Serbia is currently one of the most popular destinations for investments, business, relocation, and banking. It has worked hard to create a favorable legal framework that has attracted major investors from China, Europe, America, and Asia. However, there are also a lot of small and medium-sized businesses here registered by non-residents to take advantage of low taxes, the lowest utility bills in Europe (this is especially valuable if you want to set up production facilities here), and excellent banking services at prices much lower than in Western European countries (though the quality is comparable!). Interested in Serbia? You can get more details on the site where you will find a practical article on every aspect of life in Serbia.
Kinds of Business that Non-Residents Set Up in Serbia
Let’s look at the legal forms of companies available in Serbia at the moment:
- Branch or representative office of a company based abroad.
- Joint-stock company is a good choice for large-scale businesses that requires the presence of a supervisory committee, an auditor, a secretary, directors, and shareholders. If you want to set up a JSC, you will have to pass the minimum authorized capital threshold of RSD 3 million (about 25,500 euros), with a quarter of this amount being deposited into the bank account when the entity is actually registered. You can choose a closed or an open JSC.
- Limited liability company. This is naturally the most popular legal form, and it can be set up by just one person with no authorized capital limits (it can be 1 euro if you want to). This is an ideal structure for small and medium-sized businesses, and you will only need a founder or a legal representative to form it.
- A general partnership is an entity where its members (partners) have equal rights and obligations.
- A limited partnership includes a general partner (business founder) and one or several limited partners (entity participants). A general partner bears unlimited liability for the partnership’s debts (that is, with all his or her personal property), while the liability of the limited partner is limited by the amount of his or her contribution to the authorized capital.
- Individual entrepreneur, also referred to as a sole proprietor, is the easiest business form to establish. The individual entrepreneur bears unlimited liability for his or her debts. This form can be easily registered online using a centralized registration system of the Business Registers Agency.
Risks of Doing Business in Serbia
Let’s note that Serbia is not a risky country for doing business, so you should not expect anything out of the ordinary. However, business is a risky affair per se, and you should simply be aware of possible risks before you venture into the local market.
Expenses
The risks connected with expenses include the costs of energy, raw materials, logistics and travel, and labor, and this risk was noted by 90% of entrepreneurs polled. The problem is more acute now as compared to the previous years.
These concerns are nurtured by a high inflation rate in the country which brought about higher consumer prices and expenses. Of course, it had its effect on businesses as well.
Relations with the EU and Workforce
53% of those polled noted a major risk of a shortage of workforce and qualified specialists in the country. Of course, the Serbian government is aware of this tendency, so it takes measures to improve the situation by simplifying the employment of foreign labor migrants.
The relations with the European Union remain a major concern noted by almost half of respondents. Of course, this topic is more about politics, but it also influences the country’s economic matters and the interests of local and international investors. As the conflict in Kosovo seems to be simmering and Serbia refuses to impose sanctions against Russia, European politicians may set barriers to the country’s EU membership or delay it endlessly. The biggest risk is the minimization of investments in the country.
Other Risks
Here are some miscellaneous risks that may also play a role:
- The interest rates may increase
- Corruption risks
- The consumer purchasing power may decrease
- Businesses may have debts, and it will be impossible to collect them
- The low of private investments may decrease considerably
- Finally, the demand in the consumer market may show a substantial decline
Let’s note, however, that the Serbian business elite has ambiguous expectations, but most respondents still expect all the indicators to improve rather than deteriorate.
International Risks for Serbian Business
Here are the main macroeconomic indicators in Serbia in 2023:
- The government debt fell to 55.5%
- The GDP budget balance decreased by 2.7%
- The average annual inflation rate reached 9.5%
- The GDP growth rate equals 2.3%
The country also has its strong points:
- It conducts reforms of the public sector in coordination with the IMF.
- Serbia has concluded an agreement with the EU, allowing the country to import 93% of products without customs duties.
- The state is rich in natural resources, such as lithium, silver, gold, bauxite, lead, zinc, copper, and coal.
- The local automotive industry is growing at an impressive speed.
- Serbia is an important producer of fruits, vegetables, and grains.
We will not hide from you that there are some negative aspects of the Serbian economy:
- The informal economy sector is substantial, accounting for about 14% of employment and 20% of GDP.
- Corruption, harassment of customs, and slow judicial proceedings are a major problem.
- The friendly relations with Russia and the Kosovo conflict result in dissatisfaction among the Western countries and produce a negative influence on the country’s economy.
Conclusion
The risks we have considered are pretty much the same as in other European countries, which means that Serbia is a viable choice when it comes to starting a business. The state’s popularity with foreign entrepreneurs and investors is in no way deteriorating despite all the mentioned issues. Do not hesitate to click on the above link to discover Serbia in more detail or get a free session with an expert to discuss the prospects of your business.
