1. Why invest in Serbia?
There are several reasons to invest in Serbia, but a highly skilled and affordable workforce is often highlighted as one of the most important.
Serbia is known for its highly educated and talented workforce, particularly in the IT sector. Developers and engineers from Serbia are internationally competitive, proficient in English, and continuously improving their skills. Moreover, they offer a significant advantage due to much lower wages compared to Western countries, making it a smart decision to invest in Serbia high skilled low cost workers.
According to recent data, the average IT salary in Serbia is around €2,200, while in Western Europe, it exceeds €5,000.
Another reason to invest in Serbia is certainly tax reliefs, especially for IT and R&D companies. This includes the IP Box regime/relief, which allows licensing revenue to be taxed at only 3% instead of 15%.
Additionally, companies engaged in research and development can benefit from reduced taxes and social insurance contributions on salaries for employees in the R&D sector.
Furthermore, in some municipalities, investors have the opportunity to receive free land if they plan to open production facilities. This investment becomes particularly profitable considering that the Serbian government provides subsidies for developing manufacturing capacities. (For example, in 2024, more than €46 million was allocated to support this type of industry).
In addition, Serbia has free trade agreements with China, the EU, Russia, and Turkey, granting access to a market of billions of consumers.
Finally, while in Serbia citizenship by investment is not an option, starting a business can provide a solid pathway to residency. This means that after three years of living in the country, you can apply for permanent residency and, eventually, for Serbian citizenship through standard naturalization processes."
There is also the possibility of obtaining citizenship by a Government of the Republic of Serbia’s decision based on interest for Serbia. However, there are no precise criteria defining what qualifies as such an interest, giving the Government discretionary power to grant citizenship at its own estimation.
2. Investment Opportunities in Serbia
Serbia is increasingly positioning itself as a key investment destination for foreign investors, particularly from China and Turkey.
Thanks to strong diplomatic relations with these countries, as well as initiatives like the "One Belt, One Road" and duty-free trade agreements, investors from China and Turkey can benefit from additional security and support when doing business in Serbia.
Below, we will explore in more detail the reasons why investing in Serbia is especially attractive for investors from these countries.
1. Reasons for Chinese Investment in Serbia
There are several reasons for Chinese investments in Serbia.
To begin with, the Made in Serbia label allows Chinese companies to bypass customs duties when exporting products to the EU. Additionally, Serbia offers a favorable regulatory framework with minimal barriers for foreign investors, making the investment process faster and easier compared to the EU.
Overall, this presents an excellent opportunity for Chinese companies to expand their operations in the region.
We can also discuss the reasons for Chinese investments in Serbia by sectors:
- Automotive Industry: Chinese companies, particularly in the electric vehicle sector, can use Serbia as a manufacturing hub for exports to the European and American markets. With favorable market access, production in Serbia can reduce manufacturing and distribution costs.
- Agriculture and Food Industry: Serbia has a rich agricultural tradition and favorable climate, making it an ideal destination for investments in food and beverage production. Chinese companies can invest in food processing, organic products, and the production of wine, juices, and alcoholic beverages, which are increasingly in demand on the European market.
- Textile Industry: Serbia has a well-developed textile sector and competitive labor costs, creating opportunities for clothing production for both domestic and international markets, including the EU.
- IT and Software Services: Serbia is becoming an increasingly important hub for IT and software services, offering Chinese companies opportunities to invest in promising startups, software development, and IT outsourcing. Additionally, Serbia is highly competitive in advanced technologies such as artificial intelligence, blockchain, and cloud computing.
In addition to Chinese investments, Turkish investments are also quite popular in Serbia.
2. Reasons for Turkish investments in Serbia
In addition to the similarities in business culture between Serbia and Turkey, Serbia offers Turkish investors several competitive advantages, such as low labor costs and a favorable business environment from a tax and regulatory perspective.
Turkish companies, for example, can focus on the construction sector, as Serbia is currently experiencing significant development in infrastructure projects, including residential and commercial real estate, as well as public infrastructure projects.
Furthermore, green building and energy efficiency are becoming increasingly important, providing additional investment opportunities in eco-friendly projects.
Finally, trade and logistics also present a significant opportunity, given Serbia's strategic position as a key transit point for goods between the East and the West.
3. Foreign direct investment in Serbia
Some of the most prominent foreign investors in Serbia include:
- Continental (Automotive industry)
- Microsoft (Technology/Electronics)
- MINTH (Automotive industry)
- Linglong Tire (Tires)
- HBIS Serbia (Steel and steel industry)
- Yanfeng (Automotive industry)
- Zijin (Mining)
- Johnson Electric (Electronics)
How has Serbia managed to attract such large investments over the past few decades?
In addition to the previously mentioned financial reliefs and advantages for foreign investors, there are several specific reasons that make direct investments in Serbia profitable.
First and foremost, there are Greenfield and Brownfield projects, both in the manufacturing sector and in service industries based on information and communication technologies (especially for clients outside Serbia). The Serbian government provides financial support for these projects, making investment in them even more attractive.
Additionally, we mentioned certain tax reliefs for employment. To highlight their full scope, it is important to note that foreign investors who employ more than 100 workers and invest over €8.5 million in Serbia can benefit from corporate income tax relief for a period of 10 years.
The best part is that this investment does not have to be used within a strictly defined timeframe, giving investors the flexibility to distribute their investment over one, five, or even twenty years. Once they reach the €8.5 million investment threshold and 100 employees, they can begin utilizing these tax reliefs.
Furthermore, employers who hire individuals registered with the National Employment Service for more than six months are entitled to a significant tax relief on the net salaries of these employees from the moment of hiring.
