In a few years Serbia became popular jurisdiction for foreign investors due to various benefits and generally positive investment environment.
Still, among individual entrepreneurs and also among small and middle size enterprises,
especially in case they have fully or partially operated in offshore jurisdictions it is noticeable that certain misconceptions related to Serbian jurisdiction still exist.

 

Such misconceptions do not, of course, mean that investors think of Serbia as an offshore jurisdictions: it relates to possibilities and obligations towards the state that are often neglected or misunderstood. In order to help our Clients and partners avoid mistakes, we will try to identify and explain most significant differences below.

 

 

***

 

Substance

 

Lately, even classical offshore jurisdictions started imposing substance rules to resident legal entities. In Serbia, in order to make sure your bank account is stable and in order to make sure you meet all legal requirements for obtainment of residency and work permits for company personnel, you need to have your company registered on a legitimate address and that the address/office is not a virtual one. Throughout bank account opening process bank will require information about the website of the company, personnel and other information regarding company address.

 

Substance rules are not exclusively related to requirements of banks and state authorities, but to AML/CFT procedures that can even be initiated and controlled by correspondent banks.

 

 

 

 

Accounting, financial and tax rates

 

Serbian companies are obliged to submit financial and tax reports to corporate registry and Tax Administration. Serbian financial reports are submitted in accordance with relevant international accounting rules.

 

Serbian personal tax rate is at 10 to 15% and corporate tax rate is at 15% as well. Serbian individuals and companies may be subject to capital gains tax, VAT and withholding tax (in case of payments to foreign legal entities). On the other side, Serbia offers tax incentives in various areas of business, with IT being the most beneficial.

 

 

 

 

Bank accounts: opening and executing transactions

 

Keeping in mind that the banks are, together with the central bank of Serbia, responsible for monitoring of transactions and cross-border payments, every transaction must be followed with adequate documentation, explaining legal and financial basis of the transaction and, in case goods are allowed, documentation related to subject goods that is being presented to the bank in the moment transaction takes place and even after the transaction is executed (for example, in case of advance payments for goods).

 

Payments to physical persons and payments received from physical persons are under special regime that regulates legal, administrative, financial and tax framework into which operations with physical persons must be put. One of the most common misconceptions about Serbian legal entities is that operations with physical persons are not subject to any special rules.

 

Another important difference is that Serbian companies cannot open accounts in foreign banks without permission given by central bank. Either way, this is a solvable matter.

 

 

 

 

Legal and transparency

 

Serbian legislation doesn’t recognize fiduciary services, I. e. nominees in ownership and management structure of the company are not recognized as such. Bearer shares are not allowed in Serbia (foreign companies with bearer shares are considered as high-risk structures in accordance with AML/CFT regulations).

 

In addition to that, it is mandatory that Serbian companies declare, within a semi-public, internal registry, their beneficial owners. Registered agents and secretaries do not exist as a legal category in Serbia. Serbian companies do not pay yearly renewal fee to the state.

 

Last but not the least: Serbian company can be registered in less than 3 working days which is on average faster if compared to company registration process in classical offshore jurisdictions.

 

In addition to its tourism and hospitality segment, Serbia offers new business opportunities that are certainly suitable for foreigners and their professional opportunities. When it comes to the IT sector in particular, we can definitely point it out as the most popular and highest-paying in our market, given the fact that developers are no longer people who just create interesting video games. 

 

 

Today, all types of businesses have a need for good IT professionals. It is the same in Serbia, which is why the salaries of programmers in Serbia are constantly growing.

 

 

Many foreigners, including our citizens, are rushing to open startup companies in this area, hoping for successful business results, which seem to always be achieved. Numerous tax incentives and exempts (Exemption from Income Tax and Contributions for Founders, Employing Newly-Hired Qualified Employees, etc.) have emerged in the Serbian business environment in the past couple of years, meaning that IT and tech companies are more inclined to develop their business in Serbia.

 

 

The thing that we would point out as an advantage of the IT industry in Serbia is the “emperor of digital nomadism” or the so-called possibility for foreigners to register with the Business Registers Agency as entrepreneurs with the full assistance of our association, on the basis of which they could apply for a residence permit. Thanks to the “remote work” in this industry, a foreigner is enabled to easily and efficiently move to Serbia and perform legally registered IT activities here.

