Supporting Investment Activities in Serbia: A Step-by-Step Breakdown

In recent years, Serbia’s investment climate has been strengthened by the state's involvement in the support of key projects and several international investment protection agreements. This is confirmed by the data on the volume of foreign investments in Serbia, which is steadily growing even in the face of global instability.

Investment activity in Serbia is a system of legal, financial, and organisational processes covering the entire cycle from idea to market entry. The path involves

• Project analysis
• Investment deal structuring
• The form of presence
• Registering the company in Serbia
• Acquiring licenses
• Tax setup

Without professional assistance, it is easy to encounter barriers ranging from the wrong choice of legal form to the denial of authorisations.

Mistakes at an early stage often entail financial losses and delays in the implementation of the business plan. It is particularly important to take into account the local peculiarities of commercial law, which may differ from the EU or CIS approaches.

As a practicing lawyer, I am engaged in accompanying investment activities at all stages: from preliminary due diligence to resolving investment disputes in Serbia.

In this post, I will systematically outline how to start investment activities, avoid common mistakes, and protect investments under national and international law.

Geography of Opportunities: Serbia’s Investment Potential

Before launching an investment project in Serbia, it is important to understand the economic and regional conditions that will accompany it. The country is located at a strategically important crossroads of European, Balkan, and Asian logistics corridors.

Owing to the free trade agreements in force with the European Union, the Eurasian Economic Union, Turkey, and CEFTA members, depositors gain access to a combined market of over 1.3 billion people. This provides a significant advantage for internationally oriented businesses.

The Serbian national currency, called ‘Dinar,’ shows predictable behaviour, and the exchange rate is under the control of the central bank. The level of public debt remains at a moderate level and does not put pressure on the investment climate.

Corporate tax is set at 15 percent, allowing companies to reduce fiscal costs. In addition, the legislation contains provisions on tax preferences for investors, especially in the case of creating permanent jobs and working within the free industrial zones of Serbia.

The demand for the region is confirmed by figures. Over the past three years, the volume of foreign direct investment (FDI) in Serbia exceeded 4 billion Euros per annum. This reflects confidence in institutions, the sustainability of economic policies, and the practical implementation of projects.

Before the cancellation of the ‘Doing Business’ ranking, Serbia ranked 44th out of 190, which demonstrates the relative ease of doing business. In addition, social stability and a highly qualified labour force with moderate labour costs are important factors. All this forms a stable investment climate in Serbia, favourable for long-term activities.

Priority Sectors for Investments in Serbia

Investment activities in Serbia are based on real economic advantages and support from the state. Sector selection is a key element of the strategy. Each sector requires an individual approach, including legal support for investments in Serbia and proper assessment of the regulatory environment and potential benefits.

1. Manufacturing and industrial processing. Serbia is a regional centre of light, food, and automotive component industries. Enterprises are oriented towards export to the EU and EAEU, which allows them to optimise taxes in Serbia and use VAT benefits. The country is actively developing free industrial zones, offering investors land plots, infrastructure, and state support for investments in Serbia.
2. Information technology and outsourcing. Serbia occupies an important place on the IT map of Europe. More than 3,000 technology companies operate in the country, including R&D centres of major brands. Outsourcing centres are opening in Belgrade and Novi Sad.
3. Agricultural sector and food. Climatic conditions are favourable for organic farming and intensive livestock breeding. Serbia exports cereals, fruits, vegetables, and meat products. Investments in processing and storage are interesting: construction of elevators, drying, packing, and freezing shops. Investors in this field are supported by subsidies, while legal support for business in Serbia is necessary when dealing with land and veterinary requirements.
4. Real estate and commercial development. Demand for residential, office, and commercial property is steadily increasing. Foreigners can buy commercial property in Serbia without restrictions, including land for development. Here, it is important to conduct investment due diligence in Serbia, investigate zoning restrictions, and obtain licences and permits, including building and environmental permits.
5. Energy and renewable sources. The electricity sector is open to private capital. Solar and wind power plants and biomass projects are popular. The state offers subsidy mechanisms and feed-in tariffs, as well as tenders for capacity construction. Participation requires precise legal preparation, especially when interacting with government agencies and obtaining grid connections.

