The current inflation growth has intensified the efforts to maintain profitability and this is why many companies opt for the relocation to cheaper countries. For several years now, Serbia has been at the top of the list of countries that investors from all parts of the globe choose when making the decision on relocation. If you are still thinking about where to relocate your business, below you can find specific reasons to choose Serbia.
Why Is Serbia the New Business Destination and Why Should You Opt for Business Relocation to Serbia?
- As a result of the unique geographical position and well-developed infrastructure, Serbia is a perfect place for the companies that want to provide services to their clients in the European Union, Southeastern Europe and Middle East in the most efficient way.
- Free Trade Agreements concluded with a great number of countries enable duty-free export.
- Well-developed and stable banking system, with its affordable fees and simple procedures, enables money transfers to all world currencies.
- Low operating costs such as salaries, rental fees, electricity and gas bills create a strong background for gaining competitive advantage. This is one of the key factors affecting the process of making the decision on business relocation to Serbia.
- Favorable tax system, including low rates, free economic zones and agreements on the avoidance of double taxation.
As a result of all the listed benefits, thousands of foreign companies are already successfully operating in Serbia, including Bosch, Michelin, Siemens, Leoni, NCR, Panasonic, Continental, Syngenta, Microsoft, Swarovski, Schneider Electric, Toyo Tires…
Extremely Favorable Geographical Position
The largest part of Serbia is located on the Balkan Peninsula, while the northern part of the territory is located on the territory of the Central Europe. Since it is positioned between the East and West, Serbia is an integral crossroad with a branched road and railway network. Serbia connects the West and Central Europe to Mediterranean and Southwest Asia, and the “Corridor X”, which passes through Serbia and connects all countries all the way from Austria to Greece, is of special importance.
The Danube Corridor or “Corridor VII” is the most profitable transport corridor and it connects 10 European countries. A 3,500km long water route has been established along the Danube River and the Rhine-Main-Danube Canal. This has connected the northern and western parts of Europe, which are well developed in terms of economy, to the Black Sea, which abounds natural resources (oil, gas, ores, minerals).
The Slovenian Port of Koper, Croatian Port of Rijeka and Romanian Port of Constanta at the Black Sea are the most strategically important ports for Serbia. The port of Rijeka is important for container transport because importers use it to transport goods from China. The Port of Constanta is both sea and river port, and its connections to the Serbian Port of Novi Sad offer a more efficient and faster route that is more competitive in terms of prices. Thanks to water transportation from the Port of Novi Sad, through Constanta and Jebel Ali in Dubai, companies in Serbia can market their products across the globe.
Free Trade Agreements
Thanks to free trade agreements, the export of goods from Serbia to the markets of Southeast Europe (CEFTA), EFTA, Eurasian Union (Russia, Belarus, Kazakhstan, Armenia, Kyrgyzstan) and Turkey has been ensured. If you add preferential terms of trade with the EU and the U.S. to it, the total Serbian export potential exceeds a billion consumers. With several exceptions and annual quotas, the duty-free regime covers most key industrial products.
By concluding the announced free trade agreement with China, Serbia will become the third European country, besides Iceland and Switzerland, to offer domestic products to Chinese consumers with no limitations. That way, the products made in Serbia will be given the opportunity to be in one of the largest markets at the moment.
Well-Developed and Stable Banking System
A large number of banks offering a variety of high-quality banking services to both natural and legal persons successfully operate in Serbia. Apart from domestic banks, the West European banks are the most numerous, followed by the banks from the United States of America, China, Russia, Turkey and the United Arab Emirates.
Serbia is a part of the international payment system and you can make a payment or receive a payment from abroad in the currencies such as euro, dollar, Turkish lira, Russian ruble, Chinese yuan, etc. quite easily.
A More Favorable Taxation System
Serbian Government offers different incentives and bonuses to foreign investors, as well as 65–75% tax and contributions return to open new vacancies. A special incentive is the 15% corporate income tax rate, which is by far the most favorable in comparison to the majority of EU countries. For comparison, in 2021, the average corporate income tax rate in the EU countries was 20.71%, while the same rate reached 25% in Austria, 26.50% in France, 30% in Germany, 24% in Greece, 24% in Italy, 16% in Romania, 18% in Croatia, 19% in Poland, 19% in Slovenia.