 

 

The Statistical Office of the Republic of Serbia determined that the highest average salaries in Serbia during the previous year were paid to IT experts. According to the National Employment Service, highly educated IT profiles get jobs faster than others and have the best chances of getting a job.

 

 

The data on one of the most popular employment sites in Serbia show that the number of advertised jobs in the IT sector has increased six times in the last seven years. A total of one fifth of the ads published on the mentioned site are those in which IT experts are sought. On the other hand, the large increase in demand is not accompanied by a sufficient number of IT professionals. According to the estimates, our market is currently lacking at least 15,000 developers. When it comes to the situation in the IT market, the fact is that employers are more likely to look for developers than the developers are likely to apply for jobs.

 

 

According to the information above, we offer foreigners to move their laptops to Serbia in the simplest possible way, with our help, to settle comfortably in their digital hubs and perform their IT activities as registered entrepreneurs from the comfort of their home in order to apply for the residence permit later. 

 

 

Please contact us for more information:

Email: dd@welcometoserbia.org  Mob: +381646594849 (WhatsApp, Viber, Telegram)

CASE ANALYSIS

 

 

1. Client Information

 

 

• Previous to the imposed strict substance requirements by the latest OECD Guidelines, the Client operated through Hong Kong and Cypriot legal entities
• Shareholder of the Company contacted WTS via Jivo chat on the WTS website
• Company is registered in Serbia on the basis of PoA without shareholder’s presence
• Company is an LLC
• Shareholder of the company is Russian citizen 
• Director of the company is Ukrainian citizen 
• Registered activity of the company is non-specialized wholesale of goods (in Serbia only one activity is being registered, but it may conduct other activities as well) 

 

 

2. Legal Foundations

 

 

• The Company signed specialized and frame agreements with suppliers on the basis of which invoices are being issued to the Company 
• The Company signed specialized and frame agreements with Clients on the basis of which company issues invoices to its Clients 
• Director is the sole signatory 
• The Company signed rental and accounting agreements with our specialized companies (two mandatory expenses are prescribed by law) 
• The Company signed Family Office Services Agreement with WTS
• Director visited Serbia for one working day in order to obtain Electronic Signature Card needed for the submission of financial and tax statements and used that visit to personally submit personal documents to the bank, as a form of identification

 

 

3. Banking

 

 

• First account was opened in Western-European bank branch in Serbia in local currency, EUR, USD and RUB
• Reserve account was opened in Serbian bank in local currency and the second account is multi-currency account
• Director obtained e-banking devices through which the Director controls the accounts
• Company almost exclusively executed payments and received funds in EUR

 

 

4. Algorithm of Work

 

 

• The Company received funds from its Clients as advance payments
• The Company used funds to buy goods in accordance with the Client’s order
• The Company or the Supplier delivered the goods to the Client
• The Company occasionally payed for marketing and IT services to foreign Suppliers (in that sense, the Company is not subject to withholding tax)
• The Company’s website contains the list of brands and goods the Company is working with
• PoAs are certified in Serbia or in a foreign country by the Director and on this basis WTS provides a range of services from the Family Office package (on-the-ground banking support, personal presence, correspondence with the registry and Tax Administration etc.)

 

 

5. Accountancy

 

 

• The Company provided WTS’s accountancy company with agreements and invoices on monthly basis or quarterly
• The Company also provided WTS’s accountancy company with documentation and information on the transport and delivery of the goods
• WTS’s accountancy registered the Company for zero VAT declarations, given that the activity is not related to Serbia
• WTS’s accountancy prepared financial and tax declarations yearly

 

 

6. Taxation

 

 

• Tax base was formed based on the difference between the advance payments and the prices for the goods, minus the expenses for accountancy, rent, marketing and other on-demand services and Family Office services, so that only the profit is being taxed at 15% tax rate
• WTS’s accountancy helped the Company to optimize the tax base in accordance with local laws, bylaws and rulebooks

 

 

7. Further Steps

 

 

• Director of the Company started the process of obtaining Serbian residency
• The Company started searching for modest office space and one employee in order to finish the process of forming substance in Serbia, taking into account recommendations of the OECD and correspondent banks
• In the light of that, the Company signed frame agreement with one local supplier working with the same type of goods

 

 

Our team is primarily orientated towards banking solutions, as it consists of English, Russian, Spanish and Serbian speaking experienced bankers, lawyers and accountants, who have been successfully overcoming different business challenges of our Clients in Andorra, Switzerland, Russian Federation and Serbia for the last 30 years. 

