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Temporary residence in Serbia by company formation in 2024

Marija Medić

Attorney at Law

01/04/2024

Whether it is due to the mild climate, delicious food, or the generosity of the local people, in recent years Serbia is continually becoming a more and more attractive location for many ambitious foreigners from all over the world who wish to establish or extend their business activities outside of their domestic countries. However, the everlasting question is whether any foreigner can settle and do business in Serbia.

Joke aside – it is evident that the growth of the IT industry, simplification of the procedures of company formation, and the number of tax benefits introduced in recent years have collectively resulted in the desire of a great number of foreigners to come and settle in Serbia.

A lot of world countries are, for some time now, recognized as attractive for foreigners when it comes to company formation. According to the Global Startup Ecosystem Index 2022 made by StartupBlink, the countries such as, for instance, USA, UK, Sweden, and Germany, found their place among the top 20 countries for founding a startup. As an emerging market for foreign experts looking for relocation for their new business ventures, Serbia settled at 52nd position, which is justified having in mind the growing numbers of foreigners who have settled here in a previous couple of years.

The one main “obstacle” on their way which needed to be resolved is conducting the necessary procedures to make their residence and work activities accordant to Serbian law. For those who did not yet manage to inform properly on this topic, this blog will provide a brief explanation of this process to clarify the steps towards living and working in Serbia.

 

Basic Guide to Unified Permit

To spend a certain (longer) time in Serbia, every foreigner must obtain a temporary residence permit in the procedure initiated by filing an adequate request. Such a request can be based on several legal grounds, and, among them, the one particularly interesting for any investment-oriented businessman is applying based on the company formation and/or employment in the Serbian entity.

Let’s make it clear at the beginning – the applicable law recognizes only the temporary residence permit based on employment, whereas there is no mention of company formation per se as a legal ground for requesting the temporary residence. Regardless, the status of the founder and/or shareholder in the Serbian company does represent the valid basis for applying for temporary residence here. How? We’ll explain in a short example:

If you come to Serbia to register your own company, i.e., as a founder, you can apply for a unified permit, which includes both the temporary residence and the work permit for foreigners..

If you come to Serbia to be engaged as a managing director in a domestic company, you will need to submitan application for a unified permit also– irrespective of the fact whether you conclude the employment agreement or agreement on the rights and obligations of the managing director (without employment).

 

Therefore, To Work Legally in Serbia as a Foreigner, You Will Need The Unified Permit!

In both cases, the application for the unified permit will be subject to similar, but not the same procedures and conditions. The foreigner’s name must appear in the Serbian Business Register’s Agency’s (hereinafter: the SBRA) database about the Serbian entity, proving that you conduct any type of work concerning that company (for example, as the founder, the managing director, the other representative, etc.). However, each of these possibilities may appear more convenient for you depending on the particular circumstances –to enable you to choose which one suits your needs better, we will explain both of these options below.

But, before we move on to the specificities, let’s remind ourselves of some basic information regarding company formation as a legal ground for obtaining a unified permit. After all, that is the first step in this process in each case.

 

Step One: Company Formation In Serbia

We have already written in detail about the process of company formation in Serbia, so we won’t stay on it for too long, but we anyhow suggest starting with a brief reminder.

First, you need a founding act including all the mandatory information stipulated by the law. This act can be drafted in the form of a decision (if you are the only founder) or an agreement (if you partnered with another shareholder).

The signature of the founder(s) on the founding act must be an electronic one. This means that it will be necessary for the founders to personally come to Serbia to take over their electronic certificate issued by the authorized organizations, which may be burdensome for foreigners who cannot come to Serbia much before the beginning of the procedure for obtaining a unified permit and the company formation itself. In such cases, it may be useful to authorize an attorney at law in Serbia to sign the founding act on behalf of the founder, in which case the founder does not even have to come personally to Serbia to register the company. Such authorization is provided by signing a Power of Attorney in the country where the founder is located, properly legalizing it, and translating the legalization to Serbian, after which such Power of Attorney can be used.

 

Attorneys at law are the only individuals that are authorized to convert the document into an electronic document for company formation. The Attorneys at law are having the role of certification of physical documentation with their electronic signature, whereas such documents are converted to electronic form. Different modalities and approaches to establishing a company online are possible, depending on the founder’s personal preferences and capabilities.

 

In both cases, once the founding act, along with the ancillary necessary documentation, is prepared, it can be submitted to the SBRA, together with the application. However, if you did not plan to come to Serbia any time soon, the ideal option for you is the online company formation.

 

Ok, the Company is Registered – What’s Next?

