In the world of innovations, innovative entities are not just participants but drivers and agents of change. Their readiness to respond quickly, grow, and continuously generate new ideas makes them key drivers of economic development, particularly in Serbia, where innovations are increasingly recognized as a driving force of competitiveness.
The Registry of subjects of the national innovation system (hereinafter referred to as “Register“), managed by the Innovation Fund (hereinafter referred to as “Fund”), is a vital database that allows you to gain visibility and present your innovative projects to a broader audience. As a central platform for monitoring and promoting innovation, the Register provides you with the opportunity to more easily exercise your right to tax incentives and increases your visibility among potential business angels and partners.
Various innovative entities can be registered in the Register, such as startups, spin-offs, spin-off research organizations, development and production centers, startup support organizations, and other innovation-related entities, like business angels. If you were previously registered in the Innovation Activities Register, you will have been or will be automatically included in the Registry of subjects in the national innovation system.
Below, we will explore the significance of registration for both newly established companies (startups) and established companies with a history of operations (spin-offs).
1. What Makes a Startup Eligible for Registration in the Register?
A startup is a specific type of innovative entity – a newly established company or entrepreneur whose mission is not only profit but also the creation of innovative products or services, and which has the potential for rapid and substantial growth. If you are still in the planning phase and preparing to enter the world of innovation by establishing your startup, it is essential that you carefully plan each step in advance, whereby professional legal assistance often proves to be a decisive factor in avoiding future obstacles and ensuring successful business operations.
The Rulebook on the Register of Entities of the National Innovation System (hereinafter referred to as: “Rulebook”) not only defines what constitutes a startup but also establishes clear rules – conditions for registration and removal from the Register, as well as the obligations startups must fulfill. These conditions ensure that only serious and innovative entities can benefit from the privileges and support that come with registration in the national system.
In order to qualify as a startup eligible for registration in the Register, a startup must meet several general criteria, including:
- it is not older than 10 years from the date of its incorporation at the time of applying for registration in the Register;
- it is registered as a company that was not established through a status change by means of a spin-off or merger, or it is registered as a sole entrepreneur, in accordance with the Companies Act;
- no bankruptcy or liquidation proceedings have been initiated against it.
In addition to the general conditions, which must be cumulatively fulfilled, the startup must alternatively meet one of the following conditions:
- that the research and development expenses accounted for at least 10% of its total expenses in the previous year, in relation to the year in which the application for registration was submitted, or, in the case of an applicant established in the year in which the application is submitted and having no financial history, in the period from its establishment until the submission of the application; or
- that the startup is the holder of intellectual property rights or other intellectual assets directly related to the innovative activity it performs; or
- that the Evaluation Committee, established by the Fund, has assessed and confirmed that the applicant is developing an innovative product/service and a scalable business model (a model that enables rapid growth of sales revenue).
2. Spin-off: The Perfect Option for Already Established Companies
A spin-off is a specific type of startup that arises as a product of an existing legal entity or company’s innovations. intending to develop and commercialize innovations. This is a way for existing companies to expand their business operations and efficiently utilize their existing resources for the development of new products, services, or technologies while simultaneously establishing a new company that will be fully focused on innovative activities.
Spin-offs play a crucial role in the innovative ecosystem as they allow large companies to experiment with new ideas and technologies without jeopardizing their core operations. Moreover, establishing a spin-off can be particularly attractive to investors, as the new business is based on already developed resources, expertise, and an existing business network of the founding company.
As is the case with startups, spin-offs must meet certain conditions to be registered in the Register. This includes general conditions, which primarily require that the company is duly registered and actively operating. Specifically, the general conditions include the following:
- the spin-off must be registered as a company whose founder is a company and/or a natural person; and
- it is not older than 10 years from the date of its incorporation at the time of submitting the application for registration in the Register; and
- no bankruptcy or liquidation proceedings have been initiated against it.
In addition to the general conditions, it is also required – as in the case of startups – to meet one of the previously mentioned alternatively set specific conditions.
Developing your own product, rather than relying on outsourcing, has a significant impact on the long-term success of a company, especially when it comes to clients who already have an existing business and are developing a new product alongside their core operations. In this context, establishing a startup or spin-off represents a strategic move that allows the company to focus on innovations without disrupting its existing operations.
Now that you are familiar with the basic terms and conditions required for registration, we move on to the key part of this article – why registration in the Register is important for your business.
Below, we present three main reasons why you should consider registering in the Register.
A. Tax incentives
By registering in the Register, you confirm that your company is engaged in innovative activities, thereby fulfilling the basic condition for exercising various tax incentives and other benefits prescribed by the applicable regulations for innovative entities.
For example, the Corporate Income Tax Law states that a company that is not a startup (i.e., the founding company, investor) may, in the case of investing in the equity capital of a startup or a company engaged in innovative activities, achieve a 30% reduction in its corporate income tax obligation based on the amount invested.
The fact that a startup is registered in the Register maintained by the Fund may serve as important evidence to the tax authorities when verifying the fulfillment of conditions for exercising the right to the prescribed tax incentives.
B. Benefits of the startup ecosystem
The Fund offers a variety of support opportunities designed to help make your business successful and competitive in the market.
Through various financial instruments, technical and advisory support, and numerous programs, the Fund provides access to the resources needed to implement your innovative projects. Whether you are an early-stage startup or a more developed company, the Fund can offer solutions that may meet your needs. Financial support may include grants, loans, or subsidies that help you overcome initial challenges and achieve your goals. The Fund delivers this support through its programs, such as Katapult, Smart Start, and many others.
C. Connecting with investors
Registration provides you with the opportunity to connect with potential investors and partners who can further support your growth, as business angels are also registered in the Register. This allows you to stand out to key market players by organizing various events and networks that help you establish connections with investors and business partners, thereby opening doors to new business partnerships and opportunities. Regardless of these methods of raising investments, we recommend that you additionally inform yourself about the various startup financing models and the basic steps in negotiating with investors. Such information may help you to better prepare for the next stages of the development of your startup.
The Fund regularly organizes annual investment conferences, where you have the opportunity to present your innovative projects to a wide circle of investors, potential partners, and the media. In this way, you increase the visibility of your company and more easily attract the attention and resources necessary for further development.
The fact that you are registered in the Register tells that you are working on your own innovative product, which is important for market success and reduces the need to explain to tax or other government authorities what exactly your innovative activity is since you have undergone a detailed review and examination process by the Fund during registration in the Register.
Register and secure a key step towards entering the world of innovation and business success. Seize your key to unlock new opportunities and become part of a community that is shaping the future. Take this opportunity to turn your ideas into success.
