Serbian Citizenship Through Investment - A New Option on the Horizon?

The Law on Citizenship does not expressly provide for acquiring citizenship on the basis of investment, but the Serbian authorities are considering introducing such legislation. Currently, the only path is the naturalization of a foreigner whose admission is deemed to be in the interest of the Republic of Serbia, a decision made by the Government of the Republic of Serbia on a case-by-case basis, without precise criteria.

Legal Basis for Acquiring Citizenship Through Investment

According to recently published news, the authorities are considering enacting a law that would allow Serbian citizenship through investment, meaning that foreign nationals investing in the economy of the Republic of Serbia could acquire Serbian citizenship. The Law on Citizenship currently does not expressly provide for this route to naturalization for foreign nationals, since, under the Law, a Serbian passport can currently only be obtained on the basis of:

• Origin
• Birth on the territory of the Republic of Serbia
• Admission to citizenship of the Republic of Serbia
• International treaties.

Although the Law does not expressly provide for acquiring citizenship on the basis of investment, an application for Serbian citizenship can nonetheless be approved for a foreign national whose naturalization is in the interest of the Republic of Serbia. The decision as to what constitutes the interest of the Republic of Serbia lies with the Government of the Republic of Serbia. The state could therefore conclude that certain foreign investments are of particular importance to national interests, and on that basis be willing to grant an application for Serbian citizenship. However, there are no precise criteria defining what is in the interest of the Republic of Serbia; the matter is decided on a case-by-case basis. The interests of the Republic of Serbia in naturalizing a foreigner may be economic, scientific, cultural, or sporting in nature. Foreign investors therefore face uncertainty as to whether their application for citizenship will be approved. If the aforementioned new legislation is adopted, precise criteria could be established, which would improve the position of investors.

In short: The Law on Citizenship does not expressly provide for an investment route, but naturalization is possible on the basis of the “interest of the Republic of Serbia” – without clear criteria and by an individual decision of the Government.

The possibility of acquiring citizenship through investment in host countries is widespread around the world, given that this type of program has been implemented in 22 countries.

Advantages, Alternatives, and Open Questions

Based on the experience of existing programs that offer immigration rights or citizenship in exchange for investment, the reasons that lead investors to acquire foreign citizenship include gaining broader access to visa-free travel, as well as establishing residence in countries with a favorable tax climate. In addition, investors seek foreign citizenship as a form of personal insurance in case of future political or economic change in their home country. On the other hand, this leads to the creation of new jobs in the host country, or host countries may have other financial interests. Additional possible benefits for host countries include an inflow of new knowledge and technology.

Serbia can offer foreign investors a favorable tax environment as well as visa-free travel, given that the tax rate on capital income is 15%, and that Serbia maintains visa-free travel arrangements with a large number of countries. Among these travel arrangements, those between Serbia and the EU Schengen states, China, and Russia are especially worth noting.

In addition to citizenship, immigration programs aimed at foreign investors may also offer the option of obtaining a permanent residence permit instead of citizenship. Currently, the Serbian Law on Foreigners allows a foreign national to obtain a permanent residence permit without completing the otherwise required period of residence in Serbia, if this is in the interest of the Republic of Serbia. The same basis therefore applies to both citizenship and permanent residence permits. However, the competent Serbian authorities currently interpret both laws rather narrowly.

Until a law is adopted that would allow foreign nationals to acquire Serbian citizenship on the basis of investment, a certain transitional period could be established through a more flexible and consistent interpretation of the Law on Foreigners for certain types of investment, whereby certain investors would be granted a permanent residence permit under favorable conditions.

Immigration programs aimed at foreign investors can be divided into two groups:

• Private-sector investment (the goal is to create new jobs by encouraging foreign investment)
• Investment between the investor and the state (the goal is to increase state revenue).

Based on this division, it is likely that, if adopted, the new legislation would provide for acquiring a Serbian passport under one of these two models.

Finally, in order to preserve the integrity of the program and reduce the risk of abuse, host countries carry out background checks to establish whether an investor’s funds come from legitimate sources, as well as whether the investor has a criminal record. Before an investor’s application is approved, these checks would most likely be carried out by the Serbian Ministry of Internal Affairs together with the Ministry of Foreign Affairs.

However, before such legislation is adopted, answers will need to be found to many open questions:

• How much money or other financial assets will foreign nationals need to invest in Serbia to qualify for the program?
• Over what length of time?
• Will they need to spend a certain period of time in Serbia before applying for citizenship?
• How many work positions will their investments need to create?

Until that happens, foreign investors will either have to follow the traditional routes or will have to demonstrate that approving their application for admission to Serbian citizenship is in the interest of the Republic of Serbia, without knowing the precise criteria that define this ground.

In short: The alternative to citizenship remains permanent residence based on the interest of the state; the key practical questions – the amount of the investment, the time frame, residence requirements, and job creation – have no official answer yet.

Frequently Asked Questions About Serbian Citizenship Through Investment

Does Serbia have an official citizenship by investment program?

No. The Law on Citizenship currently does not expressly provide for this option. The only existing route is the naturalization of a foreign national whose admission to citizenship would be in the interest of the Republic of Serbia, a category that could in practice also cover significant investments, although precise criteria for this do not exist.

Who decides whether the naturalization of a foreigner is in the interest of the Republic of Serbia?

The decision is made by the Government of the Republic of Serbia, on a case-by-case basis, without predefined precise criteria. The interests taken into account may be economic, scientific, cultural, or sporting in nature.

In how many countries around the world is there a citizenship by investment program?

According to the data cited in this article, such a program had, at the time of writing, been implemented in 22 countries around the world.

What is the tax rate on capital income in Serbia?

The tax rate on capital income in Serbia is 15%, which, together with visa-free travel, is one of the factors that make Serbia an attractive destination for foreign investors.

What is the alternative to citizenship for foreign investors putting significant funds into Serbia?

Instead of citizenship, immigration programs aimed at foreign investors can offer the option of obtaining a permanent residence permit. The Law on Foreigners provides that a foreign national may obtain a permanent residence permit without completing the otherwise required period of residence in Serbia, if this is in the interest of the Republic of Serbia.