Top 30 FAQs On Opening a Company in Serbia

May 2022

Through work with clients, we noticed certain repetitive questions that inevitably arise when it comes to opening a company in Serbia.

Consequently, we decided to answer the most common questions asked by both natural and legal persons interested in starting their business and opening a company in Serbia.

1. What Legal Form is the Best with Opening a Company in Serbia?

Depending on several factors regarding the type of business you plan on conducting, an attorney specialized in Company Law will advise you on which form you should choose for opening a company in Serbia.

What you should know is that the Company Law of the Republic of Serbia recognizes four legal forms of companies, and additionally, prescribes entrepreneurs as a company form.

Forms of companies recognized by the Serbian law are:

  • General partnership company,
  • Limited partnership company
  • Limited liability company,
  • Joint-stock company

In our blog company formation in Serbia we have explained in detail all four forms of companies.

A limited liability company (LLC) is the most common form that the clients choose since it is the most appropriate form for the majority of different business activities.

However, sometimes it will be more cost-effective for you, especially from a tax point of view, to register as an entrepreneur.

In case of performing certain prevailing business activities, apart from the regular procedure, it would be mandatory to obtain the permissions from the authorized state authority.

2. What are the Advantages if I Register as an Entrepreneur?

The advantage of conducting business as an entrepreneur is simplicity, primarily in the establishment and during business operation.

The procedure of registering an entrepreneur is significantly easier and costs less than forming an LLC.

The Serbian Business Registers Agency (hereinafter: SBRA) also allows online registration of entrepreneurs. Although it is possible to establish single-member as well as multi-member LLCs, their establishment is more complicated than establishing an entrepreneurial company.

The main advantage is that as an entrepreneur, lump-sum taxation is possible, regardless of the scope of the activity and the income you generate (up to a certain amount).

Furthermore, the procedure of closing up the entrepreneurial company is much easier, comparing it with the procedure of closing up the limited liability company.

3. If I am Currently Registered as an Entrepreneur, Can I Change the Form to an LLC?

Yes, you can.

An entrepreneur can decide on continuing to perform activities in the form of an LLC, while the strike-off of the entrepreneurial company and LLC formation is done simultaneously.

The opposite, however, is not possible. If you are a member of an LLC, you cannot decide to continue conducting business as an entrepreneurial company.

4. Who Can Register a Business Name?

When opening a company in Serbia, the founder of the company has the right to choose the company’s name.

This freedom is restricted by the right to use another company’s name, as well as the characteristics of political and geographical territories.
The right to use any of these two can be obtained only by the consent of said entities, i.e. competent authorities.

The business name of the company constitutes a company name, legal form, and place of the company’s registered seat.

The limitation in choosing the business name is such, that it cannot offend the public moral, it cannot cause confusion regarding the legal form of the company or create confusion about the company’s prevailing business activity. Your company’s name cannot be identical to another company’s name. It must be different from another company’s name, to avoid confusing your company with the identity of another company.

The SBRA won’t allow the registration of a company if there is a limitation regarding the company’s business name.

We have already given detailed, practical instructions for choosing a business name in our blog.

5. Can the Company’s Name be in a Foreign Language?

The company’s name may be in a foreign language or include certain words and characters in the Latin alphabet of the English language, Arabic, or Roman numerals.

6. How Much Capital Do I Have to Invest to Establish a Company?

The minimum amount of share capital for an LLC amounts to 100 RSD (less than 1 EUR).

For certain, specific business activities, a specific minimum principal capital is foreseen.

This is the minimum amount of the share capital which has to be registered (but doesn’t have to be paid) when forming a company, while particular investment in equipment, infrastructure, materials, etc. will depend on the business you are conducting.

7. In What Currency Can I Invest?

The company’s shares are always in RSD (Serbian dinar).

The payment of capital can be made in foreign currency, in accordance with the law governing foreign exchange operations, and the dinar countervalue of shares is calculated at the median exchange rate of the National Bank of Serbia on the day of the deposit payment.

8. Must the Source of the Capital Invested in the Company Be Visible?

Yes, since starting from December 31, 2018, the SBRA has established a Central Registry of Ultimate Beneficial Owners.

Every newly-established legal entity has an obligation to register its ultimate beneficial owner within 15 days from the day of the registration.

9. Can I Have More Than One Ownership Stake in a Company?

Each member of the company can have only one ownership stake. That is, an ownership stake is a non-dividable whole, however, the percentage of different members can vary.

Thus, if an already existing member is increasing their equity in the company (for example, by transfer of equity), they won’t acquire more share interest in the company, but their percentage of equity in the company will increase.