 

 

For more information regarding banking in Serbia, please don’t hesitate to contact us.

email: dm@welcometoserbia.org; mob: +381 60 0622 940 (WhatsApp, Viber, Telegram)

www.welcometoserbia.org

Over the past year, we have encountered many blockages and impossibilities in the world of business and economics. That is why we have made an effort to enable our clients to start a company in Serbia (or a branch), always and with our assistance:

 

 

1) being physically present in our office;

2) remotely, from the comfort of their home, from the country they come from.

 

 

Life in Serbia currently offers many benefits: normal working hours of banks and state institutions, catering facilities, movement without any restrictions, affordable living costs as well as the offer of several different types of vaccines. Thanks to these, the Henley Passport Index, an organization that evaluates and analyses passports, has published an updated list of currently the most powerful passports in the world, i.e. data on whose citizens have the most benefits when traveling around the world. According to this list, Serbia’s passport is the 36th most valuable in the world, with the possibility of entering 135 countries without a visa.

 

There are three business activities that have flourished during the pandemic within our borders:

 

 

E-commerce: According to the Ministry of Trade, Tourism and Telecommunications, since April this year, the purchase of food over the Internet in Serbia has increased by 200 percent, clothing by 100 percent and technical devices and computer equipment by 50 percent.. As the director of a company told us, “we had so much work from week to week that I personally had to work in the field.”

 

 

IT industry: Developers, but also all other employees in the IT sector have officially felt the least consequences of the coronavirus pandemic, according to the combined data of our Chamber of Commerce. Serbia has a surplus of half a billion euros, which means that so much more has been exported than imported.

 

 

Home builders and builders state that people were in their houses a lot during the pandemic, so many decided to fix them. Also, the state of emergency introduced due to the coronavirus pandemic did not stop the realization of infrastructure projects in Serbia. According to the Ministry of Construction, Transport and Infrastructure, there were about 63,000 construction sites in Serbia in August 2020,  which is about 16,000 more than at the same time last year.

 

In order to alleviate the “crisis that no one has ever faced before”, the Government of Serbia has prepared a package of measures related to direct assistance to businessmen and employees.

 

 

Cash Grants

 

 

To offset initial capital investments and ease the start of business endeavours, the Government of Serbia offers financial support for Greenfield and Brownfield projects in the manufacturing sector and services, which may be subject to international trade.

 

 

Construction Land Transfer Subsidy

 

 

Government or a local municipality can sell construction land at a price which is lower than the market price in support of an investment project of national importance (if the land is owned by the government), or an investment project that promotes local economic development (if the land is owned by the local municipality.

 

 

Corporate Income Tax Relief

 

 

A 10-year Corporate Profit Tax Holiday is available for investors who hire more than 100 employees and invest more than 8.5 million euros (1 billion RSD). Tax holiday begins once the company starts making a profit. 

 

 

Payroll Tax Incentives

 

 

Employment of people who were registered with the National Employment Agency for more than 6 months entitles employers to a sizable relief of taxes paid on net salary from the moment of employment:

• 1-9 new jobs: 65% reduction 
• 10-99 new jobs: 70% reduction 
• 100+ new jobs: 75% reduction 

(payroll tax incentives can’t be combined with Financial Incentives)

 

 

Double Taxation Treaties

 

 

Serbia has 61 effective double taxation agreements in place that cover income, capital, and property. In addition to having double taxation agreements in place with most European countries, Serbia has double taxation treaties in place with many countries in Asia and Africa.

 

 

The registration of a company in our country, including the opening of bank accounts, is a very simple and fast procedure that can be completed in just one week, with the assistance of Welcome to Serbia´s office that is settled in the downtown area of our capital. That is why the number of freelancers, who want and have come to live in Serbia so far, who perform their registered activities from both their home and comfortable and well-equipped hubs in the very centre of Belgrade, has increased.

In any case, our company is available to assist all potential clients in the process of company formation and business development in Serbia.

 

Please contact us for more information:

Email: dd@welcometoserbia.org, Mob: +381646594849 (WhatsApp, Viber, Telegram)

Current 

 

The still modest rates of economic growth in the conditions of pronounced and stimulating macroeconomic and financial stability are the basic characteristics of the environment in which the banking sector of Serbia has operated in the last years. 

