Stefan P, Author at Welcome to Serbia

Which banks operate in Serbia – consolidation of the market

In 2000, 47 banks were operating in Serbia, but their number has been continuously decreasing until today and fell by more than 50%. The reason for the decrease in the number of banks is their merger in the process of consolidating the banking market. That is why the banks like: Metals banka, Credy banka, Continental banka, Niška banka, Panonska banka, Ju banka, Alfa banka, Marfin banka no longer exist and seem to be completely forgotten.

 

 

Whether they changed their name or ownership structure, the merger of banks in Serbia is not an isolated case and came as a consequence of the global processes of consolidation in the banking market. The ongoing process raises a number of questions about the reasons, risks and conditions for prospective and existing clients. However, fewer banks does not mean weaker competition and worse business conditions.

 

 

 

 

Why are banks merging?

 

A large number of banks, especially smaller and specialized ones, are being merged into larger financial groups. There are various reasons why banks decide to take this step, the most common being a higher credit potential. One of the key advantages of large banking groups is their ability to invest in new channels. Small banks are not in a position to afford such solutions, which is why the entire banking sector could develop more slowly, compared to some other countries.

The National Bank of Serbia has repeatedly stated that changes in the ownership structure in banks were mostly initiated by the parent banks. This is not surprising considering that we currently have 20 banks, but that four or five financial institutions hold about 90 percent of the market, while the rest cover a negligible part. Through merger, they can optimize their operations, increase their market shares, and offer their customers a better and more diverse offer.

Also, larger banks have the capacity to finance large development projects. They possess an enviable level of financial knowledge for structuring more complex financial solutions for business users, which is a key prerequisite for faster economic growth.

Diversification of the ownership structure increases the resistance of the banking sector to potential shocks and strengthens the stability of the banking system as a whole. However, the question is what these changes actually mean for customers.

 

 

 

 

 

What does a smaller number of banks mean for customers?

 

A smaller number of banks also means less competition, so it could be assumed that the level of quality of services for customers will decrease because of this. Actually, the truth is quite the opposite. The changes that are taking place are evaluated as positive because they strengthen the resilience and flexibility of the system, making the Serbian market similar to mature banking markets.

 

A smaller number of banks does not automatically mean weaker competition, because large financial groups remain on the market, and they have the strength and capacity to compete with each other. They strive to provide extremely competitive conditions, supported by quality products and services.

 

What is most important for customers is that the conditions under which they use banking services remain the same, regardless of the merger of their current bank with another bank. With larger banks, customers receive better service, that is, the range of products offered to customers is expanded and they will receive a more positive user experience. Thus, the standard offer of services such as bank accounts, cards and loans are expanded to include services such as leasing, insurance, fund management and the like.

A good example is the merger of AIK banka and Eurobank Direktna banka, where private and business users received a higher quality of service and new products that they did not have until then. Also, a large bank can reduce certain costs and offer more favourable financial services.

 

However, the biggest advantage of consolidation is the withdrawal of foreign capital in favour of regional capital and the strengthening of the presence of banks originating from the region and playing a systemic role in it.

 

 

 

 

 

 

How many banks operate in Serbia and where do they come from?

 

There are currently 20 banks operating in Serbia, and among them there are regional banks that have an interest in operating and investing efficiently there. Such banks come from Germany, Italy, Austria, Hungary, and Slovenia. Among the banks from the European continent, the following stand out: NLB Komercijalna banka (Slovenia), Banca Intesa (Italy), Unicredit (Italy), Erste (Austria), Raiffeisen bank (Austria), OTP (Hungary), Mobi banka (Czech Republic).

 

Expobank, which is majority-owned by a Russian citizen, also operates in Serbia, as well as Turkish Halkbank, then Mirabank, owned by the United Arab Emirates, and the Chinese Bank of China. AIK and Alta are owned by Serbian citizens, while Banka Poštanska štedionica (Postal Savings Bank) and Srpska banka are owned by the Republic of Serbia.

