This information is derived from the State Department's Office of Investment Affairs, Investment Climate Statement. Any questions on the ICS can be directed to EB-ICS-DL@state.gov
Last Published: 2/26/2018

Investment Incentives

The 2015 Law on Investment defines Serbia’s investment incentives program. Incentives are available to both domestic and foreign investors. The law established a Council for Economic Development and the Development Agency of Serbia (RAS). The Council has oversight responsibility for the investment incentives program, while RAS plays a more operational role.

The level of available subsidies for investment projects is determined under the Decree on Terms and Conditions for Attracting Direct Investments, approved in December 2016. Investors are obliged to provide 25 percent of eligible costs from their own resources. For investment projects valued between EUR 50-100 million, subsidies are limited to 25 percent of the total investment, and to 17 percent for projects over EUR 100 million. However, under certain conditions large companies can gain support for up to 50 percent of eligible costs for investment projects, medium-sized companies up to 60 percent, and small companies up to 70 percent.

Under the Decree on Attracting Direct Investments, state subsidies are available for any company that invests the equivalent of EUR 100,000 and employs at least 10 persons in a “devasted area.” The required minimum investment and employment levels for subsidies increase on a sliding scale according to the level of development of the investment location. For each new job created in a devastated area, the state will pay the investor the equivalent of EUR 7,000; the subsidy declines to EUR 3,000 per job in the most developed regions. For labor-intensive projects that create more than 200 new jobs, the government can approve additional incentives. The state will also provide subsidies for the purchase of fixed assets, again on a sliding scale based on the level of development at the investment location. The subsidy reaches 30 percent of eligible asset costs in a devastated area, and declines to 10 percent in the most developed areas of Serbia. The Serbian government may sell land for construction at a below-market price in support of an investment project that is of national importance. For more details visit their website.

The Decree on Attracting Direct Investments also establishes the criteria for granting local incentives to investments of importance for local development.

At the provincial level, the government of the Vojvodina region offers investment incentives. The maximum reimbursement level is approximately $200,000 per business entity. In addition, the Vojvodina Provincial Secretary for Work and Employment may award incentives for new employment. The Development Agency of Vojvodina was established in February 2017 as a legal successor to Vojvodina Investment Promotion (VIP). The agency is not operational as of March 2017, but the VIP website is available here.

Local municipalities may sell land for construction at below-market rates for investments that promote local economic development. Other major incentives at the local level include exemptions or deductions on land-related fees and other local fees.

Serbia’s tax laws offer several incentives to new investors. The corporate profit tax rate is a flat 15 percent, one of the lowest in the region. Non-resident investors are taxed only on income earned in Serbia. A ten-year tax holiday on corporate profits is available for investors who hire more than 100 workers and invest more than RSD 1 billion ($8.7 million). The tax holiday begins once the company starts making a profit.

In August 2015, the government approved a decree on film incentives that allows both domestic and foreign filmmakers to receive a refund of 20 percent on qualified costs. The government has allotted RSD 400 million ($3.5 million) for film incentives in 2017.

Employment incentives allow payroll tax deductions for persons registered with the National Employment Service for more than six months. The incentives currently in place are valid from the moment of employment until December 31, 2017:

  • 1-9 new jobs: 65 percent deduction
  • 10-99 new jobs: 70 percent deduction
  • 100+ new jobs: 75 percent deduction

The Serbian government has declared 2016 and 2017 “Years of Entrepreneurship,” and has announced plans to declare the entire 2016-2026 period a “decade of entrepreneurship.” As part of this initiative, the government set aside the equivalent of $147 million to support entrepreneurship and assist SMEs in 2016, and a further $11 million in 2017. Part of these funds will be allocated as subsidized loans by the state-owned Fund for Development and various ministries, and part will be issued through the RAS. Detailed information is available here  and here. These loans are available to foreign-owned companies registered in Serbia, provided the Serbian registered company has not recorded losses in the previous two years.

Foreign Trade Zones/Free Ports/Trade Facilitation

Serbia maintains 14 designated customs free zones, in Apatin, Belgrade, Kragujevac, Krusevac, Novi Sad, Pirot, Priboj, Sabac, Smederevo, Svilajnac, Subotica, Uzice, Vranje, and Zrenjanin. The free zones, established in accordance with the 2006 Law on Free Zones, are intended to attract investment by providing tax-free areas for company operations. Businesses operating in the zones qualify for benefits including unlimited duty-free imports and exports, preferential customs treatment, and tax relief in the form of value-added tax (VAT) exclusions. If goods produced within zone use a minimum of 50 percent of domestic components, they are considered to be of Serbian origin and are therefore eligible to be imported into Serbian territory or exported without customs pursuant to free trade agreements. Companies operating within a free zone are subject to the same laws and regulations as other businesses in Serbia, except for their tax privileges.

In 2015 there were a total of 240 companies operating in Serbia’s free zones, of which 154 were domestically owned and 86 foreign-owned. The companies employed a total of 22,242 workers. Total exports from free zones exceeded $2.3 billion, which is approximately 15 percent of Serbia’s total exports. Total imports into the zones were approximately $2.2 billion, or 11 percent of total imports.

Goods entering or leaving the free zones must be reported to customs authorities, and payments must be made in accordance with regulations on hard-currency payments. Goods delivered from free zones into other areas of Serbia are subject to customs duties and tax. Earnings and revenues generated within free zones may be transferred freely to any country, including Serbia, without prior approval, and are not subject to any taxes, duties or fees. Additional information about Serbia’s free zones is available here. 

Performance and Data Localization Requirements

The Serbian government does not mandate local employment or have onerous visa, residence, or work permitting requirements for foreign nationals. It does not impose conditions for foreign investors to receive permission to invest.

The Serbian government does not maintain a policy of “forced localization” designed to oblige foreign investors to use domestic content in goods or technology. Similarly, the government does not force foreign investors to establish and maintain a certain amount of data storage within the country. There are no requirements for foreign IT providers to turn over source code and/or provide access to encryption.

Serbia plans to approve a new Personal Data Protection Law, and currently continues to follow EU practice in implementation of data transfer rules.

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