clients.
Foreign investors coming to Serbia
Foreign companies operating in theSerbian market
Local prospective companies
DealsWe help clients do better deals and createvalue through mergers, acquisitions,disposals and restructuring, workingtogether to help them:
Develop the right strategy before the deal
Execute their deals seamlessly
Identify issues and points of negotiationand value
Implement changes to deliver synergiesand improvements after the deal
We also help clients assess options,restructure and help them maximise valuefrom troubled financial situations.
ConsultingWe help organisations implement theirbusiness strategies by consulting with themto:
Build effective organisations
Innovate and grow
Reduce costs
Manage risk
Leverage talent
Our aim is to support our clients indesigning, managing and executing lastingbeneficial change.
Tax Services
We provide tax and business advice on allaspects of inward investment into Serbiawith a focus on structuring investments andtrading activities for maximum taxadvantage. Our team is composed of localand expatriate tax professionals withexperience in the strategic industries of thecountry and who can provide detailedinsight into the Serbian tax framework.
Indirect Taxation Indirect Tax Compliance Services
Indirect Tax Planning and Structuring
Assistance in Dealing with the TaxAuthorities
Staff training
Due diligence
Corporate Tax Services Corporate Tax Compliance Services
Corporate Tax Planning & Structuring
Transfer Pricing
Investment Incentives
Mergers and Acquisitions
Finance and Treasury Services
International Assignments Strategic consulting
Planning and compliance
Programme administration
Employment solutions
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Expatriate Tax – International AssignmentSolutions Personal Tax and Social Security
Immigration Services
Human Resource ServicesOur Human Resource Services practice inSerbia is a part of the PwC network of morethan 6,000 professionals in over 100countries: one of the world’s largest HRadvisory organisations. Our multi-disciplinary approach allows us to advise onall aspects of people management, helpingour clients to create value for theirbusinesses through people. We helporganisations actively manage employeecosts, risks and opportunities. Ourconsultants work with clients to find tailoredsolutions to challenges encountered withinternational assignments to and fromSerbia, employee performance, developmentand reward. We combine human resourcebest practices with detailed tax, legal andregulatory knowledge.
HR Management Maximising your return on human
capital
HR strategy
HR audit
HR function effectiveness review
HR function set-up
Saratoga HR metrics and benchmarking
HR transactions advice
Due diligence
Post deal integration
Employee engagement surveys
Assessments
360 degree assessment
Management development centres
Development
Development and training needs analysis
Competency development programmes
Training for human resourcemanagement skills
Competency framework design
Outplacement
Reward Job evaluation, grading and salary
structures
Executive pay
Incentive compensation
Compensation data
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Legal Services - PwC Legal
Milovanovic & Aksic attorneysat law
Milovanovic & Aksic is a law office whichprovides clients with legal services coveringall aspects of commercial law. We areworking together with various professionalsof the PwC being also a part of theinternational PwC Legal network whichunites over 2,000 lawyers in more than 75countries globally. With over 200 lawyersacross 19 countries in Central and EasternEurope (CEE), we serve clients effectivelyand provide them with local advice within aninternational context.
We offer our clients project-based specialistlegal advice and ongoing general counselsupport in multiple territories. In addition toproviding a full service legal offering to ourclients in the mould of the conventional lawfirm model, Milovanovic & Aksic law officeas a part of the international PwC Legalnetwork also provides clients with uniquestyle of integrated legal advice on complexcommercial projects with our lawyersfrequently working in multi-disciplinaryteams alongside specialist from within thePwC network, including tax advisers, humancapital consultants, corporate financeexperts, management consultants, andaccountants.
We pride ourselves in our ability to leveragethis wider expertise to provide fast andcreative solutions to a range of problems,which enables us to produce both relevantand focussed advice to address client needs.
We cover a wide range of areas includingincorporation of companies from variousindustries, corporate governance andcompliance, corporate restructuring,mergers and acquisitions, bankruptcy andliquidation, financial services, banking,insurance, real estate, contracts and tort,employment, infrastructure and taxlitigation.