At the extraordinary meeting of the NBS Executive Boardin March 2020, when the Government of the Republic of Serbia also enacted the first measures against the situation in Europe and the world, a decision was made to cut all main interest rates of the NBS. The key policy rate was lowered to 1.75%, the deposit facility rate to 0.75% and the lending facility rate to 2.75%. This way, even before the state of emergency was declared, the NBS supported the domestic economy and, in that sense, all residents and non-residents operating in Serbia. 

 

No Sanctions

 

Given that the Republic of Serbia did not join sanctions against the Russian Federation and maintains the best strategic relations with the Russian Federation, the United States of America, EU and the People’s Republic of China, Serbian banks are open to work with the citizens of the Russian Federation and Belarus, as long as the Clients are providing the banks with invoices, agreements, specifications, customs declarations and other documents, supporting the particular transactions.

 

 

Key Benefits of Serbian Banking System Are as Follows:

 

• stable and cross-functional banking system with 29 banks divided in 7 groups (local, EU based, Russian, American, Turkish and one bank from UAE and China),
• accounts available in USD, EUR, CHF, TRY, RUB, GBP, CAD, DKK, JPY and SEK,
• premium services, like a letter of credit, bank Guarantee, nonstandard and MT-103 SWIFT payments with back-to-back (cash deposit) loans through Serbian legal entities are also available,

• basic and advanced e-banking services (support available in English) and mobile banking, 
• debit cards: DinaCard, MasterCard and Visa card available in all their variations,

• easy sale with Serbian banks e-commerce service, pay-by-link and similar services,

• state deposit insurance (EUR 50k guaranteed deposit per bank).

 

 

List of Bank Operations Successfully Conducted by Our Clients:

 

• cross-border commercial operations, such as incoming and outgoing transactions for services (IT, consulting, marketing, logistics, etc.) and reexported goods (food),
• international acquisitions and mergers,
• payrolls,
• transactions conducted on behalf of mother companies that do not have accounts at the moment of execution (may not be treated as income or expenses of the branches in Serbia),
• giving or receiving loans to and from non-residents,
• work with brokerage companies, etc.

 

Association “Welcome to Serbia” with its banking and finance experts, in-house lawyers, associated attorneys-at-law and accountants,  Clients on a daily basis in order to harmonize their work with the regulations, especially with the Guidelines for Implementing the Decision on Terms and Conditions of Performing Foreign Payment Transactions issued by the National Bank of Serbia. Our experts are making sure the Clients can execute their business plans swiftly without additional formal and other requirements from the banks and state authorities.

 

Our team is primarily orientated towards banking solutions, as it consists of English, Russian, Spanish and Serbian–speaking experienced bankers, lawyers and accountants, who have been successfully overcoming different business challenges of our Clients in Andorra, Switzerland, the Russian Federation and Serbia for the last 30 years. 

 

For more information regarding banking in Serbia, please do not hesitate to contact us 

Email: dm@welcometoserbia.org; mob: +381 60 0622 940 (WhatsApp, Viber, Telegram)

www.welcometoserbia.org

The main goal of every company is to maximize profit and its main challenge is to minimize expenses.

 

 

As operating expenses often significantly vary across regions, countries, even areas within a country, they can easily create competitive advantage in the market.

 

Carefully pre-planned low costs have always yielded good results, which brings us to the main question – where should you set your business and how should you use this price diversity across the globe wisely.

 

By all the parameters of business conveniences, Serbia takes place at the top of the list. Apart from being at the crossroad between East and West, and its good political relations with both Europe and all Asian countries, Serbia can be proud of its well-developed free trade zones.

 

There are 15 free trade zones currently active in the territory of Serbia and the import of goods from these zones increases year over year.

 

Within these zones, all kinds of business and industrial activities, including production, storing, packing, trading, banking and insurance, can be conducted.

 

A great advantage of the free zones in the territory of Serbia is that, apart from domestic ones, foreign companies can do business in these zones as well, while the earnings and income earned within a zone can be transferred to any country without previous approval and collection of taxes, customs and duties.

 

 

Doing business in these zones brings many benefits and significantly reduces expenses.

