Accounting for a Software & IT Company in Serbia: What Foreign Founders Need to Know

Your development team sits in Belgrade. Your clients are in Berlin, London, and Austin. You invoice in euros and dollars, you pay for cloud hosting and a dozen SaaS tools to vendors on the other side of the Atlantic, and somewhere back home there’s a board — or a parent company — that wants clean monthly numbers.

On paper, your Serbian company is a fairly ordinary limited liability company. In practice, almost everything that matters in its books happens across a border. And that’s exactly where generic accounting advice — and generic accounting — starts to fall short.

Most of what’s written about IT companies in Serbia covers how to set one up and which tax incentives sound attractive. Very little explains what running one actually looks like in the books. This guide fills that gap: what’s genuinely different about accounting for a software or IT company in Serbia, and why the answer depends first and foremost on what kind of IT company you are.

Table of contents:

First: which kind of IT company are you?

“IT company” covers several very different businesses. Before anything else, it helps to know which one you’re running, because the business model decides where the accounting effort goes.

Many companies are a blend — a development centre that also sells to a few outside clients, or a service company building its own product on the side. That’s fine. The point is to know which flows dominate, because they decide what your accountant needs to get right first. The sections below come back to these three models throughout.

Invoicing foreign clients

If you’re a service company, most of your revenue comes from invoicing businesses outside Serbia — and that raises the first question every founder asks: do I charge Serbian VAT?

As a general rule, services supplied to a business customer established abroad are treated differently for Serbian VAT than sales to Serbian customers, and in many cases no Serbian VAT is charged. But that general rule has exceptions that depend on the type of service, and the treatment has to be supported by documentation — your contract, and evidence that your customer is a business established abroad. Get the documentation wrong and the VAT treatment can be challenged after the fact.

Your invoicing obligations also differ by customer. Serbia’s mandatory e-invoicing system, SEF (Sistem elektronskih faktura), is built around domestic transactions; invoices to foreign clients follow different rules, but they still have to be recorded correctly for VAT purposes. A good accountant sets this up once, so every invoice you issue lands in the right place automatically.

Getting paid in foreign currency

Most IT companies in Serbia earn in euros or dollars, and that brings its own routine — nothing difficult, but worth understanding.

Invoicing a foreign client in foreign currency is standard practice. The money typically arrives in your company’s foreign-currency account, and your bank will ask you to state what each incoming payment from abroad is for — and may ask for the supporting invoice or contract. Keeping that link between invoice, contract, and payment clean makes the process painless.

Your books, meanwhile, are kept in dinars. Every foreign-currency transaction is converted, and the movement in exchange rates between the invoice date and the payment date creates exchange differences that flow through your results. That’s normal — but it means your accountant should be translating the numbers into something you can read in your own currency, not just handing you dinar figures you have to reconvert yourself.

Billing your parent: the captive development centre

If your Serbian company exists to develop software for its foreign parent, its revenue comes from a single customer — a related one. That changes the accounting picture considerably.

Captive development centres are commonly paid on a cost-plus basis: the parent reimburses the Serbian company’s costs plus an agreed margin. The key principle is that transactions between related companies have to be priced as if the two companies were independent — the arm’s-length principle — and that pricing has to be documented. In Serbia, that documentation is part of the company’s annual tax compliance, not an optional extra.

This is also an area tax authorities pay attention to, because intra-group pricing determines how much profit is taxed in Serbia versus elsewhere. The good news is that, for a well-run development centre, transfer pricing doesn’t have to be a scramble at year-end — it should be a natural output of clean, well-structured books. We cover the documentation side on our transfer pricing reports page.

Paying for tools and services from abroad

Every IT company buys from abroad: cloud hosting, SaaS subscriptions, software licences, contractors, and — for development centres — services from the parent itself. These payments look like simple expenses, but they can trigger obligations on the Serbian side.

When your Serbian company buys services from a foreign supplier, it may have to account for VAT itself rather than receiving an invoice with Serbian VAT on it. And certain types of payments abroad — some licence fees, for example — can also attract withholding tax, which is a completely separate mechanism. The two are easy to confuse, and they can apply to the same payment. We explain the withholding side in detail in our guide to withholding tax on payments from Serbia. The practical point for now: your recurring payments abroad deserve a one-time review, so each one is treated correctly every month after.

The judgement calls: revenue and development costs

Two areas in an IT company’s books involve genuine judgement — and both matter for your tax position and for what you report to investors or the group.

