Company Formation in Serbia in 2023

Serbia, a country in Southeastern Europe, has made significant progress in emerging as a dominion for both businesses and consumers. It has transformed into a stable economy and become a leading investment location because of low inflation, duty-free exports, a reasonable corporate profit tax of 15%, and a developing corporate sector.  

The surge in its corporate sector is purely logical because of attractive customer benefits in European Union countries, low business maintenance costs, and a lack of geopolitical debates. All this indeed makes it a favorable location in Europe. 

But the course of a company formation in Serbia is an uphill effort. You must find answers to several questions and consider a few factors before entering the market. For instance, who can open a company in the Republic of Serbia? What type of business can you establish? Are there specific documents you will need? What procedure does a foreigner follow to open a company?

This article will provide insight into the process of company formation in Serbia. So, read ahead!

Types of Business Structures in Serbia

Starting a business in Serbia can be rewarding when done correctly. The Serbian Company Act recognizes various forms of business entities. You must consider your business objectives and activities and select a suitable structure among the available options.

1. Limited Liability Company

An LLC is a private limited company with legal status. It is a popular choice in Serbia due to its flexibility and limited liability for its members (owners). LLC requires at least one founder (member) and allows for a simple management structure. The shared ownership limits personal risk and protects owners from liabilities. It implies that the members are not personally liable for the company's debts. 

For example, three friends in Serbia share a love for photography and turn their passion into a business. They establish an LLC and pool their talents, resources, and equipment to offer photography services to clients in their local area.

2. Joint Stock Company

A Joint Stock Company is a more complex business structure for larger companies. It issues shares and can have a broad base of shareholders, including a board of directors.

For instance, a well-established Serbian manufacturing company plans to expand its business. They go public and offer shares through a stock exchange to raise capital and broaden ownership. This transition will make it a Joint Stock Company to accommodate shareholders.

3. Partnership

A partnership involves two or more individuals or entities who share ownership and management responsibilities. Partnerships can be general (unlimited liability) or limited (limited liability for some partners).

Suppose two architects have complementary skills and a strong professional rapport. They decided to form a partnership to collaborate on various architectural projects. It enables them to share profits and the responsibilities of running their architectural firm.

4. Branch Office

A branch office is an extension of a foreign company. It operates under the name of a foreign company and has no separate legal identity.

Say there is a multinational tech company in the United States. They opened a branch office in Belgrade, Serbia, to expand their global reach. The branch office is an extension of the parent company and conducts business under its established name and brand.

5. Entrepreneur

Entrepreneurship (Individual or PR) is a simple structure where a person conducts business activities. The individual is personally liable for business obligations.

Think of a freelance graphic designer in Serbia. They operate as an entrepreneur and work independently on various design projects. As a result, they manage their clients and projects while being personally responsible for any business debts or obligations.

6. Foreign Company Representative Office

A foreign company establishes a representative office to conduct market research and promotional activities and liaise with clients in Serbia. It does not engage in commercial activities.

Consider a well-established Asian manufacturing company. They set up a representative office in Belgrade to explore business opportunities in Serbia. The role of their representative office is to conduct market research and promotional activities and establish contacts with Serbian companies without engaging in direct sales or trading activities.

Documents Required for Company Formation in Serbia

Setting up a company in Serbia is easy with the necessary documents. Here is the relevant documentation you must possess when registering your business.

1. Founding Agreement

Companies with multiple founders need a founding agreement. It is essential to notarize the signatures of each founder for the founding act.

A founding agreement must contain the following information:

• Data on members of the company,
• Company name,
• Company address in Serbia,
• Selected activity code,
• Time of issuance of a non-cash share or payment of a cash share,
• Individual share of each member,
• Authorization for representative members or directors.

2. Proof of Identity

Passport copies or IDs of all founders and responsible persons.

3. Registered Address

You must provide proof of a registered business address in Serbia.