 

Banka Intesa, OTP Banka, Unicredit banka, NLB Komercijalna banka and Raiffeisen banka stand out according to their size. In 2022, the most profitable bank was AIK banka, which is largely a consequence of the consolidation of Naša AIK banka. In May this year, Raiffeisen banka Beograd announced that the merger of RBA banka (former Credit Agricole Srbija) was successfully completed. NLB Komercijalna banka is also a good example of a successful merger.

 

Experts estimate that the optimal number of banks for the Serbian market is 10-15, so it is expected that the process of bank mergers will continue in the coming period, but with less intensity.

 

From past experiences, it can be concluded that large regional groups will continue to be significant actors of consolidation. It will probably expand strongly, and not only in its core banking business, and will bring the best regional solutions to the local market, as well as competitive business conditions.

 

How to set up electronic money and payment institutions in Serbia

HOW TO SET UP ELECTRONIC MONEY AND PAYMENT INSTITUTIONS IN SERBIA

 

Electronic Money Institutions (EMIs) and Payment Institutions (PI) are instrumental in making e-commerce and electronic payment possible across SWIFT messaging networks. The electronic payments market is growing at a rapid pace with businesses and consumers relying increasingly on electronic payments.

 

 

 

PAYMENT INSTITUTIONS

The services offered by Payment Institutions can vary from the provision of payment infrastructures to customers (e.g., for services industries) to services enabling payments between individuals, money remittance services,  issuing and/or acquiring of payment instruments. It also includes the facilitation of secure credit and debit card transactions, both nationally and internationally.

 

 

 

ELECTRONIC MONEY INSTITUTIONS

Electronic Money Institutions are institutions issuing electronic money, or “e-money”, which is a monetary value representing a claim against an issuer, which is:

 

  • stored in electronic format, (including on magnetic media),
  • issued against the remittance of funds with the goal of making payments, and
  • accepted by an individual or organization other than the issuer of the e-money.

 

In addition to issuing electronic money, EMIs are also permitted to supply all services of Payment Institutions, to grant loans (under certain conditions) linked to payment services, to supply operational services, and other services closely linked to the issuing of electronic money  the supply of payment services.

 

 

 

LEGAL FRAMEWORK

On December 18th, 2014, the National Assembly of the Republic of Serbia adopted the Law on Payment Services which entered into force on December 26th, 2014. Implementation of the Law is scheduled for October 1st, 2015, except for provisions for which the Law provides shall become applicable after the accession of the Republic of Serbia to the European Union.

 

The Law introduces significant improvements to the existing system, modernizing and aligning it with the directives of the European Union (Directive 2007/64/EC on payment services in the internal market, Directive 98/26/EC on settlement finality in payment and securities settlement systems, and Directive 2009/110/EC on the taking up, pursuit, and prudential supervision of the business of electronic money institutions), creating a harmonized, modern, and comprehensive set of rules for the provision of payment services at the EU level. A set of provisions in the Law will apply once the Republic of Serbia becomes a member of the EU.

 

The regulator follows the requirements of European standards and regulations, therefore e-money emitters and payment service operators must meet the requirements of PCI DSS. The use of cryptography in the data exchange, control of information and payments security, transparent control of access to information, and so on are among them. If EU residents use the services, the work is carried out in one of the European Union languages, you need to protect personal data according to GDPR regulation- with a written register, special technical means PO, and privacy policy.

 

 

 

AUTHORISATION PROCEDURE

 

The National Bank of Serbia is responsible for the issuance of licenses to payment institutions, as well as for the approval of a particular institution for the issuance of electronic money.

 

When applying for a license, an EMI will face regulatory due diligence.

 

An EMI must demonstrate that it has high-quality software and strong technology infrastructure. They must establish internal controls, safety measures and a plan to manage operational risks to ensure payment security and prevent fraud. The EMI must also have several pieces of information when applying for a license. This information includes:

 

  • a business plan and financial projections,
  • a description of the EMI’s organizational structure,
  • procedures for monitoring, handling, and following up on security breaches and customer complaints and
  • internal protocols for combating money laundering and terrorist financing

These are just some of the requirements the EMI must meet to obtain a license. Every EMI has unique challenges in obtaining the license.