Revenue recognition. If you sell annual subscriptions paid up front, that cash doesn’t all count as revenue the day it arrives; it’s earned over the subscription period, and the unearned part sits in the books as deferred revenue. Fixed-price projects delivered in phases raise a similar question about when revenue is earned. Getting this right keeps your profit figures honest month to month instead of swinging with your billing cycle.

Development costs. Spending on building software can, in some circumstances, be recorded as an asset rather than an immediate expense. Whether and when that’s appropriate is a matter of accounting policy and judgement, and the choice has knock-on effects for your reported profit and your tax. It’s worth deciding deliberately — and consistently — rather than by default.

If you report to a parent or investors abroad, both of these also need to line up with group reporting. Your Serbian books are kept under Serbian rules, but they can be mapped to group standards so the figures reconcile — something we build into our bookkeeping from the start.

Your team: employees, contractors, and equity

People are an IT company’s biggest cost, and how you engage them has real consequences. Many Serbian developers are used to working as independent contractors, and many foreign founders are happy to go along with it. That can be legitimate — but if the relationship looks like employment, the tax authority can treat it as employment, with the cost landing on your company. We go through exactly where that line sits in hiring in Serbia: employee, freelancer or EOR.

One more point for groups: if your parent company grants shares or options to Serbian staff, that can create local payroll and tax obligations. It’s worth raising with your advisor before the plan is rolled out, not after. Day-to-day, your payroll and HR setup is where all of this comes together.

IT tax incentives: real, but documentation-hungry

Serbia offers several incentives that are relevant to IT companies — including regimes that reduce tax on qualifying income from intellectual property, additional deductions for qualifying research and development spend, and reliefs connected to hiring. They’re genuinely valuable, and they’re one of the reasons Serbia appears on so many lists for software companies.

What the headlines rarely mention is that none of them is automatic. Each comes with conditions, and most depend on documentation that has to exist from the start — not reconstructed when the tax return is due. Some depend on who actually owns the intellectual property, which in a captive development centre is often the parent rather than the Serbian company. The rules also change over time, which is why we don’t quote figures here.

The practical rule: if you think an incentive might apply to you, raise it early, so your accounting captures what the incentive will later require. Our tax consulting team can assess which, if any, fit your situation.

How HLB TM helps

An IT company’s accounting isn’t harder than any other company’s — but it is different, and the differences sit exactly where generic bookkeeping is weakest: across borders, between related companies, and in the judgement calls.

At HLB TM, we work with foreign-owned companies in Serbia, and we look at the whole picture rather than just the ledger: the books, the VAT treatment of what you sell and buy abroad, intra-group pricing and transfer pricing documentation, payroll, and whether the incentives you’ve heard about are realistic for your structure. We’re part of the HLB Global network, and companies like Paysend, Toshiba, FANUC, and FlixBus rely on us for this kind of cross-border clarity. You can see how the ongoing service is structured on our accounting services in Serbia page.

Frequently asked questions

Do I charge Serbian VAT to my foreign clients? Often not — services supplied to businesses established abroad are generally treated differently for Serbian VAT than domestic sales. But there are exceptions depending on the type of service, and the treatment must be supported by documentation such as your contract and evidence that the customer is a foreign business. It’s worth confirming for your specific services.

Can my Serbian company invoice foreign clients in euros or dollars?
Yes. Invoicing foreign clients in foreign currency is standard. Your books are still kept in dinars, so each transaction is converted, and exchange-rate movements create exchange differences in your results. Your bank will also ask what each incoming foreign payment is for.

Do I need transfer pricing documentation if my Serbian company only bills its parent?
Yes — that’s precisely the situation it’s designed for. Transactions with related companies must be priced as if between independent parties, and that pricing has to be documented as part of your annual tax compliance.

Is VAT due when we pay for SaaS or cloud services from abroad?
It can be. When a Serbian company buys services from a foreign supplier, it may have to account for the VAT itself. Some payments abroad can also attract withholding tax, which is a separate mechanism. A one-time review of your recurring foreign payments is the easiest way to get both right.

Can our developers work as contractors instead of employees?
Only if the relationship is genuinely independent. If a contractor works set hours, uses your equipment, reports to your managers, and works only for you, the arrangement can be reclassified as employment — and the cost falls on your company.

Do IT tax incentives in Serbia apply automatically?
No. Each incentive has conditions and documentation requirements, and some depend on who owns the intellectual property. They work best when your accounting is set up to support them from the start, so it’s worth raising them early with an advisor.

Talk to us

If you’re running a software or IT company in Serbia — or about to set one up — we can make sure your accounting fits your business model, from cross-border invoicing to transfer pricing, before small gaps turn into expensive ones.