Establishment of an LLC (Limited Liability Company) in Serbia has been quite simplified, and the registration process itself is short.
Below is a more detailed explanation on how to establish an LLC in Serbia and everything that one needs to know when it comes to business operations of a Limited Liability Company.
1. What is an LLC?
LLC or a limited liability company is the most common type of a registered legal entity in Serbia. Being the type of a business entity that can be registered in a very efficient and simple way in Serbia. An LLC is the most economic and flexible form of a business company.
2 Advantages and disadvantages of an LLC in Serbia – advantages and imperfections
Advantages of establishment of an LLC in Serbia:
- time efficiency – time needed for registration of an LLC is short – 5 working days;
- less formalities – simpler organization and procedures compared to other forms of business entities that can be registered in Serbia;
- an LLC may have one or more founders;
- principal capital – minimum amount of principal capital in an LLC in Serbia is 100 RSD;
- director – an LLC in Serbia can have at least one director being the legal representative of the company (there are no conditions as regards nationality);
- small taxes – Serbia is an attractive business environment because its tax rate is among the lowest ones in Europe (the VAT for LLCs is 15%):
- legislation – new measures and regulations are regularly adopted in order to simplify the complex processes, improve business operations and unify the Registers for all business entities.
Disadvantages (imperfections):
- Limited liability companies cannot be flat taxed;
- LLCs cannot keep books according to the simple bookkeeping system, but are obliged to keep business books according to the double bookkeeping system;
- LLCs cannot have cannot have a dormant status (cannot temporarily stop the activity);
- LLCs are terminated by deletion in the liquidation and bankruptcy procedure, the process of which takes a long time;
- fines for LLC offenses are high, fines are also imposed on natural persons responsible.
3. How to register an LLC in Serbia
When it comes to company formation Serbia, the initial step is to choose an appropriate business name for your LLC during the registration process. To ensure the name is available, you can utilize the Business Registers Agency website to verify that it is not already in use. Following the name selection, the next vital step is to appoint a director for your company.
The procedure for establishing a limited liability company is initiated by the founders. LLC founders may be both legal and natural persons, they can be both domestic and foreign persons. An LLC in Serbia can have one or more founders. Before establishing an LLC, it is necessary to determine its founders, because they are the ones to decide on the way how to establish the company.
In addition to Memorandum and Articles of Association, there is another document an LLC must have: the OP form. The OP form is the form containing certified signatures of the persons who represent the company.
4. Method of establishing an LLC in Serbia
The procedure for establishing a business entity in Serbia is carried out through the Business Registers Agency. Upon completin of the registration, the LLC obtains:
- the registration number (the number assigned by the Statistical Office of the Republic of Serbia)
- the TIN (tax identification number issued by the Tax Authority)
- the social insurance number (issued by the National Health Insurance Administration).
There are two ways to submit the registration application form for establishing an LLC in Serbia:
- one-stop registration system,
- electronic method.
5. How much does it cost to start an limited liability firm (LLC) in Serbia?
The administrative costs of starting an LLC in Serbia amount to approximately 100 EUR. These costs include various administrative expenses (fees), as well as the costs of certification of documents:
- administrative costs of starting an LLC in Serbia – about 50 EUR – this is the fee payable to the Business Registers Agency for establishment/registration of an LLC;
- the costs of notarization of the documents for establishment of an LLC in Serbia amount to approximately 50 EUR.
The establishment fees are paid to the Company Register (the Business Registers Agency). All fees are settled before establishment of an LLC.
In accordance with the Company Law, the smallest initial capital for founding an LLC amounts to 100 RSD (1 EUR).
6. Which documents have to be submitted to start an LLC in Serbia?
To start an LLC in Serbia, following documents must be submitted:
- the unique registration application for legal entities establishment;
- the company’s Memorandum of Association with certified signatures of the company members;
- the proof of identity of company members;
- the decision on nomination of representatives if they are not determined by the Memorandum of Association;
- the bank confirmation of payment of the cash deposit, namely the members’ agreement of assessment of a non-monetary contribution;
- the proof of payment of the LLC establishment fee and the proof of payment of the fee for registration and publication of the Memorandum of Association.
The signed documents must be submitted in original, certified transcript or certified photocopy.
In order to register an LLC electronically, the applicant must have:
- the qualified electronic certificate (electronic signature) issued by a certification body in the Republic of Serbia;
- the installed reader of electronic cards,
- Visa, MasterCard or Dina payment cards for payment of fees.
7. How to select the company name which is not being used?
The selection of the LLC business name is a part of the identity of the entire business operation of a company. Before registration of establishment, it is possible to check the availability of company names.
Business name check means searching if the desired name is unoccupied (available, not being used, not being reserved), and also if it complies with the registration law (the Business Registers Agency approves or rejects the company name). The name must be unique, it must not be offensive, it must not contain words that are offensive or prohibited by the law.