For example, if you had 25% of shares in one company, and a member who is leaving the company transfers to you their 25% on the grounds of the Share Transfer Agreement, your percentage of interest in the company after the transfer will be 50%.

10. Can I Have Multiple Ownership Stakes at Different Companies?

In principle, there aren’t any obstacles that prevent you to have multiple ownership stakes at different companies, but in each particular case, you have to pay attention as to whether you are violating the non-competition clause.

In other words, it is extremely important whether the companies perform competing business activities, whether you have the capacity of an entity with specific obligations toward the company, or possibly, an approval to perform competitor’s activities.

11. Can I Contribute Mortgaged Property to the Company?

Yes, you can.

When you are forming an LLC or joint-stock company (so-called for-profit companies) your contribution can be monetary or in-kind, and in-kind can be items and rights.

The value of the in-kind capital contribution is determined in agreement with one member of the company or in agreement with all members of the company, through evaluation.

When in-kind capital contribution to the company includes a mortgaged property, it is important to point out that in case the mortgage is activated, the company will not be left without their share capital, since the share capital is fixed, i.e., determined during the company formation, and does not depend on additional factual changes.

On the other hand, since the obligation of safekeeping applies to share capital, if the mortgage would get activated, it would be clear from financial reports and would negatively reflect upon the company’s business, so the share capital would have to be reduced in order to cover the losses.

12. Can I Contribute Software as a Capital Contribution to the Company?

As explained in the previous answer, in-kind capital contribution can be property, as well as ownership rights to different movable assets, as well as intellectual property rights on software.

13. How Much Does It Cost to Establish a Company in Serbia?

Companies in Serbia are established before the Serbian Business Registers Agency.

SBRA’s website is transparent, and it includes detailed information on all fees.

So, for example, the fee for registering a company is 4,900 RSD (40 EUR), while the amount of fee in case of online registering the company is 4,500 RSD The fee for registering and publishing the Founding act amount to 1,000 RSD (less than 10 EUR). When establishing a company, it is mandatory to pay the fee for both registration as well as publishing of the memorandum of association, which amounts to 1,000 RSD (less than 10 EUR).

The fee for SBRA for establishing a branch or representative office of a foreign legal entity also amounts to 4,900 RSD (40 EUR).

14. What is the Difference Between the Company’s Founder, and Managing Director?

The founder or member of the company is the individual who establishes the company or joins the company afterward. The member owns a certain percentage of the company’s stake, based on which they hold management rights at the company. All company members constitute the company’s assembly, and the assembly decides on the most common matters for the company, such as: adoption of a financial statements, deciding on increasing and reducing the share capital, naming the managing director, deciding on a member’s request to leave the company, deciding on status changes, and similar.

The company’s managing director represents the company. Particularly, some of the actions for which the managing director is in charge are concluding agreements with third parties, concluding employment agreements with employees, negotiating with business associates for better conditions for the conclusion of an agreement, and similar. Also, with the managing director’s authorizations listed above, comes their responsibility for the company’s performance. Thus, the managing director is also the responsible person in the company.

15. Can I Be the Founder and Managing Director Simultaneously?

No obstacle stops you from being the company’s founder and managing director simultaneously. Moreover, this is common in practice.

Also, this alternative, as well as the alternative where the founder and managing director are different entities, both have their advantages and disadvantages.

16. If I am the Managing Director, Do I Also Have to Be Employed at the Company?

No, you don’t. The managing director at the company can be employed on the grounds of the employment agreement (when they are establishing an employment relationship) or based on agreements on rights and obligations of the managing director, so-called, management agreements (without establishing an employment relationship).

We have made a parallel between these two types of managing director engagements, and the tax aspect in our blog on Management Agreement.

17. Can I Be the Managing Director of Multiple Companies?

No obstacle stops you from doing so, except that our advice is to be careful when formulating the non-compete clause in your employment agreements and/or management agreements that you have signed.

18. Who is the Procurator?

The procurator is a type of representative to whom the company authorizes business power of attorney to conclude legal transactions and take legal actions in company’s name and on its behalf.

The procurator is registered and enrolled at the SBRA.

The Company Law prescribes the actions which the procurator cannot undertake without the company’s special authorization, such as, for example, they cannot conclude a loan agreement in company’s name and on its behalf.

19. Can I Establish a Company with a Virtual Seat in Serbia?

Yes, you can, and this is quite common, especially for providers of intellectual services, to whom work from home is common.