Apart from this, there are 15 free zones in Serbia where service and production activities can be performed in the preferential tax regime. The benefits include exemption from VAT and the duty on import of raw materials and materials intended for the production of goods to be exported. Wages and income gained within a free zone can be transferred to any country, including Serbia, fee, duty or tax-free.
Another big advantage of doing business in Serbia is more than 65 contracts on the avoidance of double taxation, concluded between Serbia and other countries. Most of the mentioned Contracts were signed by European countries such as Germany, France, Austria, Slovenia, Denmark, Poland, etc.
Average and Minimum Wages in Serbia Are Significantly Lower Than Wages in Other European Countries
Serbia has highly-educated and skillful workforce, especially when it comes to IT sector, as well as relatively lower wages in comparison to the EU or the U.S. In 2021, the average net wage was €2,079 in the EU, €2,332 in the euro area and €560 in Serbia, which means that the average wage in Serbia was only 27% of the average wage in the EU. In March of this year, the average employee net wage in Serbia was €635, i.e. €870 including taxes and contributions. In the same month, the median net wage was approximately €470, which means that 50% employees received wages that are no higher than the given amount.
According to the latest analysis of the Organization for Economic Cooperation and Development, Switzerland is at the top of the list of the countries whose employees have the highest average net wage in Europe (€4,900 per month), while Austria (€3,104 per month) and Germany (€2,952 per month) are among the first ten. When sorted by the salary tax amount, Germany (48.1%) and Austria (47.8%) are at the top of the list once again, right after Belgium (52.6%). Having these numbers in mind, it does not come as a surprise that a large number of foreign Swiss, Austrian and German companies opted for business relocation to Serbia.
According to the latest Eurostat data, the minimum gross monthly wage in the EU countries ranges from €332 in Bulgaria to €2,257 in Luxembourg. Ireland, The Netherlands, Belgium, Germany and France are among the countries that have the highest minimum wage exceeding €1,500. In Serbia, the gross minimum wage for the year 2022 is €401, which means that the net minimum wage is €300.
The research of the website for hiring IT personnel shows that the average developer’s wage in 2021 was €1,664 in Belgrade, €1,104 in Novi Sad, €1,229 in Niš and €1,196 in Kragujevac. When we compare this to the average developer’s wage in Germany, we come to a conclusion that one developer in Germany ‘costs’ the same as three or four developers in Serbia.
Lower Rental Fees, Electricity and Gas Bills
Apart from the fact that the company registration process in Serbia is very simple and fast, LLC share capital is only one euro, while further investments depend on the activity performed.
Serbia, especially Belgrade, offers a variety of office buildings, which can be rented for €400 per month at the most popular locations in Belgrade. The most attractive location is New Belgrade, where a 30m2 office can be rented for less than €600, while the same office can be found for €200–300 in the suburbs. If you still want to save as much money as possible, there is also the possibility to rent a co-working space shared with other companies, while a desk in a shared workspace costs €150 per month.
A single person monthly cost of living, without rent, are approximately €480 in Belgrade, while the amount exceeds €600 in Slovenia and Zagreb, i.e. €800 in Germany and Austria. Although the fuel price has increased even in Serbia, it is still more affordable than in most other European countries. According to the Eurostat report, the electricity price in Serbia in the first six months of 2021 was 0.0811 €/kWh for companies, which is among the lowest in Europe. The highest electricity price was in Denmark (0.3448 €/kWh) and Germany (0.3234 €/kWh). With the increase in gas price, this expense will become one of the most important items of the total operation costs, which will also affect company competitiveness.
If you would like to relocate your business to Serbia and you need help, a team of experienced professionals of the Welcome to Serbia association is at your disposal. We will be glad to help you throughout the business relocation to Serbia and further successful operation. Apart from this, we can help you throughout the process of obtaining a residence permit, opening a bank account and solving all other issues to make your arrival to Serbia as fast and simple as possible.