Specific incentives include:
- 1-9 new job positions: 65% reduction in payroll tax
- 10-99 new job positions: 70% reduction in payroll tax
- 100+ new job positions: 75% reduction in payroll tax
This makes hiring workers in Serbia a very attractive option for companies looking to expand their business.
Among other benefits, it is also worth mentioning:
- Serbia has signed 64 effective double taxation treaties that covering income, capital, and property. These agreements include most of European countries, as well as many countries in Asia (including China) and Africa, reducing the risk of double taxation for investors. This is especially beneficial when profits are transferred between Serbia and other countries, as companies do not have to worry about taxation in both jurisdictions.
- Subsidies for investment projects, particularly in sectors such as manufacturing and IT services. These subsidies can take the form of financial grants per employee, favorable land conditions for factory construction, or other reliefs, depending on the nature and scale of the investment.
All these reliefs have successfully supported the government's long-term goal of attracting high-value foreign investments that contribute to economic growth, employment, and innovation in Serbia, making the country an increasingly attractive destination for global companies.
4. Company Formation In Serbia
Starting a business in Serbia can be considered as a form of direct investment in the country, as foreign investors who decide to establish a company here not only invest capital but also directly contribute to economic development, creation of new job positions, and market growth.
What are the benefits of such an investment?
To begin with, it is useful to know that the company registration process in Serbia is extremely simple.
Foreign investors do not need any special permits for this endeavour, unlike in many EU countries. The only required permits are industry-specific, such as a license from the Ministry of Energy for gas trading. However, that requirement apply equally to both domestic and foreign investors.
Additionally, it is possible to establish a company in Serbia without physically coming to the country. This requires authorizing a lawyer in Serbia through a special power of attorney, which must be notarized in the founder’s home country and certified with an apostille stamp. The lawyer in Serbia then handles all steps of company registration and the establishment process.
We have already covered tax reliefs as an additional benefit in previous sections of this article.
5. Best business to start in Serbia
The answer to the question of what type of company to register in Serbia largely depends on your skills, interests, and the industry in which you plan to operate.
For example, Serbia has proven to be an ideal business environment for IT companies, as they can take advantage of numerous tax reliefs such as the IP Box and R&D reliefs. These benefits are particularly useful for companies developing their own products and investing in research and development (not only for tech companies but for any business engaged in creating new products!)
Additionally, as previously mentioned, Serbia offers a highly skilled workforce with excellent English proficiency, making it another key reason why many global IT leaders choose to establish their businesses here.
When it comes to the manufacturing sector, Serbia provides significant export advantages. For instance, if you open a factory, you can export products to the EU, China, Russia, Turkey, and many other countries without paying customs duties, thanks to the previously mentioned free trade agreements.
This is especially beneficial for Chinese companies looking to sell their products in the EU (by opening a factory in Serbia, their products are not treated as imports from China, helping them avoid additional costs).
Regardless of the business occupation, the most commonly registered business structure in Serbia is a Limited Liability Company (DOO), where founders are not personally liable for the company’s debts.
Registering a DOO is quick and simple—it can be completed within just a few days, and the minimum required capital is only 100 RSD. This legal structure allows for flexible business management and easy transfer of company shares, making it an excellent choice for collaboration and future growth.
6. How to invest in Serbia?
Serbia offers numerous investment opportunities, but it is crucial to understand how to invest properly and which investments are most rewarding.
For example, in recent years, Serbia has become a particularly attractive market for foreign investors due to the growing number of startups with significant growth and development potential. Moreover, licensed venture capital (VC) and private equity (PE) funds, which have recently entered the Serbian market, are increasingly investing in startups, even in the pre-seed stage.
Alongside startups, there are also many other opportunities for investing in already established, stable businesses.
Though, the generational shift of ownership in many companies – often because children are not interested in continuing the family business – creates a market for sales and acquisitions. Many of these businesses, although stable and profitable, are not optimized and do not use modern technologies (such as digital marketing, automation, and websites), which means that with the right approach, they can achieve significant growth and profit increases.
In essence, investing in these businesses provides an opportunity to improve their operations and quickly realize a return on investment.
However, in order to successfully invest in such businesses and reduce the risks of your investment, it is crucial to have qualified legal support. Therefore, we recommend hiring reliable lawyers who specialize in investments, as they will be your partners throughout the entire process – from advising on sector and investment type selection to the actual investment.
One of the most important aspects of this process is due diligence analysis, which is a standard practice in the investment industry. Through a detailed review of the company’s operations, finances, and legal obligations, the lawyer will provide you with a clear picture of the risks associated with the investment and the company’s potential for growth.
When it comes to establishing a business in Serbia, the lawyer can offer a turn-key service that covers all legal aspects of setting up and launching the business. This includes tax and legal advice prior to the company establishment, preparing the necessary documents, opening a business bank account, and obtaining all required permits (if needed for specific industries such as oil trading, medical equipment, or establishing a bank or cryptocurrency exchange).
All in all, to ensure compliance with Serbian legislation, the lawyer will support you through all stages of the investment – from company establishment to optimizing existing businesses.
Investment Lawyer in Serbia
If you are planning to invest in a Serbian startup, company acquisition, establish a new business in the country, or explore any other form of investment in Serbia, the Pekić law firm provides legal support in the form of due diligence analysis, preparation of all necessary legal documents for this process, and guidance throughout the entire investment process.
For any additional information or inquiries regarding investments in Serbia, feel free to contact us via email at [email protected] or fill out the contact form on our website.