If the name is available and not in use, it is possible to reserve the business name on the web site of the Business Registers Agency. Business name reservation is carried out by submitting a special application, which is valid 60 days upon submission. After expiry of the reservation deadline, it can be renewed or transferred to another natural or legal entity.
8. Activity code for LLCs and selection of predominant (prevailing) activity code
While registering any legal form of a business entity in Serbia, it is necessary to select the adequate prevailing activity code. The prevailing activity code is the one registered by the company and the one that best describes the activity that the company will be engaged in. In addition to the prevailing one, a company can also carry out other activities which are not prohibited by the law.
The prevailing activity code is determined on the basis of the Regulation of classification of activities, whereby codes are divided into sectors, areas, branches and groups of activities. It is necessary to register the adequate activity, which is in line with the job description.
While selecting the code it is necessary to study the classification carefully, because there are codes which require the consent of competent authorities depending on certain activity areas.
9. Determining the head office of an LLC
In the process of LLC registration there is no checking if the registered head office is actually the seat of the LLC. However, when the application for the TIN is submitted, the Tax administration performs the check according to the place of the actual head office.
During the control, a check can be made by inspecting the documentation that proves the legal basis of use of the business premises as a head office (the lease contract, sales contract, title deed, consent on the use of business premises…). The amount of the local utility fee may vary depending on the location and territory of the municipality of the head office in Serbia.
10. Virtual office and physical office address – differences
Foreign companies intending to start an LLC of their companies in Serbia and to control the entire business activities from abroad, are offered the opportunity to use services of virtual offices. Virtual offices in Serbia offer to foreign (and domestic) companies the possibility to register their company’s business address on actual physical addresses, however, without having to be present at the same.
If the needs of the job of a company’s LLC do not require daily physical presence at the location, virtual offices enable legal entities to register at an actual physical address, without physical use of these business premises and without having to pay monthly utility costs (electric power, overhead costs, lease of business premises…). The services rendered by virtual offices relate to receipt and forwarding of mail, possibility to choose a phone number, other administrative services.
11. How to register for tax payment in Serbia
The next step after registration of an LLC in Serbia is to register for tax with the Tax Administration. This is the way to register tax payers. Within 15 days from registration of a company, it is necessary to submit the tax return for advance payment of income tax.
Submission of tax return is performed electronically through the portal of the Tax Administration (portal ePorezi). The income tax for LLCs or limited liability companies amounts to 15%.
12. How to open a bank account for an limited liability firm (LLC) in Serbia
After receipt of the Decision on establishment of the LLC and obtaining of the TIN, it is necessary to open a bank account. Opening of the business bank account is a mandatory step, as it enables companies to carry out all kinds of financial transactions. Prior to opening a bank account for an LLC it is necessary to select the bank that best suits the business needs. Commissions and monthly maintenance of account should be taken into consideration, as well as if there is e-banking, payment cards, possibility of taking loans etc.
When the bank is selected, the procedure of opening the LLC account depends on the business policy of the chosen bank and the documents needed to open an account. Complete procedure for opening a bank account for an LLC in Serbia may last a day or two.
13. Is registration for VAT required
Registration of LLC as a VAT payer is not mandatory in Serbia. The limit for entry into the VAT system is 8,000,000 RSD for turnover in previous 365 days. There are two rates of value added tax in Serbia, which are imposed on the turnover of goods, services and imports. They are the general VAT rate of 20% and the special VAT rate of 10%.
Legal entities starting their business who estimate that their annual turnover will be less than 8,000,000 RSD are not obliged to become VAT payers. Otherwise, if they break the limit and achieve an annual turnover of over eight million dinars, registration for VAT payers is mandatory.
14. Is it mandatory to have the seal, or a digital signature can be used?
The use of legal entity seal is no longer a legal obligation in Serbia. The obligation to have a seal has been abolished for business entities operating in Serbia. The seal is no longer needed to verify receipt of mail, to fill in forms, to submit applications.
Instead of a handwritten signature, it is possible to use an electronic signature for signing documents in electronic format, as well as a digital seal. A digital signature or electronic signature is a set of data in electronic form that may confirm the identity of the person signing a document, as well as the validity and content of the document being signed. In electronic form, it represents the digital replacement of the handwritten signature.
15. Is it necessary to have an accountant after establishment of an LLC in Serbia
An LLC in Serbia is legally obliged to keep business books. If Serbia is your business destination, it is recommended that you engage an experienced team of experts and accountants who will help you with the correct business management, in order to achieve the best results and reduce costs.
From the accounting point of view, the services rendered by an accounting agency are: bookkeeping of business documents, payroll, tax consulting, support with VAT registration, submission of financial reports and assistance in order to comply with the legislation of the Republic of Serbia. If you plan to start an LLC in Serbia, the accounting outsourcing company HLB T&M Consulting can help you in registration of the company and offer quality accounting services.