 

The National Bank of Serbia must decide on an application for a license to issue electronic money no later than three months following the day of receipt of a duly completed application. The register of PI and EMI is maintained by the National Bank of Serbia.

 

 

 

 

LEGAL FORM

Authorization may only be granted to a legal person incorporated under Serbian law, which must be established in the form of a limited liability company  (DOO) or joint-stock company (AD).

 

 

 

MINIMUM CAPITAL

The LPS Law requires a minimum capital of at least:

  • EUR 20,000 – 125,000 for a Payment Institution, depending on the type of payment services.,
  • EUR 350,000 for an Electronic Money Institution.

 

The Company must at all times respect its funds as set out by the Law.

 

 

 

SUMMARY OF AUTHORISATION PROCEDURE

 

  • Incorporation of a Company
  • Filing of the application file, with a filing fee of EUR 2,000
  • The regulator examines the application file and may come back for more information and clarification
  • In general, successful applications for PI and EMI licenses take between 6 – 12 months, depending on the complexity of the business and the quality of the application file.

How to set up IT business in Serbia

How to set up IT business in Serbia – case study analysis

 

 

  1. Client information

 

  • The client is a computer programming company based in Dubai (UAE). As the client had legal and banking restrictions in his business in the UAE, he decided to move his business and employees to Serbia.
  • A shareholder of the Company contacted WTS based on the recommendation of our satisfied client who is of the same nationality as the shareholder of the company in Serbia.
  • The company is registered in Serbia based on PoA without the shareholder’s presence
  • The company is an LLC
  • Shareholder of the company is a Chinese citizen
  • Directors of the company are shareholders of the company and a Serbian citizen
  • The registered activity of the company is computer programming (in Serbia only one activity is being Registered and they can conduct other activities as well)

 

 

 

 

  1. Legal foundations

 

  • The company signed Master Services Agreement for IT Services with Clients based on which invoices are being issued to the company. The company has contracted and issued invoices for services related to the video game industry.
  • Two directors act independently in the business without restrictions.
  • The company signed accounting agreements with our specialized company (mandatory expenses following laws)
  • The company signed a family office agreement with WTS
  • The shareholder and Director, who is of Chinese nationality, were not visiting Serbia.

 

 

 

 

  1. Banking

 

  • The account is opened with a Western-European bank branch (Raifaissen Bank) in Serbia in local currency and the second account is a multi-currency account
  • Serbian Director obtained e-banking devices through which the Directors controls the accounts. The Serbian Director, after obtaining the consent of the other director and the founder, executes payments from the bank account for transactions in Serbia and abroad.
  • The company exclusively executes payments and receives funds in EUR

 

 

 

 

  1. Employees of the company

 

  • The company employs IT and marketing specialists with Chinese citizenship. The number of employees with Chinese citizenship was ten at one point.
  • WTS carried out the complete procedure for obtaining Visa D, Temporary residence, and work permit in Serbia for company employees. The time frame for completing this procedure is 60-90 days, with a note that after obtaining Visa D (30-40 days), the employee could work legitimately in Serbia. WTS provided the necessary visas and permits for all employees who applied to work in Serbia, without a single rejection by the police authorities.
  • One year after obtaining and renewing temporary residence in Serbia, the employees successfully applied for and received visas for travel to the EU and the USA.
  • WTS provided services to find apartments for employees.

 

 

 

 

  1. Accountancy

 

  • The company provides WTS’s accountancy company with agreements and invoices every month.
  • The company also provides WTS’s accountancy company with the required documentation.
  • WTS’s accountancy registers the Company for VAT declarations.
  • WTS’s accountancy prepares financial and tax declarations yearly

 

 

 

 

  1. Taxation

 

  • WTS’s accountancy helps the Company to optimize the tax base following local laws, bylaws, and rulebooks
  • The company proposed WTS as a way of doing business that would ensure that it does not pay VAT for services it would perform abroad electronically.