Each sector of economy requires preparation, knowledge of local regulations, and professional legal support for investment activities. My practice shows that a competently chosen sector and quality documents are 80% of the success of an investment project.

Legal Framework For Investment Activities in Serbia

To start investment activities in Serbia, it is important to understand how its legal system is organised.

The key document regulating investment activities in Serbia is the Law on Investment, adopted in 2015. It defines the rights and obligations of the parties, introduces the concept of an investment project, and establishes basic guarantees. These include protection against nationalisation, the right to freely dispose of profits, the possibility of transferring capital abroad, and access to international arbitration. This is the foundation on which any legal support for investments in Serbia is built.

The next important regulatory element is the Law on Companies. It regulates the registration of companies in Serbia and defines the possible organisational and legal forms. The law also establishes the rules for branches and representative offices of foreign companies. This is the basis for those who want to open a business in Serbia for investment with minimal risks.

In 2021, the Law on Digital Assets was adopted. It was a response to the development of the blockchain economy and regulated the circulation of cryptocurrencies, tokens, and ICOs. It increased the transparency of digital transactions and strengthened confidence in the jurisdiction. It is now possible to formalise investments in Serbia in the form of digital assets, subject to AML and KYC regulations.

State Bodies Regulating Investment Activities in Serbia

The work of state authorities affects

• The speed of decision-making
• The level of transparency
• The protection of participants’ rights.

Competent cooperation with official structures ensures maximum correctness and helps businesses avoid legal consequences:

1. Ministry of Finance of the Republic of Serbia. It forms the strategy in the field of taxation, fiscal policy, and customs administration. It sets the rules by which the tax system and budget regulation operate. An important part of its work is the enforcement of laws affecting tax counselling in Serbia and the planning of corporate expenditures. Without understanding its approaches, it is impossible to optimise taxes and accurately calculate the fiscal burden.
2. Tax Administration under the Ministry of Finance. This body is responsible for tax collection, tax compliance checking, and record keeping. It carries out desk and field control, issues certificates, and registers taxpayers. When registering a business in Serbia, the company immediately receives a tax identification number, based on which further reporting is based.
3. Agency for the Registration of Enterprises (APR). This is the key body through which company registration in Serbia takes place. The work of APR allows checking of the reliability of counterparties, access to financial statements of companies, and ensuring compliance. It is important for an investor to conduct investment due diligence in Serbia using open data from the register. APR also plays a role in business liquidation and reorganisation.
4. National Bank of Serbia (NBS). The country's central bank controls the stability of the currency market and exchange rate policy. It regulates the activities of banks, insurance organisations, and microfinance institutions. It also implements currency regulation in Serbia through the NBS, including capital transfer authorisations, accounting of foreign economic contracts, and payment transactions. Investments in foreign currency should be made pursuant to the provisions of the currency legislation. This is particularly relevant when structuring an investment transaction in Serbia involving non-residents.

The legal regulation of investments in Serbia is based on the actions of a number of specialised bodies. They create conditions for investment, ensure control, protect investors' rights, and maintain the stability of the financial system.

Understanding the functions of these institutions is critical for those who want to start investment activities in Serbia and ensure their safety in the legal framework.

Taxation of Investment Activities in Serbia

One of the strongest incentives to invest in Serbia is its flexible tax system. The tax base is formed based on the following key pieces of legislation:

• Law on Corporate Income Tax - regulates the calculation of corporate income tax, establishes a 15% rate, and defines the conditions for granting exemptions (including tax holidays and deductions).
• Law on Value Added Tax - describes the VAT application procedure, differentiated rates, refund conditions, and peculiarities for foreign companies.
• Law on Property Tax - establishes the procedure for calculating property tax and property transactions.
• Laws on Customs Duties and Excise Duties - regulates import burden, preferences under free trade agreements, and domestic indirect taxation.
• International double tax treaties - in force with more than 60 countries, ensuring tax neutrality of cross-border transactions.

Serbia's tax system meets the challenges of attracting direct investments. A simple taxation mechanism, access to international agreements, and flexible incentives make the country attractive for both industrial and innovative projects.