 

 

The main benefit is the facilitated taxation regime that includes exemption from VAT and customs for the import of raw and other materials, machinery, equipment and construction material intended for the production of export goods, while the import and export of the goods in a zone is unlimited. These VAT facilities also refer to the turnover of goods and services within one zone and between two free zones in Serbia, which additionally reduces expenses.

 

Furthermore, favourable conditions are also provided for the lease of all kinds of business facilities.

 

 

Apart from the benefits offered by doing business in free trade zones, there is a variety of benefits that Serbia itself offers:

 

 

• Free trade agreements enabling duty-free export to the markets of CEFTA, EFTA, Russia, the Eurasian Union and Turkey
• Preferential conditions for trading with EU, USA, Japan and Australia
• 15% company income tax
• 20% VAT
• 10% individual income tax
• Other low business expenses
• Developed road, river and airline transport networks
• Highly qualified workforce
• Double Taxation Agreement signed with 61 countries
• Tax relives for the creation of new jobs

 

For more information please contact us.

Email: dilic@welcometoserbia.org; Mob: +381600622947 (WhatsApp, Viber, Telegram)

 

www.welcometoserbia.org

Serbia started regulating crypto industry as the country’s Law on Digital Assets went into effect.

 

 

In parallel with the adoption of the Law on Digital Assets, the Serbian parliament amended a series of tax laws, specifically the Personal Income Tax Act, Corporate Income Tax Act, and the VAT Act.

 

 

The most important amendments relate to the following:

 

 

• Value Added Tax Law – Transfer or conversion of cryptocurrency to cash will be VAT exempt without the right to deduct input VAT.

 

• Corporate Income Tax Law – Sale or other transfer against consideration of digital assets by legal companies will be subject to capital gains tax at the rate of 15%.  If a taxpayer invests the funds generated by the sale of digital assets in the share capital of a resident company in Serbia within 90 days of the sale, 50% of the capital gains tax will be exempt. A refund of 50% of paid capital gains tax will be made within 12 months from the date of sale of the digital assets. 

 

 

Non-resident entities will be subject to a 20% tax on capital gains realized from the sale of digital assets unless there is an applicable double taxation treaty that exempts such gains from taxation in Serbia. 

 

 

• Personal Income Tax Law – Similar to the CIT Law, sale or other transfer against consideration of digital assets by individual taxpayers will be subject to capital gains tax at the rate of 15% on the positive difference between a contracted price, i.e. market value and acquisition value of the digital asset. Generally, acquisition value is documented as the price actually paid. In the case of digital assets acquired through ‘mining’ or from the employer through a share plan, acquisition value would be determined under specific rules. PIT Law prescribes a tax exemption for 50% of realized capital gains if the gain is invested into the share capital of a Serbian legal entity or investment fund.

 

• Law on Property Taxes – Digital assets will be subject to inheritance and gift tax at the rate of 2.5%, whereby the tax base is the market value of digital assets at the moment they are inherited/gifted. Property tax and property transfer tax do not apply to digital assets.

 

 

These amendments will be applicable from 1 July 2021 when the Law on Digital Assets will start to apply.

 

 

For more information regarding the Law on Digital Assets and starting a crypto business in Serbia, please contact us.

Email: sm@welcometoserbia.org; Mob: +381 60 1849 443 (WhatsApp, Viber, Telegram)

 

www.welcometoserbia.org

Many (and perhaps the majority) of those who come from Russia to Serbia are thinking about starting their own business here. Serbia is an attractive destination. Business is always a risk, and a business started in a foreign land is a double or triple risk.

So, why start a business in Serbia?

 

Increasingly, Serbia is of interest to Russians and residents of CIS from the point of view of business. This is not surprising. 

Today many companies from Europe, Asia and the USA are present in Serbia. And they feel quite comfortable in this market. Quite a lot of foreigners invest their money in Serbia as an investment-attractive country with clear legislation and adequate rules. 

 

The country’s economy is developing, and this is, as you know, the best condition for developing your own business, so it is quite possible to start your own business in Serbia.

The geographical position and close ties with both Russia and Europe guarantee further economic development.

 

Free Trade Agreement signed between Serbia and the Russian Federation has strengthened mutually beneficial trade ties. At the moment, perhaps, every Russian has met with Serbian goods, in particular with food, and was able to appreciate their quality. The prospects for increasing the import of Serbian goods to Russia are really great, since almost every producer in Serbia is ready to increase production and improve quality in order to get to the Russian market.

