How to establish (Open) a company in Serbia
Establishing a company in Serbia is becoming an increasingly popular step among entrepreneurs who want to take advantage of favorable economic opportunities and start their own business. However, the very process of registering an entrepreneur or company requires precise planning and knowledge of legal procedures.
To avoid common mistakes and ensure a smooth operation from day one, it is crucial that you familiarize yourself with all the steps – from submitting your application to the Agency for Business Registers (APR) until the fulfillment of tax and administrative obligations. In this guide, find out everything you need to start your business successfully. Considering the complexity of the procedure, it is important that you have help from the very beginning from a corporate law attorney.
Are you planning to establish a company in Serbia?
Establishing a company involves a number of legal steps — from the choice of legal form and activity to registration in the register and tax obligations. If you want expert legal support to make the process simple and error-free, our commercial law lawyers are here to help.
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Choosing the legal form of a BUSINESS COMPANY
Law on Business Companies of the Republic of Serbia prescribes the existence of 4 legal forms of business companies, namely:
- General Partnership,
- Limited Partnership,
- Limited Liability Company, and
- Joint Stock Company.
In addition to these business structures, individuals can conduct business as entrepreneurs. You can find all questions and answers on the topic of how to open an entrepreneurial store on our website blog.
Given that the largest number of entrepreneurs in Serbia decide to carry out business activities in the form entrepreneurial activities (PR) or limited liability companies (LLCs), in the following text we focus on registration of LLCs and entrepreneurs, as well as practical differences between LLC and PR.
These two legal forms differ by several criteria - including tax treatment, personal liability of the founder, administrative obligations, as well as the possibility of business growth and development.
That's why it's important to see everything clearly advantages and disadvantages of opening an LLC in relation to entrepreneurial activity, in order to choose the legal form that best suits the nature of your business and the planned volume of business.
Choosing a business name
In addition to choosing a legal form, choosing a business name is one of the most important steps in the process of establishing a company. In addition to the legal requirements that the business name of your company must meet, it is necessary to take into account other effects that the company name can cause.
The business name consists of the name itself, the legal structure (e.g., PR or LLC), and the company’s registered address.
As for the legal aspect of choosing a company name, there are extremely strict rules for establishing a company, the non-compliance of which can lead to the Agency for Economic Register (APR), to reject your registration application.
Your company name must be unique and sufficiently different from other businesses in the same or similar industry to avoid confusion.
Therefore, before starting the registration, you need to check with the APR, whether the name you have chosen for your company is unique enough and whether the APR will allow the registration of such a company name, you can get help when checking the availability of the desired name from a commercial law attorney.
To facilitate this, the APR allows for name reservation giving you exclusive rights to the name for 60 days before official registration.
Documentation for establishment (opening) of the company
Properly preparing registration documents is crucial for a smooth business operation in the future.
The required documentation varies depending on whether you choose a sole proprietorship (PR) or a limited liability company (LLC).
For LLC registration, you will need:
- The Founding Act
- A copy of your ID card or passport
- A decision on appointing the director
- A registration application.
The Founding Act of LLC
The founding document is the basic and most important document in your future company. It determines the most important elements for your future business, such as: the headquarters of the company, the predominant delta, the amount of the basic capital, the shares of the members, the time of payment or the introduction of contributions to the founding capital, determining the jurisdiction of the LLC authorities.
In order to avoid problems in later business, it is advisable to hire a law firm specialized in company law.
The registered address of the LLC
The registered address serves as the company’s official business location and postal address.
Prevailing business activity of the LLC
During company registration in Serbia, one of the key steps is the choice predominant activities which your company will perform. The predominant activity is determined in accordance with Regulation on the classification of activities, and should reflect the jobs your company will be doing most often deal with.
However, it is important to know that a registered company can, in addition to the main ones, also perform other activities which are permitted by law. Therefore, it is advisable to carefully consider all the services or products you plan to offer, in order to correctly define the activity in accordance with the planned business.
Also, for certain types of activities — such as transport, education, catering, employment mediation and others — it is necessary to obtain special permits or consents from the competent authorities beforehand. That is why it is extremely important that before registering your company in APR, you check whether it is required for your chosen activity special permit or license, in order to avoid doubts as to whether a permit is required for the performance of your desired activity or not, consult with a lawyer for company formation.
The founding capital of the LLC
The founding capital represents the financial foundation of the company. It can be in cash, assets, or rights, but its value must be expressed in monetary terms.
The minimum founding capital for an LLC in Serbia is 100 dinars, however, the amount of the founding capital varies depending on the desired activity of the company, and the decision on how much the founding capital of the company will be is made by the founders.
The ownership structure of the LLC
The share of an LLC member represents the percentage of his ownership in the company's share capital.
In Serbia, the minimum number of company members is not determined, so the company can have only one member, as a result, single-member LLCs are common. In addition, the maximum number is not determined.
In proportion to the shares, members acquire numerous rights, such as: the right to pay profits, voting rights in the company's assembly, rights to participate in the company's work and many other rights. The detailed regulation of the share of members, as well as the majority for decision-making in the company's business in the founding act, is a key step in order to avoid conflicts in the decision-making process or possible blockage in decision-making, which almost always causes a decline in the company's business.
Representation of the Company and Appointment of a Legal Representative
In addition to the aforementioned sections of the Founding Act, this document can also regulate the company’s representation,including the appointment of a legal representative (director) of the LLC. Although naming a director in the Founding Act is not mandatory—since they can be appointed through a separate decision—many founders choose to regulate representation within a single document for clarity and efficiency. The company’s representative can be any legal entity or an adult individual, including the sole member of the company.
