About companies in Serbia
A company is established on an indefinite or definite basis time. A society is considered to be founded on the indefinite time if the founding act, ie the statute, is not otherwise specified. The company has a predominant activity, and may perform other activities that are not prohibited by law, regardless of whether they are determined by the founding act, that is, the statute, which is one of the significant advantages of Serbian company law.
Legal forms of company which exist in Serbian company law are:
- Limited Partnership
- Limited liability company
In their business name, legal forms may also be marked with abbreviations: shorten for Partnership O.D.; shorten for Limited partnership K.D., for Limited liability company D.O.O. and for Stock company A.D.
Types of companies
Given the importance, we will deal with the two most commonly used forms.
A limited liability company is a company in which one or more members (natural and / or legal persons) have shares in the share capital. Society members are not liable with their property for the obligations of the company, except in in case of abuse of the limited liability rules.
- Minimum share capital 100 RSD
- The establishment of a limited liability company begins with the submission of a registration application to the Business Registers Agency
- The maximum number of members of the society is limited to 50
- It is necessary to enclose a photocopy of the identity card or passport for natural persons and / or an excerpt from the register in which the legal entity is registered, as proof of the identity of the founder.
- A LLC is established by a decision on establishment if the founder is one member, or by a founding agreement if there are several founders. The minimum obligatory content of the founding act includes: marking of the founders – members, business name and seat, activity, amount of share capital and individual deposits, as well as the manner and time of payment of cash deposits and description and value of non-cash deposits. The signatures of the founders of the company on the founding act must be certified
- Cash and non-cash investment when founding a company must be paid, ie entered within the deadline specified in founding act, and that period cannot be longer than five years.
- Advantages: limited liability for all members which means that all members are liable only up to the amount of their stake, management flexibility – the owners themselves form the management structure of the company. In this company, its members participate in the management, but they can entrust the management to an individual, a board or the majority of owners;the company pays lower taxes.
- Disadvantages: founding this company is expensive any changes in terms of address, new activities are expensive … the transfer of ownership shares is limited. The transfer of shares is limited by the right of pre-emption of the company and members.
A joint stock company is established by one or more natural / legal persons, shareholders, and the share capital of the company is divided on stocks. Shareholders are not liable for the company’s obligations, except in case of abuse of the limited liability rules. The joint stock company is liable for its obligations with all its assets.
A joint stock company can be public (the one that issued securities) and non-public.
- The shareholders who establish the company sign the founding act and the first statute of the company.
- Shareholders’ shares can be in money, things and rights, expressed in dinars.
- The shareholder’s role cannot be in the work or provision of services joint stock company.
- Minimum share capital for the establishment of a shareholder company amounts to 3,000,000.00 dinars, unless a special amount provides for a special law.The nominal value of one share cannot be lower than 100 dinars.
- Prior to the registration of the company, the shareholders are obliged to pay, that is, enter deposits that represent at least 25% share capital, with the amount paid in cash part of the share capital cannot be lower than the amount of the minimum share capital.
- Cash and non-cash investment when founding a company or capital increases must be paid, ie entered within the deadline specified in the founding act, ie the decision on capital increase, and that deadline for the public shareholder a company cannot be longer than two years
- Adventages: limited liability for shareholders, sustainability of business, ability to increase capital through a public call, transferability of ownership and centralized management.
- Disadventages: formalities at establishment, double taxation, obligation to submit data, documents and financial statements and legal and other costs.
Setting up companies in Serbia
In order for a company to be able to start operating and acquire the property of a legal entity, it is necessary to fulfill a certain number of conditions and to pass the registration procedure.
Companies are registered with the Business Registers Agency in accordance with the law on registration. By registering in the Register of Companies, all information about the company becomes available to the public and authoritative for third parties. What companies can register are: establishment, connection and termination of the company, status changes and changes in the form of organization of that company, data on the company important for legal transactions, data related to the bankruptcy procedure, as well as other data determined by law.
The two basic data on a company are the identification number and the tax identification number without which the company cannot be registered.
The registration number is assigned to the company by the Statistical Office of the Republic of Serbia and is kept in the Register under this number.
The tax identification number (PIB) is assigned by the tax administration and it is the unique and only number of the legal entity for all public revenues and is retained when changing the seat or residence of the taxpayer.
Information about companies in Serbia
Company information is transparent and accessible to interested parties. There are also data that represent a business secret and which are not published publicly due to the protection of the company’s operations.
Basic data on the company, data on members of the company, representatives, branches, financial reports, pledges on movables, court injunctions and financial leasing can be found on the website of the Business Register Agency.
Information on owners, capital, stock trading and takeover bids can be found on the website of the Central Securities Depository.
Data on the blockade of the company and on the company’s accounts can be found on the website of the National Bank of Serbia.
Labor law framework
All rights, obligations and responsibilities arising from employment are regulated in two ways: by state regulations and regulations that arise with the consent of employers and employees. State regulations represent the Labor Law, as the basic law that regulates this branch of law in its entirety, or numerous special laws, which regulate in detail certain aspects of labor law. Regulations created by an agreement between employers and employees are a collective agreement and an employment contract, which must be in accordance with state regulations.
In Serbia, there is a possibility of performing work both within and outside the employment relationship.
When it comes to performing work within an employment relationship, the most important forms are a fixed-term employment relationship and an indefinite employment relationship which can only be concluded if there are objective reasons for it.
Regarding the performance of work outside the employment relationship, its most common forms are temporary and occasional jobs, work contract and additional work.
The above forms of work can be performed full-time (40 hours per week), part-time (less than 40 hours per week), part-time and overtime. As a rule, the working day lasts eight hours, and the working week five days. After one month of uninterrupted employment with the employer, the employee acquires the right to annual leave for the duration determined by the employment contract, whereby that annual leave may not last shorter than 20 working days for one calendar year. It is interesting to point out that an employee cannot be denied the right to annual leave, or even replaced with monetary compensation, except in the case of termination of employment.
Total salary of an employee in Serbia is made up of salary for work performed and time spent at work, salary based on the employee’s contribution to the employer’s business success (awards, bonuses, etc.) and other income based on employment. The minimum gross salary for 2020 is 40,000 RSD, or 335 euros
The notion of earnings in terms of applicable labor law implies gross rather or net earnings, given that, in Serbia, earnings include both contributions and income tax. There are three types of contributions: pension and disability insurance contributions, health insurance contributions and unemployment insurance contributions. Contributors are for both the employer and the employee, bearing in mind that one part of the contribution is paid “at the expense” of the employee and the other part “at the expense” of the employer.
The applicable contribution and tax rates are as follows:
- Contributions for pension and disability insurance at the expense of the employee amount to 14% of gross salary, and at the expense of the employer 11% of gross salary;
- Health insurance contributions at the expense of both the employee and the employer amount to 6.15% of gross salary;
- Unemployment insurance contributions amount to 0.75% of gross earnings;
- Income tax is 10% of gross earnings.
Taxation in Serbia
In accordance with the Law on Corporate Income Tax, a taxpayer is a resident of the Republic of Serbia who is subject to taxation received on the territory of the Republic of Serbia and abroad.
A resident taxpayer is, in the sense of this law, a legal entity established or having a place of actual administration and control on the territory of the Republic
A non-resident of the Republic is subject to taxation of profit generated by operating through permanent business units located in the territory of the Republic.
For the purposes of this Law, a non-resident taxpayer is a legal entity established and having a place of actual administration and control outside the territory of the Republic.
Corporate income tax rate is 15%