 

 

WTS team is primarily orientated towards business and 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 business and banking solutions in Serbia, please please don’t hesitate to contact us.

 

 

email: bs@welcometoserbia.org; mob: +381600622941 (WhatsApp, Viber, Telegram)

 

www.welcometoserbia.org

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Buying real estate in Serbia remotely | Case Study 

This is a case study about one of the most challenging client cases we had in recent years.

 

A married couple from China got in touch with our company in December 2021 with a request to assist them in obtaining a temporary residence permit in Serbia. After analyzing the client’s case and presenting them with several solutions, we agreed that the best option for them is buying Real estate as they intend to move to Serbia to live.

 

 

 

Visa-free entry

 

Here is why this case was so complicated:

 

 

Chinese passport holders have a 30 day visa free stay in Serbia, after which, they have to apply and obtain a visa for longer stay or so called visa D. The application for visa D must be done outside of Serbia in a Serbian consulate, and only after obtaining this visa can one apply for temporary residence.

 

At the time, the global pandemic was still very much in force, and China especially had restrictions regarding exiting and entering the country and our clients explained to us that if they leave China to visit Serbia and pick out a real estate and start the process, it would be almost impossible for them to return afterwards and apply for visa D to finish the rest of their relocation.

 

 

 

 

 

 

Remote real estate purchase

 

They asked us if it was possible to start the process remotely so that everything would be finished  before they arrive to Serbia and apply for temporary residence.

 

We offered the following solution – clients gave us the Power of Attorney to buy the real estate in Serbia on their behalf. An additional complication was that they had to give 2 separate PoAs to 2 different members of our team, and we could draft the PoAs only after the real estate has been chosen by the clients, as the PoA must contain all the relevant data. The PoA than had to be signed, notarized and apostilled by the clients in their home country  which can be a very long and complicated process.

 

However, we decided to start the process remotely and help our clients with choosing the right real estate for them to spend the rest of their lives in although they have never been to Serbia before. This was not an easy task and we’ve spent more than 6 months coordinating with clients, contacting real estate agents and direct sellers, scheduling visits etc.

 

 

 

The main problems we faced were:

 

1) The sellers were not prepared to wait and save the real estate until the moment we receive the original Power of Attorney

2) The sellers did not trust the remote process and foreign clients

3) The real estate our clients chosen weren’t registered at the competent cadastre

 

Finally in August 2022 we found the right apartment in a small town in Central Serbia. We did due diligence, saw the apartment and finalized the conditions. The sellers understood the situation and were ready to cooperate, so we drafted the PoAs and in October 2022 we signed the purchase-sale contract on behalf of our clients. Our clients became owners of their dream home in Serbia before visiting it!

 

 

 

 

Visa D application

 

The next step in the process was preparation for the visa D application where we faced a new problem:

 

Serbian consulate in Beijing was hard to cooperate with and the whole procedure of visa D application was looking to last much longer than expected and our clients were eager to come as soon as possible.

 

So we found an alternative solution and suggested our clients to come to Serbia and then leave for Banja Luka, a city located in Bosnia, where the closest Serbian consulate is located at and apply for visa D there.

 

 

 

Finally, at the end of February 2023 we welcomed our wonderful clients at our office, gave them the keys to their new home and organized their trip to Banja Luka.

 

We submitted the documents for visa D online and they scheduled a meeting for our clients at the beginning of April.

 

After they get visa D our clients can finally move into their new home and start their life in Serbia while we prepare everything for them to obtain a residence permit through buying real estate in Serbia.

 

 

Everything is possible when you believe and when you have trustworthy professionals supporting you.

 

Nina Barudzija

Client Advisor

nb@welcometoserbia.org

Recognition of an education document

RECOGNITION OF  A FOREIGN SECONDARY  AND  HIGHER

EDUCATION DOCUMENT  FOR THE PURPOSE OF  EMPLOYMENT IN THE  REPUBLIC OF SERBIA

 

 

The recognition of a foreign school document is the procedure whereby a qualification acquired abroad is equated to the corresponding, relevant public document of the  Republic of Serbia.