Serbia provides business conditions suitable for both local and foreign entrepreneurs interested in expanding or developing their operations in a safe and appreciated environment. 

 

Great infrastructure, appreciated economic indicators, appealing tax structure, and support provided by the authorities in matters of business incentives make Serbia not only an attractive business destination but also a long-term partner for countries like Russia and many others.

 

When people say „Serbia“, the first thing that comes to mind is an affordable lifestyle, excellent food, and the city that never sleeps – Belgrade.

 

Over the years, Serbia, a country located at the crossroads between East and West, has conquered the hearts of many visitors with its natural beauty and ethnic cuisine. Apart from enticing financial advantages, Serbia also offers a wide array of new laws, which can serve to facilitate personal and professional development for foreigners.

 

 

What does the term „Resident of Serbia“ imply?

 

 

• It refers to a person living in the Republic of Serbia
• And who, in addition, has a personal or professional interest in the country

 

 

The right to reside in Serbia can be realized in several ways:

 

• by starting a company or opening a branch of a company
• through the purchase of real estate in Serbia
• by investing in existing firms

 

 

 

 

What incentives are there for obtaining residency in Serbia? Apart from all the aforementioned benefits, Serbia allows you to live a freer life in light of less restrictive Covid-19 measures, including more freedom of movement and relatively unrestricted access to bars and restaurants. Despite the current situation in the world, our country allows its citizens to live a relatively normal life, with the same high standard of hospitality as always. However, we will endeavour to make your stay even more enjoyable by helping you obtain a residence permit or passport – if applicable.

 

 

In the year before the pandemic, around 11 thousand foreigners settled in our country. In light of the circumstances, these numbers have increased significantly through 2020. According to the United Nations Development Programme, Belgrade was ranked seventh city in Europe for digital nomads by the Nomad List website. The BBC has found that many Westerners claimed to have made the decision to move to Serbia’s capital almost overnight, but that the results were much better than expected – with a relaxed atmosphere and very affordable lifestyle. Here, you will find the ideal grounds for an IT start-up, as well for any freelance career, as confirmed by the testimonials of the many foreigners who have spent some time in Belgrade.

 

 

 

 

Yet another advantage of living and working in Serbia is the presence of a plethora of international banks, such as: Western Europe (Banca Intesa, Unicredit, Erste, Raiffeisen bank, Societe Generale), Russia (Sberbank, VTB, Expobank), Turkey (Halkbank), UAE (Mirabank), China (Bank of China).

 

 

What is particularly attractive is that Serbia does not have CRS reporting, meaning that this is one of the few places where privacy still exists. In addition, other benefits include a personal tax of only 15%, political neutrality (considering that Serbia is one of the few countries that has not imposed sanctions on Russia), and a number of reputable universities which have close collaboration with other international faculties.

 

 

Information first – decisions later.

 

 

If you do not hold Serbian nationality, but would like to live in Serbia, the above tips can serve as a good preliminary base to consider the possibility of moving to Serbia. However, you must keep in mind that the issue is more complex than it may seem at first and that there are parameters that vary on a case-by-case basis. The above-mentioned should therefore not be treated as legal advice.

In any case, our company is available to assist all potential clients in the process of applying for a residency permit in Serbia.

Please contact us for more information:

Email: dd@welcometoserbia.org, Mob: +381646594849 (WhatsApp, Viber)

 

 

 

The Serbian Parliament adopted the new Law on Digital Assets (Law), which came into force on 29 December 2020. In order to leave enough time for digital property service providers to harmonize their business and general acts with the provisions of the Law, the Law is envisaged to apply after 6 months from the date of entry into force.

 

By adopting the law on digital assets, Serbia will belong to the small group of the most innovative countries in the world that have recognized the synergy of new technologies with the financial services sector, and decided to support and improve such singing through the legislative framework, while ensuring effective investor protection, financial market integrity and financial stability of the country, Minister of Finance pointed out. 

 

What are Digital Assets?

 

Digital Assets are defined as a digital record of value that can be digitally bought, sold, exchanged, or transferred and which can be used as a means of exchange or for investment purposes.

 

There are two types of digital assets under the Law: virtual currencies and digital tokens.