Main taxes on investment activities in Serbia

Serbia offers one of the most attractive tax systems in the Southeast European region. Legislation is focused on facilitating entry for investors by providing clear rates, predictable reporting, and opportunities for tax optimisation. There are no local corporate taxes, a flat corporate tax rate, and a range of fiscal incentives for investors in highly value-added projects.

Rates of main taxes in Serbia

Investment Tax Incentives and Benefits

Serbia actively supports investors by providing a wide range of incentives and benefits. The main ones include

1. Ten-year tax holidays. Valid for companies that invest at least RSD 1 billion in fixed assets and employ at least 100 employees. Valid for up to 10 years, provided jobs are retained.
2. Double tax deduction for R&D. All R&D expenses in Serbia are double-taxed.
3. Exemption from royalty tax. Up to 80% of income from licences, patents, and copyrights registered in Serbia is excluded from taxation.
4. Tax credit for investment in innovation in Serbia. The investor receives a tax deduction of up to 30% of the invested amount in innovative companies. The limit is 100 million dinars.
5. Foreign tax credit. Allows resident legal entities to reduce tax liabilities in Serbia from taxes already paid abroad (on dividends, interest, royalties, etc.).

To correctly apply all preferences, it is necessary to work out a tax strategy in advance and use professional legal support for investment activities in Serbia. This allows you to reduce fiscal risks.

Investment Types in Serbia

Investment activities in Serbia allow for various mechanisms of capital investment. This allows taking into account the strategy, risk level, and scale of the business. The legislation does not limit the choice of investment forms, and the state encourages the most beneficial models for the economy. In practice, this creates flexibility and expands opportunities for those who plan to start investment activities in Serbia and enter the domestic or international market.

Direct investment

The most common and transparent format. Direct investments require registration of companies in Serbia, selection of a legal form, and capital contribution. This option is suitable for those who want to control the project, make management decisions, and share in the profits. Direct investments are considered to be the basis for investment projects in Serbia, as they require comprehensive legal and financial adjustments. They allow investors to receive subsidies and tax incentives.

Portfolio investments

This type of investment does not involve participation in management. The investor acquires financial instruments - shares, bonds, and fund units. It is a quick way to enter the Serbian market, diversify risks, and utilise speculative potential. Special attention in this case requires tax counselling in Serbia, as profits are subject to capital gains tax. It is also important to consider the currency control regime established by the National Bank, especially when withdrawing dividends and capital gains.

PPPs and concessions

The public-private partnership model is used in projects with a long cycle, like transport, energy, environment, and water supply. The private party participates in the construction and operation of facilities and receives income through operating payments or concession fees.

Legal support for investments in Serbia is important for this type of project, including analysing procurement legislation, assessing concession conditions, and verifying infrastructure rights. Examples: motorways, regional wastewater treatment plants, municipal hospitals.

Investing in property

Investment in real estate is one of the most stable segments. Foreigners can buy commercial property in Serbia, lease plots for construction, and invest in logistics, office, or residential complexes. This form requires support for investment activities in Serbia at all stages, from title analysis to the processing of building permits. Investors have access to land leasing in free industrial zones, where tax preferences and accelerated procedures for connecting to infrastructure are available.

Venture financing

A separate area is financing innovative projects and technology start-ups. It is associated with high risk and high return potential. Venture investments can be formalised through funds, direct investments, or joint ventures. Serbia is building infrastructure to support startups, incubators, accelerators, and grant programs. It is particularly important to conduct investment due diligence in Serbia, assess the legal protection of intellectual property, and choose the appropriate form of corporate control.

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Stages to Support Investment Activities in Serbia

Supporting investment activities in Serbia is a complex and step-by-step process, which is easy to confuse without experience. Mistakes are often made at the first step: choosing the form of business, filing documents, or calculating taxes. Inconsistent actions can lead to refusal in registration, loss of time, or fines. Only professional support allows you to go through all stages competently, avoid risks, and build a stable legal basis for the project.

Preparatory stage

Before starting investment activities in Serbia, it is necessary to conduct legal and business analyses. The first step is the study of the specific sector, including the specifics of regulation, restrictions for foreign participants, and authorisation practices. The analysis covers the current sectoral regulatory framework, as well as judicial and administrative practices.