The Government of the Republic of Serbia founded the Qualifications Agency, in accordance with the Law on the National  Qualifications Framework of the Republic of Serbia (Law on NQFS).

The key role of the Agency entails the provision of expert support in the process of developing and modernizing qualifications and ensuring comparability and recognisability of national qualifications in the European context, recognizing foreign qualifications, improving non-formal education, quality assurance of qualifications acquired formally and informally, and the procedure of recognition of previous learning.

 

 

 

 

RECOGNITION OF  A FOREIGN

SECONDARY  SCHOOL  DOCUMENT FOR THE PURPOSE OF  EMPLOYMENT IN THE  REPUBLIC OF SERBIA

 

Together with the Request for the recognition of a foreign  secondary school document, it is necessary to submit the  following documents:

 

  1. Original certificate (or certified copy) of the final completed secondary school grade, and/or certificate/diploma of the completed secondary school (or a certified copy);
  2. Translation of the certificate of the final completed grade with an authorized court interpreter in the Republic of Serbia (two copies) for:

2.1  gymnasiums of certain profiles – certificate of the last completed grade or the final grade and the graduation diploma;

2.2   for three-year and four-year secondary vocational schools of certain education profiles, for employment, the certificate shall be translated for each grade individually, as well as the certificate of the completed graduation or final exam at the end of a cycle of a certain education level. In case recognition is sought for the continuation of education at a higher education institution, only  the certificate of the final completed grade shall be translated together with the certificate/diploma on the completed graduation or final exam;

  1. Evidence on all previously completed grades in the Republic of Serbia or abroad (original or certified copy)
  2. Evidence of paid fee.

 

 

 

 

RECOGNITION OF  A FOREIGN HIGHER

EDUCATION DOCUMENT  FOR THE PURPOSE OF  EMPLOYMENT IN THE  REPUBLIC OF SERBIA

 

 

By recognizing the foreign higher education document, through the procedure of professional recognition, a person obtains the right to employment in the Republic of Serbia.

 

The expected deadline for the service of recognition of a foreign higher education document for employment (professional recognition service) is 60 days from the day the duly written request was received.n exceptional cases, if a higher education document was obtained at one of the top 500 universities ratified in one of the latest international university ranking lists, such as the Shanghai Ranking Consultancy, US News and World Report Ranking, or The Times Higher Education World University Rankings, the decision on professional recognition is made without conducting the procedure of evaluation of the foreign study program within 8 days from the date the due request was received.

 

 

 

E-PROFESSIONAL  RECOGNITION OF FOREIGN  HIGHER EDUCATION  DOCUMENTS

 

Together with the completed e-Request, the following documents shall also be attached (scanned as PDF):

 

  1. Original diploma;
  2. Original diploma supplement or academic transcript;
  3. Translation of documents (under items 1 and 2) to the Serbian Language with an authorized court interpreter in the Republic of Serbia;
  4. Previously obtained higher education documents (diplomas);
  5. Copy of identity card or passport;
  6. Decision of the competent authority or a copy of the wedding certificate (if the applicant changed their name and/ or surname);
  7. Short biography in Serbian and/or English that shows the course of education;
  8. For the recognition of doctoral studies, it is necessary to attach:

the doctoral dissertation in the electronic format in the original language. The doctoral dissertation may be submitted by providing the link to its destination or by its attachment in electronic format. The extended abstract of the dissertation (in Serbian or English) shall also be submitted electronically. In the recognition of doctoral studies, it is necessary to provide a list of published scientific papers and state where they were published;

  1. Providing evidence on the payment of the procedure costs.

 

 

 

 

 

 

 

 

Simplified procedure for admission to Serbian citizenship

Simplified procedure for admission to Serbian citizenship

 

Last year’s announcements of the liberalization of the citizenship regime of the Republic of Serbia have aroused great interest. Although this possibility was announced by the highest instances, our team of experts responded to a large number of inquiries from Clients and Partners, stressing the need for these initiatives to be legally formalized. Accordingly, we are pleased to inform you that the first draft of the Law on Amendments to the Law on Citizenship of the Republic of Serbia has been published.