 

Virtual currency is defined as a type of digital asset that is not issued and whose value is not guaranteed by the Central bank or other public authority, which is not necessarily tied to a legal tender, has no legal status of money or currency, but is accepted by individuals or legal entities and it can be bought, sold, exchanged, transmitted and stored electronically.
Digital Assets (Crypto-assets) are inextricably linked to blockchains, as they are the blocks that make up the chains themselves. Crypto-assets come in many forms and with varying rights and functions. A crypto-asset can serve as an access key to a service (often referred to as “utility tokens”), can be designed to facilitate payments (often referred to as “payments tokens”) but can also be designed as financial instruments, such as transferable securities.

 

What are the key elements of these proposals?

 

Digital Assets service providers (and notably trading platforms, exchanges, and custodial wallet providers) will be required to have a physical presence in Serbia and they will be subject to prior authorization from a national competent authority (National Bank of Serbia) before starting their activities. They will be subject to capital requirements, governance standards and an obligation to segregate their clients’ assets from their own assets. These crypto-asset service providers will also be subject to IT requirements to avoid the risks of cyber thefts and hacks.

 

As regards issuers of Digital Assets, the proposal requires the publication of a white paper including all relevant information on the specific crypto-asset. Such information would include a detailed description of the issuer, the project, and planned use of funds, conditions, rights, obligations and risks. Members of the issuers’ management body will have to meet probity standards, and misleading market communications by crypto-asset issuers are prohibited. Compliance with all these requirements will be supervised by national competent authorities.

 

For issuers of asset-referenced tokens, the main requirements include the obligation to be authorized, governance requirements, rules on conflict of interests, disclosure of stabilizations mechanism, investment rules, and additional white paper requirements. For example, the obligation to disclose information on any potential claim, and minimum rights on such a claim.

 

Issuers of e-money tokens will be subject to the regulatory requirements of the Electronic Money Directive and the rules set out in the Regulation on Markets in Crypto-Assets.

 

Digital Assets service providers will be subject to prudential requirements, organizational requirements, rules on safekeeping of clients’ funds, and rules on mandatory complaint handling procedures and conflicts of interest. Besides, there specific requirements are depending on the type of crypto-asset service provider.

 

Law on Digital Assets wants to help banks embrace cryptocurrency. More regulatory guidance will help traditional banks warm up to cryptocurrency. The proposals are trying to counter the perception held by some traditional banks that transactions involving cryptocurrencies present heightened risks that require lengthy and expensive due-diligence checks.

 

 

Who can provide digital asset services and what are those services?

 

Only a company registered in the Republic of Serbia can be a Provider of services related to digital assets.

Registered Providers may perform some or all of the following:

 

• receiving, transferring and executing orders relating to the purchase and sale of digital assets on behalf of third parties; (capital requirement 20.000 euro)
• services for the purchase and sale of digital assets for cash and/or funds in the account and/or electronic money; (capital requirement 20.000 euro)
• digital asset exchange services for other digital assets;(capital requirement 20.000 euro)
• storage and administration of digital assets for the account of users of digital assets and related services;(capital requirement 20.000 euro)
• services related to the issuance, offer and sale of digital property, with the obligation to purchase it, or without that obligation:(capital requirement 20.000 euro)
• keeping a register of pledges on the digital property;(capital requirement 20.000 euro)
• digital asset acceptance/transfer services; (capital requirement 50.000 euro)
• digital asset portfolio management ((capital requirement 50.000 euro)
• organizing a platform for trading digital assets (capital requirement 125.000 euro)

 

The entity applying for the relevant license must have a minimum registered capital of EUR 20,000 to EUR 125,000, depending on the type of service it will be providing.

 

Serbia is now home to many successful fintech start-ups and many other businesses are overhauling their models, often in cooperation with Fintech companies.

 

Technology companies, both large and small, are increasingly diversifying into financial services. Furthermore, digital finance has helped citizens and businesses tackle the unprecedented situation created by the coronavirus pandemic.

 

Welcome to Serbia team can provide you with the practical know-how to start your Serbian Cryptocurrency business or exchange. We are doing it now in compliance with current laws and we have more than 10 clients who already have their own Cryptocurrency business in Serbia. We’ll help you build a successful Cryptocurrency business, please contact us immediately.

 

Please contact us for more information.
Email: sm@welcometoserbia.org, Mob: +381 60 1849 443 (WhatsApp, Viber, Telegram)