If you decide to start a business in Serbia, there is many incentives that can be granted to your company, so our office listed all of them on one place, in order to help you.
We divided them in three categories, depending in which way the incentives are granted.
I FINANCIAL INCENTIVES
A new investment package has been prepared for investors into Serbia. The funds may be awarded for financing investment projects in the manufacturing sector, the services sector which may be subject to international trade and strategic projects in the field of tourism. Investment projects in the sector of primary agricultural production, hospitality, lotteries, trade, the production of synthetic fibers, coal and steel, tobacco and tobacco products, weapons and ammunition are not eligible to receive funding.
The amount of funds which can be awarded to large enterprises is determined up to 50% of the eligible costs for the implementation of the investment project. The amount of funds may be increased by up to 20 percentage points for small-sized companies and up to 10 percentage points for medium-sized companies.
For eligible costs over 50 million euros, amount of awarded funds for investments may not exceed 25% of the total value of the eligible costs. For eligible costs greater than 100 million euros, this percentage may not be greater than 17% of the investment’s eligible costs, and shall be determined as follows:
- For eligible costs up to 50 million euros – up to 50% of these costs;
- The part of the eligible costs from 50 – 100 million euros – up to 25% of these costs;
- The part of the eligible costs greater than 100 million euros – up to 17% of these costs.
Funds may be awarded for:
- Investments in the manufacturing sector which shall secure the creation of at least 50 jobs in local governments and are classified as a fourth group category in the level of development or devastated territories with an investment value of at least 500,000 euros;
- Investments in the manufacturing sector which shall secure the creation of at least 100 new jobs in local governments and are classified as first, second or third group categories in the level of development, with an investment value of at least 1,000,000 euros;
- Investments in the services sector which may be subject to international trade, whose minimum value is 300,000 euros and which shall secure the creation of at least 20 new jobs;
- Investments into strategic projects in the field of tourism whose minimum value is 5 million euros and which shall secure the creation of at least 50 new jobs;
- Large investment projects, on the condition that at least 20% of the investment project’s value is realized no later than one year from the Agreement signing date;
- Medium-sized investment projects, on the condition that at least 10% of the investment project’s value is realized, no later than one year from the Agreement signing date.
Please note: We gave here just a short information about this incentive, for detailed information please contact our office
The National Employment Service Grants
The National employment agency had many service grants, such as:
- the Employment Subsidies Program,
- the Apprentice Program, and
- the Re-Training Program.
II TAX INCENTIVES
Corporate Profit Tax Holiday
Companies are exempt from Corporate Profit Tax for a period of 10 years starting from the first year in which they report taxable profit if they invest an amount exceeding approximately €9 million in fixed assets, and employ at least 100 additional employees throughout the investment period.
Carrying Forward of Losses
The tax loss stated in the tax return can be carried forward and offset against future profits over a period up to 5 years.
Avoiding Double Taxation
If a taxpayer already paid tax on the profit generated abroad, he is entitled to a Corporate Profit Tax credit in Serbia to the already paid amount. The same right is enjoyed by a taxpayer who earns revenue and pays Personal Income Tax in another country, provided there is a Double Taxation Treaty with that country.
Reduced Salary Load
From July 1st, 2014 new employment entitles employers have a sizable relief of taxes and contributions paid on net salary from the moment of employment until June 30, 2016.
- 1-9 new jobs: 65% reduction;
- 10-99 new jobs: 70% reduction;
- 100+ new jobs: 75% reduction.
This reduces the total salary load to very competitive 20%*
*an estimate for an average salary in Serbia
Annual Income Tax Deductions
For non-Serbian citizens, the annual income is taxed if exceeding the amount of threefold the average annual salary in Serbia. The tax rate is 10% for the annual income below the amount of 6 times average annual salary in Serbia, and 15% for the annual income above the amount of 6 times average annual salary in Serbia. The taxable income is further reduced by 40% of an average annual salary for the taxpayer and by 15% of an average annual salary for each dependent member of the family. The total amount of deductions cannot exceed 50% of the taxable income.
Value Added Tax Exemptions in Free Zones
Income generated through commercial activities in the Free Zones in Serbia is exempted from Value Added Tax. There are six Free Zones, currently operating in the country: Subotica, Novi Sad, Zrenjanin, Sabac, Kragujevac, and Pirot. Three more zones are being prepared in Nis, Smederevo and Uzice. Foreign companies can establish a privately-owned Free Zone based on the project approved by the government.
III OTHER INCENTIVES
Customs-Free Imports of Raw Materials and Semi Finished Goods
Foreign investors in Serbia can enjoy the benefit of customs free import of raw material and semi-finished goods for export oriented production. This benefit can either be achieved by operating in one of the free zones in Serbia or by a permit from custom office for outward processing production. In both cases finished products must be 100% designated for export.
Customs-Free Imports of Machinery and Equipment
Foreign investors are exempt from paying customs duty on imported equipment and machinery which represents the share of a foreign investor in a capital of a company in Serbia.
A wide array of incentives is also available at the local level, varying in scope and size from one city to another. The major ones comprise the following:
- City construction land lease fee exemptions or deductions, including the option of paying in installments, with the prior consent of the Serbian Government;
- City construction land development fee relief such as fee exemptions or discounts for one-off payments;
- Other local fees exemptions or deductions.
As you see there is many incentives that can be granted to our company, we tried to explain them in brief text and we hope that we succeeded.
If you have any questions or need additional information, feel free to contact our office.