 

One of the key motives for changing the legal solutions is to attract and retain highly skilled foreign nationals with certain skills and knowledge that could be considered as key for the development of the local economy. This initiative comes after the launch of the procedure for changing legal solutions, which will combine the processes of obtaining residence and work permit in a single procedure in which foreign nationals will be able to obtain temporary residence and work permit in Serbia at the same time.

 

 

 

Among those interested in obtaining Serbian citizenship, draft Art. 14 and Art. 15 attract the most attention.

Draft of Art. 14 introduces the possibility to apply for citizenship for foreigners with permanent residence permit in Serbia, eliminating a key condition from the current version of the Law, according to which the same right was intended for foreigners who had maintained their permanent residence permit in Serbia for at least three years before applying for citizenship.

Draft Article 15 introduces a completely new possibility – the right to apply for citizenship for foreigners who have been residing in Serbia on the basis of a temporary residence permit for a period of at least 1 year before the application and who are employed on the territory of Serbia.

 

 

Regardless of the possibility of the above-mentioned regulatory changes and in accordance with the commitments that Serbia undertakes in the process of harmonizing legislation and procedures with the EU, it is reasonable to expect that the procedures for obtaining residence permit and permanent residence permit will become more and more complicated, given that these two categories of legalization of foreigners represent the entry door for admission to citizenship. Our extensive practice in the field of immigration services also confirms the thesis that state authorities will use all legal and discretionary mechanisms to filter applicants according to state interests in a broader sense already at the first stage, i.e. when applying for temporary residence permit.

Thus, control over the legality of the application, the documentation submitted, the concentration of life and business interests as well as the overall legitimacy of the application will be raised to a much higher level with the zero tolerance for violation the conditions of visa-free regime (so-called visa-run). In this regard, the refusal to grant a residence permit will close the door to any possibility of legalization of foreign nationals and will be grounds for deportation.

 

 

 

The Association “Welcome to Serbia” has the necessary expertise, considerable experience – gained through the engagement of founders and members in this field and in other European jurisdictions – and adequate personnel – through active cooperation with attorneys-at-law specializing in work with the Department for Foreigners of the Ministry of Interior.

We will be pleased to assist you not only in implementing, but also in properly articulating your interests on the territory of Serbia, which will help you in coordinating with the competent governmental authorities in all aspects of your presence. Our team of experts is ready to provide the basis for your long and peaceful stay in our country and the first step in this regard is obtaining your temporary residence permit.

 

 

 

Bogić Sekulović

Legal Expert

Association “Welcome to Serbia”

 

 

    If you are interested in obtaining Serbian citizenship subscribe to our newsletter so we can inform you about the latest changes and news on this subject.


    Banking difficulties for non-residents | Serbia

    Banking difficulties for non-residents

     

    In recent time, non-residents have reported increasing difficulties when working with banks in Serbia. This has been particularly problematic for individuals who need to transfer funds to accounts abroad, or who rely on e-banking to conduct financial transactions. Some of the challenges that non-residents face when working with banks in Serbia include the need for a “fresh” white card from the Ministry of Internal Affairs, restrictions on using e-banking to initiate transactions, and the need for confirmation from tax authorities when transferring funds abroad.

     

     

     

     

    „Fresh“ white card

     

    One of the most significant challenges facing non-residents in Serbia is the need for a “fresh” white card from the Ministry of Internal Affairs. This card is essentially a document that verifies a person’s identity and residency status in Serbia. Non-residents who wish to conduct any tipe of transaction with banks in Serbia must have a valid white card, and the card must be “fresh” (i.e., issued within the last month).

     

    This can be a cumbersome process for non-residents who do not live in Serbia full-time, as it requires them to rent an apartment every time they visi Serbia and get a „white card“ from the Ministry of Internal Affairs in person, as a tourist „white card“ is not valid for the banks.