4. Bank Certificate

You must obtain a certificate from a Serbian bank to show you have deposited the initial capital.

5. Tax ID Numbers

Each founder and associated person must acquire a Serbian tax identification number (PIB). An authorized representative should sign the entry in the registers of taxpayers.

6. Documentation for Specific Company Types

You may need to submit some additional documents based on the business type. For instance, joint-stock companies often require a business plan.

7. Application Form

Business companies can only and exclusively register electronically through a user application called eRegistration.

What are the Requirements for Starting a Company in Serbia?

Starting a company in Serbia involves a process governed by Russian federal laws and regulations. The requirements for company formation in Serbia are typically similar to those for anywhere in Russia. The essential requirements are:

1. Basic Registered Capital

The capital amount to establish your business depends on your chosen legal form. For instance, the minimum capital for starting the most chosen business structure, LLC, is RSD 100.000.

2. Director

Appoint a director for the company who will be responsible for its management.

3. State Registration

Acquire an INN for the company and employees. To comply with labor and taxation regulations, you must register your hired employees with the Serbian Tax Administration and other social security funds.

Related Read: The cost of hiring a new employee: A comprehensive guide

4. Statistical Codes

The Statistical Office of the Republic of Serbia assigns a unique code to companies. Obtain statistical registration codes for your business activities.

5. Taxation and Reporting

Understand and comply with the Russian Tax System and file regular tax reports.

How to Register a Company in Serbia?

Serbia adopted the new Law on Investments 2015 and implemented multiple investment approaches. The introduced changes have significantly erased the differences between foreign and domestic investors and their legal status. Consequently, the Serbia company registration procedure is almost the same for everyone.

1. Select a Company Name

Choose a name for your company and ensure it is distinctive and does not resemble any registered business in Serbia. You can check the name availability and reserve it with the Serbian Business Registers Agency.

2. Choose the Legal Form of Your Company

Decide on the business structure that best suits your goals and activities. Standard options are Entrepreneurship (PR), Joint-stock Company (AD), and Limited Liability Company (LLC or DOO), among other forms.

3. Prepare the Founding Documents

Create the essential founding documents. They include Articles of Association, Memorandum of Association, and a decision to register the company. Mention details, like the company's name, legal form, address, business activities, management structure, and share capital.

4. Open a Bank Account

You need to open a bank account to deposit the required share capital. You can begin the company registration first and then set up an account in a Serbian bank.

The following documentation is necessary to open a bank account:

• An application form,
• Form with certified signatures of authorized persons,
• Decision in company registration from the Business Register of Serbia,
• Identity proof,
• Card with deposited bank signatures,
• Additional bank details like online banking requirements and an account opening agreement.

5. Register the Company

Register your business officially with the Serbian Business Registers Agency. You can submit the application in person or online at your convenience.

6. Obtain a Tax Identification Number

Acquiring a tax number is crucial for taxation purposes. You must obtain a Tax Identification Number from the Serbian Tax Administration once you register the company.

7. Register for VAT

You must register for Value Added Tax (VAT) with the Serbian Tax Administration if the company exceeds RSD 8 million in annual turnovers.

8. Register with the Relevant Authorities

You must check your business activities and register with relevant government authorities like the National Bank of Serbia, the Ministry of Economy, or the Serbian Chamber of Commerce.

9. Acquire Necessary Permits and Licenses

Obtain relevant licenses and permits from the relevant authorities based on your business activity to ensure your company complies with the regulations.

You can fill out an application and pay a stipulated fee to receive a copy of the registration. The taxes for this service may vary according to the complexity of the data.

Serbia Company Registration Benefits

Various foreign companies operate in Serbia. What exactly makes it a business-friendly place? Knowing why to start a company in Serbia is necessary before learning to open one there.

1. Access to Resources

Serbia is positioned in Southeast Europe. The easy access to regional and international markets makes it a favorable hub for trade and commerce. Moreover, the country boasts rich agricultural land, mineral resources, and a well-developed infrastructure. Hence, it is conducive for businesses in various sectors, like agriculture, mining, and logistics.