Next, legal due diligence of the project and its potential participants is conducted - investment due diligence in Serbia. This allows us to identify risks: corporate, tax, territorial, and regulatory. The next step is to choose the form of business. Most often, a limited liability company (DOO) is used as the most flexible and understandable model. It can be quickly registered, easily changed, and scaled up.

Special attention is paid to the possibility of obtaining tax incentives for investors in Serbia. This requires an assessment of the project parameters: the amount of investment, the number of jobs to be created, and the location within the free industrial zones. At this stage, a legal and fiscal strategy is prepared, which is the basis for successful market entry.

Business registration

The interaction with the Business Registration Agency lasts from one to three working days. The articles of association, the decision on establishment, the application, and the confirmation of the legal address are prepared. Upon completion of the registration, the company receives a registration number and then a tax identifier.

Next, the company is registered with the tax service. This is a mandatory procedure for all those who plan to conduct investment activities in Serbia. Certain types of activities require registration in other registers - for example, exporters, importers, and builders. Legal support at this stage allows you to reduce time and avoid mistakes in the form or content of documents.

Obtaining permits

For construction companies, it is necessary to coordinate the architectural design and expertise and obtain a construction licence. For foreign economic activities, export-import codes and permits. Food, medical, educational, and environmentally sensitive activities require special licences.

It is necessary to cooperate with municipalities. This is especially true for property investments in Serbia or the location of facilities within cities. Obtaining permits is related to timing, payment of fees, and compliance with urban planning requirements. Here, it is important to accompany investments in Serbia through ongoing legal and administrative coordination.

Operations

Once the project is launched, operational processes need to be established. Accounting in Serbia is organised, the form of record keeping is chosen, and financial control is set up. It is important for the employer to conclude labour contracts, comply with minimum social standards, and monitor employment norms. All this requires systematic legal support of investments in Serbia in terms of labour and tax law.

Working with banks requires compliance with AML norms, preparation of a package of documents, and description of the sources of origin of funds. Without correct preparation, it may delay the opening of a current account. It is important to take into account the currency regulations in Serbia, especially for cross-border payments and the transfer of profits abroad.

Legal Protection

The last and at the same time key aspect is the provision of legal guarantees. The investor has the right to protect its interests in Serbian courts, as well as through international arbitration. It is important to prescribe in advance the terms and conditions of the investment agreement in Serbia: jurisdiction, dispute resolution procedure, and regulations of interaction. This is especially important when attracting partners, government agencies, or funds.

International treaties allow the use of capital protection against expropriation, ensure non-discriminatory conditions, and give access to ICSID mechanisms. It is at this stage that it is important to resolve investment disputes in Serbia quickly and with minimal losses. Professional support allows not only winning the case but also building a strategy that prevents the conflict from recurring.

Investment Specifics in Serbia: Practical Aspects

Even in the presence of a favourable regulatory framework and transparent procedures, the success of a project depends on a correct understanding of the practical conditions. Investment activities in Serbia are accompanied by a number of peculiarities that are important to take into account when making decisions. These include access to state support measures, asset clearance rules, reporting requirements, and labour law peculiarities.

Subsidies and state support for investments

Serbia actively applies incentive tools to attract capital. The state reimburses up to half of the costs of employee salaries, equipment purchases, and construction of facilities if the project is aimed at production development and job creation. The amount of support depends on the region, the number of employees, and the amount of investment. Projects implemented in underdeveloped zones receive maximum bonuses.

To leverage this opportunity, submit documents in advance and justify the economic efficiency. Proper preparation and legal support of investments in Serbia allow you to pass the selection process and fix the conditions for receiving the subsidy in the agreement with the state.

Industrial and free economic zones

Serbia offers investors accommodation in free industrial zones, where the infrastructure is already provided - roads, communications, and customs warehouses. Companies in such zones receive tax incentives, accelerated connection to networks, and administrative support.

This reduces the costs at the project start-up stage and makes it possible to open a company in Serbia in a short time. There are income tax and VAT preferences for legal entities. However, access to these zones is subject to special conditions, and it is important to obtain legal support in Serbia when concluding lease agreements, connecting networks, and agreeing on construction conditions.