     

     

     

     

    E-banking restrictions

     

    Another challenge facing non-residents in Serbia is the restriction on using e-banking to initiate transactions. Most of the banks in Serbia do not allow non-residents to use e-banking to initiate transactions. This can be particularly problematic for individuals who need to transfer funds quickly and efficiently, as it often means that they must visit a bank branch in person to initiate the transaction. This can be a time-consuming process, particularly for non-residents who do not live in Serbia full-time or have a residence permit.

     

     

     

     

    Transferring funds abroad

     

    Finally, non-residents in Serbia may also face challenges when transferring funds abroad. In many cases, banks in Serbia require confirmation from tax authorities before allowing a non-resident to transfer funds to an account abroad. This can be a significant problem for non-residents, as it requires them to navigate complex tax regulations and may result in delays or additional costs.

     

    In summary, working with banks in Serbia can be challenging for non-residents, particularly when it comes to transferring funds abroad or using e-banking to initiate transactions, that is why it is highly recommended to obtain a residence permit in one of several ways, most popular being company formation and real estate investment, and get full access to Serbian flexible banking system.

     

     

    Welcome to Serbia can offer full legal and administrative support in the process of obtaining temporary residence in Serbia, as well as professional advice and solutions to all bank-related matters in Serbia.

     

     

     

    Contact us for more information at nb@welcomtoserbia.org or +381 60 1849443 (Whatsapp, Viber, Telegram).

     

    Nina Barudžija

     

    Client Advisor

     

    Branch of a foreign company in Serbia

    Operating in another country through a local branch reflect and helps the reputation of your business. Branch is a widely recognized legal form stipulated in different legal systems and simply existing in the consciousness of individuals and business entities in a broader sense – as a displaced unit of a company capable of conducting commercial activity.

     

    Above mentioned legal form is often confused with similar but different legal form, a representative office of a foreign company. Of course, both branch and representative office can be formed by a foreign company (although both local and foreign companies can have a branch in Serbia, while only a foreign company can have a representative office in Serbia);
    both of them are not treated as legal person (which means that, in legal terms, legal identity of both legal forms is provided by the mother company as the only legal person in the structure) but, on the other side, both are, in terms of reporting, taxation (almost all tax obligations) and other fiscal-related manner, treated as Serbian residents, due to the fact that both are registered with business registry with Serbian address, which results in assignation of tax identification number in both cases.

     

     

     

    In accordance with Serbian Law on Companies branch of a foreign company is a separate organizational unit of a company through which the company performs activity in accordance with the law. Branch acts on behalf of the mother company.

     

     

    This means that a representative office is an organizational unit equipped with commercial identity unlike the representative office. Branch can conduct commercial activity both on request and in accordance with instructions of the mother company but it can also generate its own income and eventually profit by executing commercial transactions.

     

     

     

    Branch of a foreign company can have (employed) director and personnel in Serbia. Serbian branch of a foreign company can also have all types of bank accounts opened in local bank. In addition to that, branch has its own premises, registration number, tax identification number and other components that are similar even to the local legal person (LLC).

     


    7 main advantages of a Serbian branch


     

    In practice, branch of a foreign company is being utilized for commercial operations related to the place or region where the branch is positioned with all supporting operations just like in the case of companies. Usually the director of branch of a foreign company is being stationed in Serbia. In terms of financial and tax regulations branch operations need to be treated with expertise and experience given that a branch can conduct operations on behalf of mother company and cooperate with the mother company through internal banking and financial transactions, which is very specific.

     

     

    Association “Welcome to Serbia” is well-experienced in terms of registration and maintenance of branches of foreign companies, including but not limited to administrative, legal and accounting areas and we are looking forward to collaborating with foreign companies interested in such form of business presence in Serbia.

    Starting a business in Serbia – Why you shouldn‘t rely on one expert

    Starting a business in Serbia can be a complex process, involving legal and regulatory requirements that can be challenging to navigate without expert guidance.

     

    Hiring a lawyer to help with this process is a common solution, but relying solely on an individual expert can be risky, as they may not provide all the necessary information to their clients. In this blog post, we will explore a case study that illustrates the importance of having full support from all aspects when setting up a business in Serbia.

