Explore Serbia as a favorable jurisdiction for business, boasting pro-business laws, a favorable tax system, and numerous advantages for foreign investors.
Serbia is definitely a recommendable jurisdiction for business, and many large foreign investors from China, Europe, and the US have come here to stay. The country has a huge potential, it is open for foreign businesses, and its economy is on an upward trend. There are a lot of advantages to setting up a company in Serbia, including pro-business laws, a benign taxation system, the lowest utility bills in Europe, a highly skilled workforce, and much more. However, there are still some risks that should be taken into account before you venture into the unknown, and we will talk about them in this post.
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Legal Forms in Serbia Available to Non-Residents
Let’s look at the legal forms you can choose to set up a company in Serbia:
- A General Partnership or a Limited Partnership. A general partnership (DO) is an entity where all the partners have the same rights and obligations, and their liability is not limited. By contrast, a limited partnership (KD) has only one partner who bears full liability for the partnership’s debts (the business founder, referred to as the general partner). All the remaining participants are limited partners, and their liability is limited to the share they contributed to the authorized capital.
- Joint-Stock Company (AD) is a good choice for large businesses, and its structure should include a supervisory committee, an auditor, a secretary, shareholders, and directors. The minimum authorized capital equals RSD 3 million (25,587 euros), with 25% to be paid up at the time of entity formation. You can set up an open or a closed joint-stock company in Serbia.
- Individual Entrepreneur (Pr) is a legal form where the business founder is fully and solely liable for his/her debts. This is the easiest legal form to establish as it can be registered remotely using a centralized registration system of the Business Registers Agency.
- Limited Liability Company (DOO) is one of the most common and popular legal forms that can be established by one person with an authorized capital of 1 euro. This is the right choice if you have a small or medium-sized business, and the founder (or his/her legal representative) can register the entity remotely.
- Branch (representative office) of a company based abroad.
If you are in doubt about which legal form to choose, do not hesitate to click on the above link and get in touch with our specialist for professional advice.
Doing Business in Serbia: Possible Risks
Business is always connected with risks, and any entrepreneur knows that very well. There are general risks and country-specific ones, and we are going to focus on the second group and discuss those that exist in 2023. The list is based on the surveys conducted in business communities in the past months.
Risk 1: Expenses
This risk was noted by 90% of those polled, and this practically means the cost of energy, raw materials, logistics and travel, workforce, and so on. Serbian business people say that this aspect poses a higher threat to businesses as compared to the previous year.
This risk is connected with a galloping inflation in Serbia that amounted to 15.1% in 2022. It entailed higher consumer prices and more expenses, which could not leave businesses unaffected.
Risks 2 and 3: Relationships with the European Union and Labor Force
Here are the main details of these risks:
- 53% of respondents noted the shortage of qualified specialists in the country. However, the Serbian authorities are planning to quickly solve this problem by simplifying access for foreign migrants who have sufficient qualifications.
- 47% of entrepreneurs fear possible deterioration of relationships with the European Union. This is a matter of politics, of course, but the country’s economy and the interests of investors are affected as well. As you probably know, the country refused to impose sanctions against Russia, which may (or may not) become the reason for the European officials to veto Serbia’s accession to the EU and cut off investments in the country’s economic development.
Other Risks to Consider
Here are some other risks that may pose a threat to local and foreign businesses:
- Debts and the impossibility of collecting them
- A lower demand in the consumer market and fewer private investments
- Declining purchasing power
- Corruption among officials
- Increasing interest rates
These risks are related to an unstable situation that all Serbian businesses are facing nowadays. The local business elite has ambiguous ideas about the future, though the majority of business people think that the indicators are going to improve.
Serbian Economy: International Risk Assessment
First of all, let’s look at the negative trends in the Serbian economy:
- Corruption, slow court proceedings, and harassment of customs.
- Refusal to impose sanctions against Russia and the conflict in Kosovo that is far from a final settlement may adversely affect the country’s economic development due to dissatisfaction of Western countries.
- The informal economy sector is quite large.
However, this is balanced by the strengths of the Serbian economy:
- The public sector is undergoing reforms in cooperation with the IMF.
- The production of vegetables, grains, and fruit is significant.
- 93% of products can be imported without customs duties under the agreement with the EU.
- The country has a lot of natural resources, such as gold, lithium, lead, copper, etc.
- The automotive industry is rapidly developing.
Conclusion
Despite all the risks mentioned above, Serbia remains an attractive country for entrepreneurs from around the world. It has its peculiarities when it comes to making administrative steps, so we strongly recommend that you follow the above link to seek professional assistance. We know all the ins and outs, and we will help you make the most of Serbia without much hassle!