In recent years, Serbia has become one of the most attractive destinations in Europe for foreign nationals seeking a favorable business environment, quality of life, and streamlined immigration procedures. However, beyond these advantages, one of the key reasons Serbia appeals to entrepreneurs from various nationalities is its strong business potential.
If you do not yet own a company in Serbia, you may soon consider embarking on this endeavor.
Pre-company formation costs in Serbia may include expenses related to obtaining specific licenses, permits, or approvals from the relevant authorities.
If the business activity requires special licenses or permits (e.g., in the fields of healthcare, trade, or construction), the costs can be significant and will depend on the type of activity.
1. Company Formation in Serbia Costs before the Serbian Business Registers Agency
We have addressed the key questions that may arise when considering company formation in Serbia. Having all the necessary information in one place can be highly useful, so we recommend keeping this guide handy if you decide to establish a business entity in Serbia.
During the incorporation process of any legal entity before the Serbian Business Registers Agency (hereinafter: SBRA), the founder(s) must consider the administrative fees associated with the registration process. The costs vary depending on the legal form of the entity being established. For example, the average costs for incorporating a limited liability company (LLC), the most common business structure in Serbia, are:
- Approximately 52 EUR (6,150 RSD) for submitting a registration application electronically (e-incorporation),
- Approximately 14 EUR (1,670 RSD) for reserving the desired business name,
- Approximately 50 EUR for issuing an electronic certificate (cost may vary depending on the issuer), necessary for digitally signing financial reports and other documents.
SBRA is a publicly available registry containing all essential information about legal entities established in Serbia. In case of any changes to the company’s registered data, it is mandatory to implement and register such changes before the SBRA. In this regard, administrative costs related to amending registered data in the SBRA include:
- Approximately 28 EUR (3,230 RSD) for registering a single change for an LLC, while additional changes submitted within the same application are charged approximately 13 EUR (1,560 RSD) per change,
- Approximately 53 EUR (6,260 RSD) if the registration application for a change in registered data is not submitted within the legally prescribed deadline,
- Approximately 30 EUR (3,440 RSD) for the registration of each amendment during the liquidation process of an LLC,
- Approximately 17 EUR (1,980 RSD) as the administrative fee for obtaining an extract of registered LLC data from the SBRA.
It is important to note that administrative fees are generally lower when applications are submitted electronically, in cases where paper submission is still permitted. Additionally, applications filed electronically are processed faster than those submitted over the counter at the SBRA.
If you decide to engage professional legal assistance, such as lawyers, to support you throughout these procedures, you should also consider legal service fees when planning your budget.
In the following section, we will briefly outline the average costs related to the establishment of an entrepreneurial agency and amendments concerning the existence of an SP:
- Approximately 13 EUR (1,560 RSD) for electronic registration of an entrepreneurial agency,
- Approximately 10 EUR (1,150 RSD) for reserving the desired business name,
- Approximately 7 EUR (890 RSD) for registering a change in any entrepreneur-related data. In case multiple changes are submitted in a single application, each additional change costs 470 RSD per change,
- Approximately 10 EUR (1,150 RSD) for obtaining an excerpt of registered entrepreneur data issued by the SBRA.
2. Initial Capital
After outlining the costs charged by the SBRA for various types of registrations, it is important to address the question – what is the minimum or maximum amount of initial capital?
The good news is that the minimum initial capital for an LLC is only 100.00 RSD, which is less than 1 EUR. Moreover, there is no prescribed maximum, meaning founders can invest as much as they wish as long as they meet the minimum requirements.
On the other hand, different rules apply to certain legal entity forms. Different regulations apply if a company is established as a Joint Stock Company.
Foreign investors considering the establishment of a Joint Stock Company should be aware that the minimum initial capital required is approximately 25,530 EUR (3,000,000 RSD).
Additionally, it is important to note that companies planning to operate in specific industries subject to special regulations must comply with different minimum capital requirements prescribed by law.
3. Office Lease Costs
The cost of leasing office space for a company varies depending on the city where the company is headquartered and the specific district within the city. On the other hand, if your business model includes services that can be provided remotely and you do not require office space, you may consider a virtual office in Serbia, which offers a wide range of remote business services along with several financial advantages, as discussed in our blog.
4. Costs After the Company Formation in Serbia
The list of necessary expenses for operating a business entity in Serbia does not end here.
One of the most significant obligations is the payment of corporate income tax, which in Serbia is set at 15%.