Company Stamp
It is also important to note that the use of stamps is now only a possibility, but not an obligation, so you should decide in the founding document whether you will use a stamp or not. Although the use of the stamp is not an obligation, if you opt for the use of the stamp in the founding deed, you are obliged to use the stamp in your future business.
Certification of the Founding Act and LLC Registration Application
The founding deed is signed by all the founders, but its authentication before a notary public is no longer mandatory, since its authentication can also be performed by a lawyer. To successfully register an LLC with the Serbian Business Registers Agency (APR), you must possess a valid ID card or passport if you are a Serbian citizen, or a valid passport if you are a foreign national.
The final step in document preparation is submitting the Registration Application to APR.
The last step in the preparation of documentation is the registration application in APR. The registration application is a form with all the elements important for your company, it is filled out electronically and submitted through the APR online service. The registration application is a document that is attached to the registration of an Entrepreneur, as well as to the registration of an LLC.
Submitting an application to the Serbian Business Registers Agency (APR)
The final registration step involves submitting the completed application and required documents to the APR.
In the case of entrepreneurs, registration in the APR can be done both physically in the premises of the APR, as well as electronically, while for LLCs the only way to register is electronically, which can only be done by registered users.
Registration of beneficial owners of LLC
After you submit a registration application for the establishment of a company at the Agency for Business Registers (APR), the APR makes a decision within a maximum of 5 working days. If the application is approved, the next important step for the newly established limited liability company (LLC) is the registration of beneficial owners in the Central Register of Beneficial Owners (CESV).
This registration is a legal obligation and must be completed no later than 15 days from the day the company was officially registered in the APR. The procedure is carried out electronically, using a qualified electronic certificate of the legal representative of the company (most often the director).
All natural persons who own at least 25% shares in the founding capital of the company are registered as real owners of the company.
The importance of this step should not be overlooked: failure to register real owners within the legal deadline can lead to a misdemeanor fine in the amount of 500,000 to 2,000,000 dinars, in accordance with current regulations.
Therefore, it is recommended that the registration of real owners is planned and carried out immediately after the establishment of the company, in order to avoid unnecessary risks and additional costs in business.
Opening a company bank account
After completing all the previous steps, you need to open your company's bank account in the Republic of Serbia. The choice of bank is your choice, however, it is extremely important that you choose the bank that will be able to provide you with the best service for your business in the future. It is especially important to pay attention to whether the bank does business with countries abroad with which you plan to do business, the possibilities of electronic banking, as well as credit conditions.
company taxation
Both sole proprietors and LLC companies must decide on a taxation method.
For sole proprietors, Serbian tax law provides three taxation options:
- Lump-sum taxation
- Self-taxation
- VAT taxation
Flat rate taxation of ENTREPRENEURS
Lump-sum taxation is the simplest option, involving a fixed monthly tax amount regardless of income.The tax amount is determined based on the business activity and location.
You can get an approximate calculation of your monthly taxes and contributions using the Tax Administration's online calculator, available at the following link: Lump sum calculator.
This tool helps business owners estimate their financial obligations based on their chosen legal structure and other relevant factors. It is suitable for small businesses, as it eliminates the need for bookkeeping and annual financial statements.
All entrepreneurs who do not make a profit of more than 6,000,000 dinars during the calendar year have the right to flat taxation. You can find all the details about flat-rate taxation on our website blog about lump sum entrepreneurs.
For a Limited Liability Company (LLC), lump-sum taxation is not an option. Instead, you can choose between VAT registration (if your company meets the legal requirements) or self-assessment taxation, where the company calculates and pays taxes based on its actual financial operations. Selecting the appropriate taxation method is crucial for optimizing your business’s financial obligations.
Self-taxation of ENTREPRENEURS
Self-taxation requires businesses to maintain financial records and hire an accountant.
Companies earning between 6,000,000 RSD and 8,000,000 RSD must use this method
All entrepreneurs with income between 6,000,000 RSD and 8,000,000 RSD are obliged to apply this method of taxation, except in the case when they decide to register for VAT.
VAT registration of ENTREPRENEURS
VAT taxation applies to businesses with an annual income exceeding 8,000,000 RSD.
It allows businesses to recover VAT paid on goods and services required for operations.
For LLC companies, flat-rate taxation is not an option, so they must choose between VAT registration or self-taxation.
Costs of Company Registration in Serbia
The cost of registering a company in Serbia varies depending on whether you establish an entrepreneurship or a LLC.
For a LLC, the fees include: • APR administrative fee: 6,150 RSD, • Qualified electronic signature for the director: approximately 5,000 RSD.
For a sole proprietorship, the APR administrative fee is 1,560 RSD.
Bearing in mind all of the above, we come to the conclusion that establishing a company is not a complicated process, however, in that process it is extremely important to be careful and to try to foresee all possible problems in the later business and to warn them within the scope of legal possibilities. In addition, we advise you to contact us in this procedure as Experts in Corporate Law, in order to avoid any inconvenience in later business.
FAQ
1. The difference between an entrepreneur and a doo?
The entrepreneur is liable with all his assets, it is easier and cheaper to establish. DOO has a minimum founding capital (100 dinars), liability is limited to the company's assets.
2. How long does the company registration process take?
After all the documentation is obtained and the application for opening a company is submitted, the company is opened in 3-5 working days if the documentation is complete and correct.
3. Where is the company registered?
The company is registered before the Serbian Business Register Agency.
4. Can a foreigner establish a company in Serbia?
Yes, a foreigner can be the founder and owner of an LLC.
