Serbia – How to set up a limited liability company

After the transition period, in the last 10 years, the Republic of Serbia has become a stable and well organized society. The stable government, the status of the candidate country for the EU membership, as well as the traditionally well-balanced relations with both the East and the West, have led Serbia to become an increasingly interesting investment opportunity for both domestic, and foreign investors (total production increased of 2.3% from January to September 2018).

Legal framework and tax benefits

Being on the road to the EU membership, the Republic of Serbia has already begun to harmonise its legislation with the EU acquis communautaire, opening its market to foreign investments and striving to follow the current markets trends. On the other side, relationships with China and Russia are also traditionally exceptional good and cooperative.

In line with the aforementioned, the Serbian government seeks to attract as many foreign investors as possible, primarily by providing significant tax benefits, such as: reduced burden on earnings up to 75%, temporary tax exemption of the corporate profits, avoidance of double taxation, possibility of duty-free imports of raw materials and semi-finished products, duty-free imports of machines and equipment, as well as many other benefits.

Setting-up a company

Before presenting a short guidance on setting up a company in Serbia, it is notable to highlight that companies in Serbia can be established by any natural or legal person, both domestic citizens and non-residents. Therefore, the following basic rules of establishment could be of interest for the foreign readers.

Serbian Company Law recognizes four types of companies: Joint Stock Company, Limited Partnership, Partnership and Limited Liability Company. In this post we will focus on the latter, describing in a few lines the process of establishing a LLC (in Serbian: Društvo sa ograničenom odgovornošću – DOO) in Serbia.

A LLC is a company that is established by one or more legal and/or natural persons (which are the members of the company), for the purpose of performing a particular business under a common business name. Regardless of whether the LLC is owned by one or more member, remains, however, an entity separate from its members and liable for its obligations only with its assets.

The basic conditions that a LLC must fulfil in order to be able to submit a proper registration to the Business Registers Agency are:

• Incorporation act: Memorandum of association, in case of a multi-member LLC / Decision on incorporation in case of a one-member LLC;
• Business Name (in Serbian language in Cyrillic or Latin letters);
• Appointment of the legal representative of the company, i.e. the director;
• In Serbian law, contributions can be monetary or non-monetary (contributions in kind), including contributions in work and services. The minimum subscribed capital (monetary or non-monetary) is 100.00 RSD (equivalent to 1 euro). At the moment of establishment of the LLC, the contributions do not have to be paid in. In such case, the member of the company is obliged to determine the deadline for payment of the contributions, in accordance with the Incorporation Act. The deadline cannot be longer than 5 years after the foundation of the company.

When the aforementioned basic conditions are met, the incorporation procedure continues as follows:

1. Registration of the company at the Business Registers Agency. The deadline for submission of the application is 15 days after the date of adoption of the incorporation act. When registered, the company obtains: (i) Registration number (in Serbian: Matični broj (MB)); (ii) Tax Identification Number (in Serbian: Poreski identifikacioni broj (PIB)); and (iii) Health insurance number issued by the Republic Health Insurance Institute.
2. Opening a company bank account.
3. Registration in the Tax Administration.
4. Digital signature (optional).
5. Company seal (optional).

The author of this post is Dragan Nikolic.