In addition to corporate income tax and other accounting obligations that business entities regularly encounter, there are several key obligations:
- Ecotax – The amount depends on the size of the business entity and its environmental impact, based on the activities it performs. Most businesses will pay around 50 EUR annually;
- Municipal fee – The amount a company must pay depends on its size and the municipality where its headquarters is registered. In most cases, this fee amounts to approximately 60 EUR per year;
- Company name display on business premises – The administrative fees for this type of advertisement fall under the jurisdiction of the local government or municipal tax administration. A special tax application must be submitted, but it is important to note that this fee applies only to companies that had an annual revenue of approximately 425,170 EUR (50,000,000 RSD) in the previous year.
Of course, it is also important to consider the costs of utilities such as water, electricity, and gas.
5. Membership Fee for the Chamber of Commerce and Industry of Serbia
Every legal entity conducting registered business activities in Serbia is a member of the Chamber of Commerce and Industry of Serbia. To fully benefit from membership rights and advantages, legal entities must regularly pay monthly membership fees.
The fee amount is determined based on the size of the legal entity (as defined by accounting regulations) and its annual revenue. The fees range from a minimum of approximately 5 EUR (600 RSD) for micro-enterprises to as much as 1,575 EUR (185,000 RSD) for large businesses.
6. Transfer Pricing
Transfer pricing refers to the pricing of transactions between related legal entities. Given this definition, the key question arises: Who qualifies as related parties in the context of transfer pricing?
The Corporate Income Tax Law provides an answer, defining related parties as:
- Entities with a direct or indirect capital connection of more than 25% (parent companies, subsidiaries, and sister companies),
- Entities with a controlling relationship (a significant influence on business decisions), which always applies if an entity holds more than 25% of voting rights in a governing body,
- Family members (both immediate and extended).
Entities required to prepare a Transfer Pricing Report include both legal entities and entrepreneurs engaged in transactions with related parties concerning assets or obligations.
Essentially, if a company conducts any type of transaction with related entities during a tax period, it is highly likely that it will be required to prepare a Transfer Pricing Report.
7. Introduction to Serbia’s Tax System
Serbia’s tax system is attractive to many foreign investors seeking favorable business conditions.
As previously mentioned, the corporate income tax rate is 15%. The capital gains tax is also set at 15%. The income tax rate on salaries is 10%. The taxpayer for income tax is the individual receiving the salary, i.e., the employee (the individual performing work in exchange for remuneration). Additionally, companies must consider mandatory contributions imposed on each salary. For businesses planning expansion into Serbia, such data is crucial for accurate business cost planning, particularly in terms of employee-related expenses. These insights enable precise calculations of gross and net salaries, which are key to financial planning.
Regarding Value Added Tax (VAT), the standard tax rate for most goods and services is 20%. However, it is important to note that not every legal entity is required to be VAT-registered. If you would like to learn more about this topic, consulting a tax law expert is advisable.
8. Tax Incentives for Business Entities
In recent years, Serbia has introduced numerous tax incentives and exemptions, making it an even more attractive destination for starting or expanding a business in the country.
Tax incentives provide significant benefits for efficient business operations.
Some of the most important tax incentives include:
- The “IP BOX” regime – reducing corporate income tax from 15% to an effective rate of 3%,
- Research and Development (“R&D”) incentives – reducing corporate income tax for companies conducting research and development activities in Serbia.
The “IP BOX” and “R&D” incentives can be combined, allowing for a significant reduction in corporate income tax, potentially down to 0%. This benefit presents an exceptional opportunity for entrepreneurs and companies investing in innovation, enabling them to lower their tax liabilities while simultaneously fostering further development and the application of new technologies.
Don’t Forget Incentives for Employees!
9. Tax Incentives for Employing Foreign Employees
Serbia has emerged as one of the most sought-after destinations in Europe, particularly in the field of immigration law.
Serbia has relatively low labor costs compared to other European countries. However, companies in Serbia that employ foreign nationals can benefit significantly, as there are special tax incentives for hiring this category of workers. If all legal requirements are met, incentives can be granted in the amount of 70% of the calculated and paid income tax and 100% of the calculated and paid contributions for mandatory pension and disability insurance.
In addition to offering a favorable environment for company formation, Serbia also encourages the employment of foreign nationals, which can significantly contribute to business growth and development. This option is particularly advantageous for employers planning to relocate their business to Serbia along with their staff.
Implementing Smart Optimization while Maximizing Profit
Understanding the costs associated with establishing and subsequently managing a company in Serbia is crucial for making informed business decisions. From the incorporation process to labor costs and utility expenses, each factor plays a significant role in the overall financial picture. Efficiently managing these costs contributes to smoother and more successful business operations in Serbia.