20. Do I Have to be Physically Present While Opening a Company in Serbia?

No, you don’t. We have explained the whole procedure of registering a company in Serbia remotely in our blog Is it possible to register a company in Serbia remotely?

21. Does my Company in Serbia Have to Use a Company Seal?

Companies in Serbia may, but don’t have to use a company seal.

The Company Law provided that a special regulation cannot provide for the obligation to use the company seal.

State authorities, organizations, courts, and other legal entities cannot complain if the company does not use a company seal when concluding legal business.

22. How to Obtain an Electronic Signature in Serbia?

An electronic signature that you can use before the SBRA has to be issued by one of the authorized certification bodies in the Republic of Serbia. In other words, SBRA does not accept an electronic signature that is not qualified.

Our short guide on using the electronic signature can help you decide on which electronic certificate is the best for you.

23. How Long Does It Take to Open a Company in Serbia?

The decision of the SBRA lasts from 3 to 5 business days.

So, from the moment of filing the registration request for opening a  company in Serbia, the company will be established from 3 to 5 business days.

On the other hand, how long the preparation of the registring the company would last, depends on occassions on every single case.

24. Do I Have to be Physically Present When Opening a Bank Account?

No, you don’t.

By enclosing the documents which the bank requires, when you authorize the attorney in Serbia by power of attorney, they will take actions on your behalf and your account, so you can open a bank account without coming to Serbia.

25. When Do I Need an Apostille on Documents?

Depending on what is your country of origin, in order for the documents from your country to be accepted for international use:

  • the document has to pass the procedure of the so-called full legalization or
  • you have to put an apostille on the document or
  • the apostille may not be required.

What obligation will exist for you depends on whether the state from which the document originates is a signatory to the Hague Convention on the abolition of the need to legalize foreign public documents.

On the following link, you can find the list of the countries that are signatories to this convention.

As for the third category, in cases when an apostille is not necessary for international use, Serbia has signed a bilateral agreement on the mutual release of legalization of public documents (by that, for certain agreements, only some categories of public documents are released from legalization).

Serbia has concluded a bilateral agreement on the mutual release of public document legalization with the following countries: Algeria, Austria, Belgium, Belarus, BiH, Bulgaria, Czech Republic, Slovakia, France, Greece, Croatia, Italy, Iraq, Cyprus, Hungary, North Macedonia, Poland, Romania, Russian Federation, Montenegro, Ukraine, and Slovenia.

26. Do I Have to Show My Identification Document (Passport)?

Yes, the copy of the of the company founder’s ID has to be enclosed when filing the documentation for company formation in Serbia.

Your passport number, as well as the country of issuance are publicly available on the SBRA after the company formation, which everyone can access.

27. Can I Do Business with the Free Zones in Serbia?

Yes, you can, since in Serbia, there are 15 free zones, where performing business activities with a certain preferential tax system is possible.

You can perform business activities at the Free Zones if you decide on opening a company in Serbia, but also without company formation in Serbia, through your company registered outside of Serbia.

The key advantage why Free Zones are more and more popular is because, under certain conditions, they exempt VAT on income made through business activity.

28. In What Way May I Use Tax Incentives for Companies in Serbia?

The numerous tax incentives that exist in Serbia for both entrepreneurs in certain industries and unrelated to the branch of the economy, make this issue increasingly popular, and Serbia an increasingly tempting destination to start a business.

In our blog, you can check which incentives are currently available, as well as double-check whether you are paying something you shouldn’t.

We would also like to add that there are specific tax benefits for returnees and foreigners, which we have analyzed in detail.

Also, the Republic of Serbia is offering tax incentives for startups that perform innovative activities.

29. Do I Have to Register as a VAT Taxpayer?

No, you don’t, if your total yearly turnover is not higher than 8,000,000 RSD.

If you are not a VAT taxpayer, you do not calculate VAT for the turnover of goods and services, so you don’t have the right to state VAT in invoices, you don’t have the right to deduction of the previous tax, nor are you obliged to keep records prescribed by the VAT Law.

However, when your revenue is lower than 8,000,000 RSD, you can choose to pay VAT.

So, when your revenue is lower than 8,000,000 RSD yearly, this is a possibility, not an obligation.

30. Can I Obtain a Temporary Residence in Serbia through Opening a Company in Serbia?

For temporary residence in Serbia, you can apply as a founder, company member, managing director, by establishing an employment relationship or without an employment relationship, and also as an entrepreneur.

Depending on what grounds you decide to apply for temporary residence in Serbia, the documentation which you will have to show at the Police Department, and later on, in case you have to obtain a work permit, to the National Employment Service, will depend as well.

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