Can a Foreigner Open a Business in Serbia? Answers to 5 Questions You Always Wanted to Ask!
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“Can foreigners establish companies in the Republic of Serbia, and are there any restrictions compared to domestic citizens?”
Foreign individuals, as well as foreign legal entities, can be founders of any form of a company in the Republic of Serbia. Also, a foreign natural person can register as an entrepreneur in our country.
There are no restrictions compared to domestic citizens – there are no additional requirements imposed on foreign founders for the registration of the establishment in the Serbian Business Registers Agency (SBRA). They will enjoy the same position, rights and obligations as domestic founders.
“Why the Republic of Serbia?”
In addition to the relatively simple and quick procedure for establishing a company in the Republic of Serbia, there are many other benefits.
First, the tax regime in the Republic of Serbia is very suitable for business activities. For example, corporate income tax is among the lowest in Europe and is paid at a flat rate of 15%. In addition, the laws prescribe many tax benefits and exemptions, especially in innovative activities and the IT sector, which makes the Republic of Serbia a favorable market for investment.
Also, today there are 15 free zones operating in the Republic of Serbia, which offers investors the opportunity to do business without paying customs and other import duties for goods intended for activities in the free zone, without paying VAT on the sale of goods and services in the free zone, etc.
“What is the first step towards establishing a company in the Republic of Serbia?”
Regardless of whether you are a domestic citizen or a foreigner, the first step towards the establishment of a company is always choosing the legal form of the company. The legal forms of a business company in the Republic of Serbia are:
- Limited liability company;
- Joint stock company;
- General partnership; and
- Limited partnership.
Choosing the legal form of a company is the most important business decision that must be made when establishing a company. The legal form you choose will significantly affect the results of your business, and it can also affect your personal life.
A limited liability company (“LLC”) is the most common legal form of business companies because it is the most suitable form for most different business activities. Therefore, in the rest of the text, we will focus on the establishment of this legal form.
“What does the procedure for establishing an LLC look like?”
After you have decided that the legal form of the company you are establishing will be LLC, the establishment process itself takes place through 8 key steps.
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Selection of the predominant business activity code
The predominant activity you should choose is the one from which you will have the most income. All activity codes are listed in the Regulation on Business Activity Classification and are classified by sectors, areas, branches and groups.
Choosing a predominant activity will not limit you in terms of performing other business activities. However, this decision is not without significance. First, it should be kept in mind that for some business activity codes it is necessary to obtain a special license or permit before registration.
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Choosing a business name
When choosing a business name, it is very important to follow certain rules. A business name that does not meet the prescribed requirements is often the reason for rejecting an application for LLC registration.
The most important rule is that the business name must not be identical to the business name of another company, nor such as to cause confusion about its identity.
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Choosing a business address
Choosing a business address includes choosing a company’s seat address, a mailing address (if different from the company’s seat address) and an email receiving address.
A special benefit for foreign founders is the possibility of registering a virtual seat. Basically, this type of seat provides all the benefits of a standard seat (address, phone number, administrative services, etc.), but without the need for physical space.
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Preparation of the Memorandum of Association
The Memorandum of Association is the constitutive act of the LLC. It can be established by one natural or legal person, in which case the founding act takes the form of a decision, or by several natural or legal persons, in which case the founding act takes the form of an agreement.
When drafting the Memorandum of Association, it is important that it contains all the mandatory elements in accordance with the Companies Act[1].
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Notarial certification of the Memorandum of Association
After it is drawn up, the Memorandum of Association must be notarized. The certification can be done at the public notary’s office.
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Submission of documentation to the Serbian Business Registers Agency
The procedure for registering the establishment of an LLC is carried out at the Serbian Business Registers Agency (“SBRA”) by submitting a registration application for the establishment with accompanying documentation.
After receiving the LLC Registration Decision, it is necessary to fulfill some additional requirements in order to be able to operate smoothly – to obtain an electronic signature, register the beneficial owners and open an LLC bank account.
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Obtaining an electronic signature and registering beneficial owners
An electronic signature is your signature – in electronic form. The director of each LLC must have an electronic signature because only they can sign the balance sheet and register the beneficial owners (which must be done within 15 days from the day of company registration).
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Opening an LLC bank account
The last step in establishing an LLC is opening an LLC bank account. The procedure and documentation will depend on the chosen bank. In principle, the procedure can be quite simple if a foreigner is present when opening a bank account.
“Is it necessary for a foreigner to be present in the Republic of Serbia when establishing an LLC?”
It is not necessary. The entire process of establishing a company can be completed by a person you authorize by issuing an appropriate power of attorney.
However, keep in mind that certain stages after the establishment of the LLC will require your presence. Namely, the director of the LLC will have to be present during the registration of the beneficial owners because, as mentioned, it is done exclusively using the director’s electronic signature.
On the other hand, although it is possible to submit a request for opening a bank account through a power of attorney, the probability that your request will be rejected will be reduced to a minimum if you are present when submitting it.
[1] (“Off. Herald of RS”, Nos. 36/2011, 99/2011, 83/2014 – other law, 5/2015, 44/2018, 95/2018, 91/2019 and 109/2021)
P.S. In order to avoid any possible mistake in the procedure for establishing a company in a country of which you are not a citizen, consider hiring an expert who will complete this procedure quickly and successfully for you.