Serbia - 1-Openness to, & Restrictions Upon, Foreign InvestmentSerbia - Foreign Investment

Policies Towards Foreign Direct Investment

Serbia is open to FDI, and attracting FDI is a priority for the government. Even during its communist past, Serbia prioritized international commerce and attracted a sizeable international business community. This trend continues, as a new Law on Investments passed in October 2015 extends national treatment to and eliminates discriminatory practices against foreign investors. The law also allows the repatriation of profits and dividends, provides guarantees against expropriation, allows customs duty waivers for equipment imported as capital in kind, and enables foreign investors to qualify for government incentives.

The Government’s investment promotion authority is the Development Agency of Serbia (RAS). RAS offers a wide range of services, including support of direct investments, export promotion, and coordinating the implementation of investment projects. RAS serves as a one-stop-shop for both domestic and international companies.

Limits on Foreign Control and Right to Private Ownership and Establishment

Foreign and domestic private entities have the right to establish and own businesses, and to engage in all forms of remunerative activity. The Law on Investments ended discriminatory practices that prevented foreign companies from establishing companies in the production and trade of arms (for example, the defense industry) or in specific areas of the country. However, foreign citizens and companies are prohibited from owning agricultural land in Serbia. The government must lift the ban on foreign agricultural land ownership by September 1, 2017 as part of its EU accession commitments. Serbia had not requested an extension of the ban as of March 2017, but Minister of Agriculture and Environmental Protection Nedimovic has said publicly that Serbia may continue to limit the sale of farmland to foreigners. Foreign companies have overcome the prohibition by establishing a company in Serbia to buy agricultural land. Unofficial estimates indicate that Serbian subsidiaries of foreign companies own some 20,000 hectares of farmland.

For some business activities, licenses are required – for example, financial institutions must be licensed by the National Bank of Serbia prior to registration. This limitation applies to both domestic and foreign companies active in finance, energy, mining, pharmaceuticals, medical devices, tobacco, arms and military equipment, road transportation, customs processing, land development, electronic communications, auditing, waste management, and production and trade of hazardous chemicals.

Serbian citizens and foreign investors enjoy full private property ownership rights. Private entities can freely establish, acquire, and dispose of interests in business enterprises. By law, private companies compete equally with public enterprises in the market and for access to credit, supplies, licenses, and other aspects of doing business. Serbia does not maintain investment screening or approval mechanisms for inbound foreign investment.

Other Investment Policy Reviews

Serbia has not conducted an investment policy review through the Organization for Economic Cooperation and Development (OECD), World Trade Organization (WTO), or United Nations Conference on Trade and Development (UNCTAD).

Business Facilitation

According to the World Bank’s 2017 “Doing Business” report, it takes five procedures and seven days to establish a foreign-owned limited liability company in Serbia. This is faster than the average for Europe and Central Asia. In addition to the procedures required of a domestic company, a foreign parent company establishing a subsidiary in Serbia must translate its corporate documents into Serbian.

Under the Business Registration Law, the Serbian Business Registers Agency (SBRA) oversees company registration. SBRA’s website is available in English. All entities applying for incorporation with SBRA can use a single application form and no longer need signatures on applications notarized.

Companies in Serbia can open and maintain bank accounts in foreign currency, although they must also have an account in Serbian dinars (RSD). The minimum capital requirement is symbolic at RSD 100 (less than $1) for limited liability companies, rising to RSD 3 million (approximately $26,000) for a joint stock company. A single-window registration process enables companies which register with SBRA to obtain a tax registration number (PIB) and health insurance number concurrently with registration. In addition, companies should register employees with the Pension Fund at the Fund’s premises.

Pursuant to the Law on Accounting, companies in Serbia are classified as micro, small, medium, and large, depending on the number of employees, operating revenues, and value of assets.

RAS supports direct investments and promotes exports. It also implements projects aimed at improving competitiveness, supporting economic development, and supporting small- and medium-sized enterprises (SMEs) and entrepreneurs. More information is available at the RAS website.

Outward Investment

The Serbian government neither promotes nor restricts outward direct investment. However, there are restrictions regarding short-term capital transactions – i.e. portfolio investments. Residents of Serbia are not allowed to purchase foreign short-term securities, and foreigners are not allowed to purchase short-term securities in Serbia. There are no restrictions on payments related to long-term securities.

Capital markets are not fully liberalized for individuals. Citizens of Serbia are not allowed to have currency accounts abroad, or to keep accounts abroad, except in exceptional situations listed in the Law on Foreign Exchange Operations (exceptional situations may include work or study abroad).