Several activities need to be undertaken once the procedure of company formation is completed:

  • opening of the bank accounts
  • depositing the company’s share capital
  • obtaining the electronic signature
  • registration of the ultimate beneficial owner(s) of the company

At the same time, what you can do is start collecting the documentation which must be filed to the authorities along with the application for the unified permit. For more details about the application and ancillary documentation – continue reading.

 

Introduction to the  Unified Permit Request

February 1, 2024, brought a very warmly welcomed innovation to the field of Serbian immigration law. Namely, the unified request for issuing a one permit that is both permit to live and work in Serbia was introduced. This huge innovation enabled each foreigner wishing to work and settle in Serbia to submit the request for both permits at the same time.

Before the unified request has been introduced, these were two separate procedures – according to the formerly applicable legislation, all foreigners were obliged to first obtain a Serbian temporary residence, and afterward, apply for a work permit. As a result, the entire procedure of settling in Serbia usually lasted significantly longer for all the foreigners, which did not contribute to the attractiveness of living and working in Serbia.

Now, two authorities involved in this procedure (the Ministry of Interior, on one side, and the National Bureau of Employment (hereinafter: the NBE), on the other side) mutually decide on the fulfillment of the conditions for both permits.

Even though the two procedures are unified, and at the end you receive only one permit – unified permit, the lists of the documentation that needs to be delivered to each of the two competent authorities are long. The type of work engagement you will seek can affect the list, as well.

For these reasons, this part of the process usually seems the most difficult, and the professional assistance of an immigration lawyer is almost always necessary, to help you understand and collect the needed documents.

 

Carrying On With Obtaining The Unified Permit

Once the documentation is prepared, there are a few following stages before the unified permit is obtained.

The unified request itself is submitted to the Ministry of Interior Affairs, through the electronic portal. The convenience for the foreigner is that their physical presence in Serbia is not necessary when submitting the application.

The NBE is responsible for deciding on granting approval regarding the employment related aspect of the request, so its task is to assess whether the conditions for the foreigner to start working in Serbia are met. After granting approval, the competent authority issues a unified permit to the foreigner, which means that the foreigner can officially and legally reside and work in Serbia.

 

Founder vs. Managing Director

Finally, let’s get back to differing the two scenarios:

1. in which you are a founder of a Serbian company;

2. where you are registered as a managing director of a company.

Let’s imagine we have two founders who have signed the founding act of a Serbian company named “The Firm” and that way became owners of 50% of the company each. Both Founder A (we will name him Mike) and Founder B, Anne, wish to stay in Serbia for a longer time and to apply for residency based on being shareholders of the Serbian entity. However, Mike wishes to be the Managing Director while Anne is not interested in being registered as Managing Director of The Firm. Furthermore, they decide to, besides Mike being one of the Managing Directors, additionally engage the services of Nicole, who will as well be registered as a Managing Director of The Firm. In this example, we can detect the differences between the legal ground and the type of engagement for each of the founders, as well as the one that the Managing Director will obtain.

 

It can be noticed that the fact that Mike is the founder and the Managing Director of his company at the same time makes no difference regarding the legal ground for her temporary residence or the type of work permit in Serbia.

The list of the documents which need to be submitted with the unified permit request differs depending on whether the foreigner applies for the permit based on employment or for self-employment.

Also, as it can be noted, one additional step is required in case of the Managing Director’s position – the Labor Market Test.

Labor Market Test is an examination conducted by the NBE to check whether there are unemployed Serbian citizens who might fill in any of the open work positions at domestic employers. The goal of this test is to ensure that domestic citizens have priority over the foreigners who are coming here to work – if there are available unemployed persons registered at the NBE’s record who fulfill the conditions for working on the particular (open) position, the NBE’s consent for a foreigners, who applied for the unified permit, for that particular position cannot be issued. Consequently, the permit cannot be obtained.

It’s also important to have in mind that the Managing Director does not have to be engaged in the company by the employment agreement (i.e., as an officially employed person), but can also be engaged through the Agreement on the rights and obligations of the Managing Director. Although from the labor law point of view, these two types of engagement have significant differences, when we look from the aspect of rights of foreigners, it is irrelevant which one of the two agreements is concluded with the Managing Director.

 

What Changes if I Register as an Entrepreneur?

Not much. The same procedure which applies to Anne, who did not establish employment in The Firm but has obtained the unified permit for self-employment, applies to the entrepreneurs, as well. Depending on your business goals and strategy, registering as an entrepreneur may be more or less convenient, and the simplicity of this procedure surely is its biggest advantage.

As it can be concluded from this brief guide, there is a way for a foreigner to establish a business presence in Serbia and at the same time change the environment by settling here. The key preconditions are good planning, organization, and being properly informed of the procedure itself. Hopefully, this brief guide answered some of the most frequent open questions regarding this topic and explained the necessity to take a first step towards a new life and business abroad.

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