Legal regime of real estate

For companies registered in Serbia, there are no restrictions on the purchase of real estate. This applies to both industrial premises and land for construction. This regime allows for purchasing commercial property in Serbia and deploy it as a business or an investment asset. Transactions are formalised with a notary and require a preliminary analysis of the legal status of the object.

It is necessary to check ownership, encumbrances, zoning, and building restrictions. Without this verification, risks may arise, especially in the case of a change of use of the plot or reconstruction. It is important to carry out investment due diligence, which is part of the standard procedure for supporting investment projects in Serbia.

Financial reporting and standards

Serbia applies IFRS for large companies. This applies to companies whose shares or bonds are admitted to trading, as well as organisations with international participation and turnover above a set threshold. For other entities, the application of IFRS is voluntary.

This creates flexibility in the choice of accounting system and makes it possible to adapt the financial support of investments in Serbia to the scale and structure of the business. Companies are required to submit annual accounts, file tax returns, and comply with accounting policies. Failure to comply with formal requirements will result in sanctions from the tax authorities and may make it difficult to withdraw dividends or sell shares.

Investment Risks and the Importance of Legal Support

Any investment project is fraught with uncertainty. Even with a favourable economy and transparent procedures, individual mistakes can lead to financial losses and business interruption.

Legal support for investment activities in Serbia is aimed at preventing these risks, properly structuring the project, and protecting the investor's interests at all stages. My practice shows that competent legal support not only reduces costs but also determines the sustainability of the project in the long term.

Insufficient due diligence before entering the project

At the planning stage, it is important to conduct investment due diligence in Serbia. This helps to identify legal defects, hidden liabilities of counterparties, encumbrances on property, and disputable elements in the corporate structure.

Lack of full due diligence leads to the fact that the purchase of a business or property is carried out with risks that become apparent after the deal has been concluded. As part of the legal support for investments in Serbia, a legal audit is carried out: analysing statutory documents, verifying rights to assets, and assessing existing contracts and court proceedings. This is a key stage of any reasonable investment decision.

Errors in registration and authorisation procedures

Company registration in Serbia is fast-tracked, but incorrect choice of legal form, errors in the constituent documents, or lack of necessary activity codes may result in the denial of a licence or the blocking of operations. When registering real estate, it is important to take into account zoning and land use restrictions.

Denial of a building permit or changing the status of a plot of land without the approval of the municipality is a typical reason for stopping a project. The lawyer accompanies licensing and permit procedures in Serbia, controls applications and deadlines, and helps to maintain a dialogue with the authorities.

Misunderstanding of tax obligations

Serbian tax legislation is formally stable but contains technical nuances, especially in cross-border transactions. Errors in interpreting rates, incorrectly accounting for expenses, or ignoring double tax treaties can lead to additional charges, penalties, and fines.

Particular attention should be paid to dividend tax, rules for the application of exemptions, and conditions for receiving state support for investments. Competent tax advice in Serbia allows you to correctly calculate liabilities, choose a favourable structure, and optimise taxation within the legal framework.

Disputes and conflicts

Even when a project is properly organised, conflict situations arise. These may be disputes with contractors, landlords, government agencies, or employees. In case of non-compliance with the contract or refusal to register, the dispute may move to the administrative or judicial plane.

In the absence of defence mechanisms, the parties lose time and money without legal leverage. A pre-prepared investment agreement, properly draughted obligations, and an arbitration clause allow resolving investment disputes in Serbia in pre-trial or arbitration proceedings. In some cases it is possible to apply to international arbitration (including ICSID) if the investment is protected by relevant interstate agreements.

Conclusion

Investment activities in Serbia combine the advantages of a stable jurisdiction, transparent legislation, and flexible tax policy. The legal system ensures equal access to the market, and government programs encourage investment through subsidies and incentives.

However, any investment strategy requires precise preparation, comprehensive analysis, and consistent legal oversight. Without professional support, there is a high risk of encountering mistakes that can devalue efforts and hinder project realisation.

To launch investment activities in Serbia safely, sensibly, and efficiently, you need qualified support.

My team provides a full range of services - from company registration and authorisations to structuring transactions and resolving investment disputes.

As a practicing lawyer with many years of experience, I, Pavel Kowalski, ensure personalised management of each project, accurate decisions, and protection of the client's interests at all stages.

Contact me to launch your investment journey in Serbia!