     

     

    Case Study – Why you shouldn‘t rely on one expert when starting a business in Serbia?

     

     

    In this case, a client wanted to set up a small business in Serbia, related to selling jewelry as a retail business. The client hired a lawyer to help with the registration process and assumed that everything would be taken care of once the business was registered. The lawyer successfully registered the business and provided the client with all the necessary documentation.

     

    However, the lawyer failed to inform the client about all the other legal and regulatory obligations that come with setting up a business in Serbia, most important of all – his tax obligations, mainly the deadline to submit the initial tax report within 15 days from the company registration. As well as the obligation of having a licensed accountant for the purpose of submitting regular financial and tax statements.

     

     

    A few months after registering the business, the client received a letter from the Tax administration informing him that he had failed to comply with certain regulations and was facing penalties. Confused and frustrated, the client reached out to his lawyer for guidance. However, the lawyer was unable to help him, as they did not have expertise in the specific area.

    Our client then realized that he had made a mistake by relying solely on one lawyer for his business setup. He started doing research on his own and found out that there were several other legal and regulatory requirements that he had to comply with, such as tax and accounting obligations, data protection regulations, and labor laws.

     

     

    He turned to our company and found that we provide full legal, administrative, and accounting support of business, being specialized in working with foreign clients, and having a team of more than 15 experts, including lawyers specialized in different fields, licensed accountants, tax experts, financial advisors among others.

     

     

     

    This case study illustrates the importance of not relying solely on one expert when setting up a business in Serbia.  It’s crucial to work with lawyers and other experts who have expertise in the specific areas of law related to the business and who can provide comprehensive guidance throughout the entire process.

    It’s also essential to do your own research and stay informed about all the legal and regulatory obligations that come with starting a business in Serbia.
    By doing so, you can avoid potential legal issues and ensure that your business is set up for success.

     

    If you plan to start a business in Serbia and do it properly contact Welcome to Serbia at office@welcometoserbia.org or +381 60 1849 443.

     

    Representative office in Serbia

    Having a representative office in another country reflects and helps the reputation of your business. Representative office is a widely recognized legal form that existed throughout 20th century even in different political and economic systems. Lately representative office became interesting not only for state-owned foreign companies, but to foreign investors in Serbia generally.

     

     

    Above mentioned legal form is often confused with similar but different legal form, a branch of a foreign company. Of course, both representative office and branch can be formed by a foreign company (although only a foreign company can have a representative office in Serbia); both of them are not treated as legal person (which means that, in legal terms, legal identity of both legal forms is provided by the mother company as the only legal person in the structure) but, on the other side, both are, in terms of reporting, taxation (almost all tax obligations) and other fiscal-related manner, treated as Serbian residents, due to the fact that both are registered with business registry with Serbian address, which results in assignation of tax identification number in both cases.

     

     

    In accordance with Serbian Law on Companies, the representative office of a foreign company is allowed to execute preliminary and preparatory actions related to the activity of the mother company and its performance in legal transactions. Also, a representative office can only conclude legal transactions in connection with its current business.

     

    This means that a representative office is not an organizational unit equipped with commercial identity like the branch. Preliminary and preparatory actions are being done on request and in accordance with instructions of the mother company, so the work is being delivered to the mother company.

     

    This doesn’t mean that a representative office cannot have (employed) director and personnel in Serbia. Serbian representative office of a foreign company can also have all types of bank accounts opened in local bank. In addition to that, representative office has its own premises, registration number, tax identification number and other components that are similar to the branch of a foreign company and in some elements even to the local legal person (LLC).

     

    In practice, representative office is being utilized for market research, search for partners, participation in seminars, various negotiations on ground, seeking and agreeing provision of services and, in case of need, acquisition of goods, both by contacting clients, suppliers and business partners. Usually the director of representative office is being stationed in Serbia.

     

     

    Association “Welcome to Serbia” is well-experienced in terms of registration and maintenance of representative office, including but not limited to administrative, legal and accounting areas and we are looking forward to collaborating with foreign companies interested in such form of business presence in Serbia