Serbia Subsidiary Entity Set Up

Serbian Entity Set Up

The Republic of Serbia welcomes foreign investment and is intent on building stronger worldwide connections. The relatively young nation is a member of the United Nations and Council of Europe, with plans to join the World Trade Organization and membership of the European Union expected from 2025.

Serbia is also a member of the Central European Free Trade Agreement (CEFTA). Serbia’s Gross Domestic Product (GDP) grew by over 7% in 2021 and was expected to reach 60.67 billion US dollars by the end of that year.

Even so, expanding overseas is a major step, especially for companies considering opening a legal entity in their new territory. It is easy to stumble whilst trying to balance two key objectives – advancing your company at home and expanding into a new territory.

How to set up a Serbian Subsidiary

Setting up a subsidiary in Serbia? First, choose a company type. If you are planning to hire staff and run payroll you must establish a legal entity. The most popular choice is to open a limited liability company, known as a Društvo sa Ograničenom Odgovornošću, abbreviated to DOO. 

This company type requires minimum share capital of €1 and it must be registered with the Business Registers Agency (BRA), following the regulations of the Law on Procedure for Registration. The subsidiary operates under Serbian Companies Law in the same way as local entities.

Further requirements and procedures include: 

• Obtain company eight-digit registration number (matični broj, MB) from BRA
• Obtain nine-digit company tax number (poreski identififikacioni broj, PIB or TIN) from BRA
• Register with the Serbian Statistical Office to receive official registration
• Register with the Tax Administration (Poreska Uprava)
• Register with the Social Insurance Institute (Zavod za Socijalno Osiguranje, ZSO)
• Register with the ZSO for mandatory health insurance for employees with the Fund for Disability and Pension Insurance
• Provide Articles of Association of the parent company with full names, addresses, country of residence and nationality of the owners, initial contribution by shareholders
• A business bank account and proof that minimum share capital of €1 has been deposited
• Register at least one Serbian citizen as representative to deal with the local authorities
• Appoint a company secretary

What you need to set up a Serbian Subsidiary

• A name unique to Serbia with the suffix DOO, registered with the Business Registers Agency (BRA)
• Notarized Articles of Association of the parent company giving full names, addresses, country of residence and nationality of the owners; initial contribution by shareholders
• Company eight-digit registration number (matični broj, MB) and nine-digit company tax number (poreski identififikacioni broj, PIB or TIN), obtained from BRA
• Registration with the Serbian Statistical Office to receive official registration
• Registration with the Tax Administration (Poreska Uprava)
• Registration with the Social Insurance Institute (Zavod za Socijalno Osiguranje, ZSO) for mandatory health insurance for employees with the Fund for Disability and Pension Insurance
• Articles of Association of the parent company; full names, addresses, country of residence and nationality of the owners; initial contribution by shareholders
• A business bank account and proof minimum share capital of €1 has been deposited
• At least one shareholder
• At least one resident Serbian citizen as representative to deal with the local authorities
• A company secretary

Benefits of setting up a Serbian Subsidiary

Specific advantages for a foreign company opening a limited liability subsidiary in Serbia include that the subsidiary has independent legal identity under Serbia’s Companies Law. The subsidiary is responsible for its own debts and liabilities, but the shareholders are liable only to the limit of their own share contribution. Additionally, the parent company generally has no liability for debts or liabilities.

The subsidiary, as a resident local company, pays Corporate Tax (CIT) on its Serbian and worldwide profits at 15%. The company must also register for Value Added Tax (VAT) as there is no threshold for companies offering goods and services in Serbia.

Through its subsidiary, the parent company has the advantage of exploring the Serbian and Balkan market and further afield among European Union member nations, into the Central European Free Trade Agreement (CEFTA) economic bloc and even further east.

Other benefits for a subsidiary: 

• Easier to obtain regulatory approvals, loans and finance and enter contracts with other Serbian and European companies
• More impact with clients and suppliers, as subsidiaries imply more permanency than branches
• Employees feel there is more stability and job security than from being with a branch

In the wider commercial sense, opening a subsidiary makes a statement of a company’s commitment to expanding into foreign markets, in this case the opportunities offered by the European economies.

However, there is a more straightforward option to the risks and costs of setting up a subsidiary in Serbia.