Our lawyers, members of the Serbian andBelgrade Bar Associations, are dedicatedprofessionals with excellent understandingof business environment and language skillsensuring good communication with clientsand the ability to draft complex legaldocuments in both Serbian and Englishlanguage.
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PwC’s Academy
Experience knowledge
We offer a variety of training coursescovering work-related skills and abilitiesrequired in a modern business environment.The courses are based on the experiences ofboth our experts and PwC Global. What'smore, they are suited to the needs of modernbusiness and tailored to our clients’requirements. PwC’s Academy in Serbia ispart of PwC’s growing network of Academiespresent in over 30 European countries.Through the network of PwC’s Academieswe continually exchange and test in practiceour knowledge, experiences, competenciesand methodologies.
The courses are divided into four areas ofprofessional concentration:
Technical skills and abilities (finance andaccounting, tax and project management)
Personal effectiveness skills(management skills and soft skills)
International professional qualifications(ACCA, DipIFR, CIPD, PMP, CIA)
Special educational programmes (MiniMBA, training programmes tailored tosuit clients’ requirements)
The courses are organised as:
Open training courses accessible toeveryone
Internal training courses designed tomeet individual client needs
The list of our training courses is not final.We are always open to new training coursesdesigned closely with our clients to ensurethat their needs and expectations are fullymet.
The training courses at PwC’s Academy aretaught by our best managers holding thehighest degree of theoretical knowledgeverified and amplified through practice, inaddition to a number of internationallyrecognised experts.
PwC’s Academy premise are especiallydesigned and equipped to address thediverse learning needs of the students.
PwC’s Academy is the educational segment of the global organisationPricewaterhouseCoopers (PwC).
PwC’s Academy comprises experienced professionals who during workshopsconvey to the learners their knowledge and experience gained from andembedded in daily practice.
PwC Serbia
Omladinskih brigada 88a11070 BelgradeTel: + 381 11 33 02 100
www.pwc.rswww.pwcacademy.rs
Contacts
Emmanuel KoenigCountry Managing [email protected]
Assurance Services
Jock [email protected]
Biljana [email protected]
Maja [email protected]
Miro SmolovicSenior Manager – PwC’s [email protected]
Advisory Services
Bojidar [email protected]
Tanja [email protected]
Vesna StefanovicSenior Manager – Valuations &[email protected]
Tax and LegalServices
Krzysztof [email protected]
Branka [email protected]
Dragan DracaSenior Manager/Corporate [email protected]
Jovana StojanovicSenior Manager/Indirect [email protected]
Ivana VelickovicSenior Manager/Human ResourcesServicesivana [email protected]
Predrag MilovanovicAttorney at Lawpredrag.milovanovic
ntacts
Tax and LegalServices
Krzysztof Lipka
Branka Rajicic
Dragan DracaManager/Corporate Taxation
Jovana StojanovicSenior Manager/Indirect [email protected]
Ivana VelickovicSenior Manager/Human Resources
ivana [email protected]
Predrag MilovanovicAttorney at [email protected]
PwC
This Doing Business Guide is produced by PwC Se
Legal Disclaimer: The material contained in this alert is provided for general informationanalysis of each item described. Before taking (or not taking) any action, readers should seek professional adviceliability is accepted for acts or omissions taken in reliance upon the contents of this alert.
© 2013 PricewaterhouseCoopersd.o.o. or, as the context requires, the network of member firms of PricewaterhouseCoopers International Limited, each of which is a
This Doing Business Guide is produced by PwC Serbia’s Tax and Legal Department.
Legal Disclaimer: The material contained in this alert is provided for general information purposes only and does not contain a comprehensiveanalysis of each item described. Before taking (or not taking) any action, readers should seek professional adviceliability is accepted for acts or omissions taken in reliance upon the contents of this alert.
© 2013 PricewaterhouseCoopers Consulting d.o.o. All rights reserved. “PwC” refers to the Serbianor, as the context requires, the network of member firms of PricewaterhouseCoopers International Limited, each of which is a
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purposes only and does not contain a comprehensiveanalysis of each item described. Before taking (or not taking) any action, readers should seek professional advice specific to their situation. No
firm of PricewaterhouseCoopers Consultingor, as the context requires, the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate
and independent legal entity.and independent legal entity.