You are not a Serbian citizen but are interested in buying property in Serbia? Or wish to know whether buying property in Serbia is possible, what are the procedures and costs? We decided to provide answers to FAQs for our foreign clients.
You’ve decided to invest in a property in Serbia? The first thing on your to-do list is to check whether citizens of your country have the right to acquire property in the Republic of Serbia and under which conditions.
In order to find that out, you must check whether there is a concluded bilateral agreement between your country and the Republic of Serbia that regulates the issue of obtaining the property of a national of that country in another country. In the absence of such an agreement, it is necessary to check whether actual reciprocity between the countries has been concluded.
It should be emphasized that the acquisition of agricultural land is reserved exclusively for Serbian citizens. The exception is the ability of EU citizens to acquire agricultural land, with very restrictive conditions.
If the answer is positive and you, as a foreigner, may buy a property in Serbia, you should proceed to the next step, which is finding the right property, inspecting the real estate, reaching a price agreement and moving to realization.
If the citizens of your country cannot acquire property in Serbia, you can overcome this obstacle by establishing a company in Serbia. As explained in more detail in the blog post Company Formation in Serbia in 7 Steps, foreign legal and natural persons can establish companies without any restrictions. Not only that, but foreigners can also establish the so-called Special Purpose Vehicle with the intention to acquire agricultural land through a domestic legal entity.
After you have found your right property, it is necessary to perform real estate legal due diligence. What do we mean by this? In addition to going to the site and inspecting the property, it is necessary to carry out a legal due diligence of the property, check whether there is an encumbrance, mortgage, annotations on the property, etc. The real estate industry has encountered numerous issues in Serbia, starting with properties for sale in Serbia that have not been registered into the Real Estate Cadaster to properties built without the permission of the competent authority, property subject to dispute, etc. For this reason, be careful when choosing a property and performing your due diligence.
In Serbia, only real estate lawyers are professionally trained to give you advice on buying property in Serbia.
Apart from legal and factual due diligence of the property in the matter, you need a real estate lawyer who works in a real estate law firm for the next step – drafting a purchase agreement. Once the parties agree on the price, method of payment and the deadline for the transfer of the property, the lawyer puts the seller and buyer’s wishes on paper. The lawyer also manages the way of transferring the money for the purchase.
After the Contracting Parties have come to an agreement on all terms, it is necessary to book a certification-solemnization of the agreement before the Notary Public. A Notary Public is competent if their location is in the area of the property in matter. Contracting Parties sign the agreement drawn up by a lawyer and the Notarial Clause on the confirmation of the document before the Notary public. However, keep in mind that at that moment, the buyer has not yet become the owner of the property in question.
The buyer pays the agreed purchase price, and the seller transfers the property on the real estate to the buyer. The payment of the purchase price shall be made by transferring the funds from the buyer’s account to the seller’s account. The transfer of possession is carried out when the seller lets the buyer into the real estate and provides the transfer of the keys.
After the certification, your job is still not complete, because foreigners have to submit a request for registration of the ownership right in a public registry. The Republic Geodetic Authority, which has its departments for real estate cadaster is in charge of registering real estate on the territory of the RS. Therefore, it is necessary for the buyer to submit an application for registration of the ownership right to the competent real estate cadaster. The competent department of the Real Estate Cadaster issues a Decision, which authorizes the registration of ownership rights on the purchased property and that concludes the procedure of the acquisition of property. In other words, only when the Decision of the Real Estate Cadaster that permits registration of ownership rights in the name of the buyer becomes final, the buyer shall become the owner.
After the conclusion of the agreement and the acquisition of the real estate, some other activities should accompany the purchase of the property.
When buying property in Serbia, you will be charged with absolute rights transfer tax. The seller (as a taxpayer) submits the tax return within 30 days from the date of the certification – solemnization of the Agreement with the Notary public. In practice, however, the more common situation is that the Contracting Parties agree for the buyer to pay the tax, and therefore, the agreements state that the buyer will pay the absolute rights transfer tax, although the seller is supposed to pay the tax according to the law.
The tax rate is 2.5% of the market value. If the Agreement stipulates a price that is higher than the market price, the tax will be calculated at the agreed price. Market value is assessed by the competent tax administration.
In addition to the absolute rights transfer tax, which is paid only once during the purchase of each property, you are also required to file a tax return on property tax. Property tax is determined on the basis of the annual Decision and is being paid quarterly. The tax rate is 0.4% for real estate valued up to 10 million dinars, while it goes up for the more valuable real estate.
In order to complete the entire procedure of buying a property in Serbia as a foreigner, it is also necessary to make changes of the account holder with the competent companies (eg., for electricity, water supply, etc.)
The cost of buying a property in Serbia depends on the value of the property itself. The higher the value, the higher the cost.
In addition to the purchase price and the accompanying bank transfer fees, expenses that the buyer needs to bear in mind when it comes to the actual transfer of ownership are as follows:
Natural persons are required to provide personal documents of both the seller and the buyer. Foreign natural persons are required to submit a passport, while foreign legal entities are required to submit a Copy from the competent business entities registry, which has to be properly legalized or supplied with the Apostille (except if it is issued by the competent authority of the country with which Serbia has concluded a bilateral agreement on the abolition of the need to legalize foreign documents) and certified by a court interpreter. In addition, immediately prior to the solemnization of the agreement before the Notary, the real estate folio from the competent real estate cadaster should be submitted for the property that is the subject of the agreement, which proves ownership of the seller. Furthermore, the seller should provide evidence to whether the property they are selling is part of their special or marital property.
The Law does not regulate this issue, but starts from a point that it is not necessary to have a contractual (diplomatic) reciprocity with a foreign country, but, in practice, it is enough to give a permit to citizens of the Republic of Serbia to acquire property on the territory of that foreign country (factual reciprocity).
Likewise, foreigners may inherit real property on the territory of the Republic of Serbia on the basis of the assumed factual mutuality, while the stakeholders in the procedure may prove the contrary.
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