2. Skilled Workforce

Serbia has a well-educated and qualified workforce in information technology, engineering, and manufacturing, among other fields. In addition, the labor costs are relatively competitive compared to Western European nations. Hence, finding skilled and cost-effective staffing options is easy in Serbia.

3. Financial Incentives and Opportunities

The financial sector in Serbia has been growing and opening access to capital through local banks and financial institutions. Several financial institutions, like the Serbian National Bank and the Serbian Investment Bank, help entrepreneurs get started. The government offers salary tax incentives and subsidies to attract foreign investments. You can avail yourself of the salary tax contributions and corporate tax exemptions to scale your business.

4. Low Living Cost

Serbia offers a relatively low cost of living at €700 per month compared to many Western European countries. Affordable housing, transportation, and daily expenses contribute to a high quality of life for residents and expatriates. Thus, doing business in Serbia is advantageous for businesses to attract and retain talent and manage operational expenditures.

Timeline for Serbia Company Formation

There is not precisely a fixed timeline. The duration for company formation depends on various factors, such as business type, complexity, and efficiency of the registration process. However, you can expect a general timeline based on the following:

1. Engagement Planning

It involves name reservation and drafting of founding documents. Engagement planning is where you secure your business name and prepare essential documents.

2. Company Incorporation

You open a dedicated bank account to deposit capital and register your company with the Serbian Business Registers Agency.

3. Corporate Bank Account Approval

This step includes fulfilling bank-specific requirements to open a bank account and obtaining approvals.

4. Corporate Internet Banking Approval

Then, you must gain approval to use corporate Internet banking services to enable online management of financial transactions.

5. Engagement Completion

The last step includes registering with relevant government ministries or industry-specific bodies and acquiring appropriate permits.

Here is an outline of the average timeline for company formation in Serbia for multiple business entities.

Setting up a Company vs. Partnering with an Employer of Record in Serbia

Establishing a full-fledged company in Serbia gives you more control and independence. It provides a way for long-term growth and expansion through which you can build a distinct corporate identity and presence in the global market. 

However, it is crucial to understand that setting up an entity in Serbia could be challenging and expensive. So what’s a good alternative? Partnering with an Employer of Record like Skuad.\

Below is a comparison between incorporating a company and using an employer of record to participate in the Serbian market.

Hire Talent in Serbia Compliantly

Serbia is an excellent choice for establishing a business. However, setting up a company equals hefty capital investments, compliance challenges, filing lengthy applications, and obtaining time-consuming permits. In addition, it demands a comprehensive understanding of the legalities and laws. 

Skuad’s unified platform allows you to hire, onboard, and pay international employees in over 160 countries, including Serbia. With Skuad, you do not need a separate legal entity to manage the HR and legal compliances skillfully. Our platform ensures 100% compliance with local labor and employment laws. 

‍Book a demo with Skuad to tap into the Serbian market seamlessly.

FAQs

Q1. How much does it cost to open a company in Serbia?

The cost of starting a business in Serbia varies depending on the business structure. The administration costs for various legal entities at present are as follows:

• Limited Liability Company: €50.26
• Entrepreneur: €12.78
• Branch office of Foreign Companies: €50.26

The registration process will accompany other costs. You also need the Founding Act to have complete documentation, which costs about €30 to 50. Further, registration and publishing of the Memorandum of Association requires €27.

Q2. Is Serbia a good place to start a business?

Serbia has achieved significant economic growth over the past years. Implemented reforms have reduced the national debt and attracted international capital. Its location and stable advancements have positively influenced small- and medium-sized enterprises.

Q3. What are the risks of doing business in Serbia?

Shortage of workforce, decrease in consumer purchasing power, high costs for labor, raw materials, logistics, and travel during inflation, and deterioration of relations with the European Union are among the most common risks companies may face when doing business in Serbia.