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The consumer

Consumer Profile
With a median age of 43.4 years (CIA - World Factbook, 2020 est.) and a GDP per capita of USD 8,750 (IMF, 2021), Serbia has a low-middle income and rapidly ageing consumer population. The poverty rate reaches almost 25% (one of the highest in Europe - Eurostat, 2019) and most of the Serbs touched by poverty live in rural areas (World Bank). There are also considerable economic disparities among consumers as Serbia suffers from high income inequality (one of the highest Gini Coefficients in Europe with a score of 33.3 points in 2019 - Eurostat, latest data available). The capital city of Belgrade itself generates 40% of the national wealth, while Southern and Eastern Serbia only account for 14% (Heureka Group, 2021). 
Serbian consumers show interest in the country of origin and tend to favour local products, followed by those made in Germany and the EU. They tend to avoid products made in Croatia, China and Albania (Blic survey, latest data available).
Serbian consumers also show a growing interest in high-quality food and fresh products.
Consumer Behaviour
Serbian consumers have gradually become price-sensitive over the recent years with the crisis negatively affecting the purchasing power since 2008. The price remains by far the most important criterion when it comes to maintaining or changing spending habits. According to a Nielsen survey, 77% of Serbian consumers rarely buy a product they desire rather than need. In 2019, Serbian consumers spent on average RSD 22,977 per month on food and non-alcoholic beverages (34.2% of the total consumption) and RSD  11,182 on housing and utilities (16.7% of the total consumption) (Statistical Office of the Republic of Serbia, latest data available). Serbian consumers are further impacted by an inflation rate of 2.2% in 2021. It is expected to remain around 2.5% in 2022 and 2023 (IMF).

Serbian consumers opt more and more for online shopping (especially cross-border retail for lower prices), which is expected to grow at a compound annual growth rate (CAGR 21-25) of 5.59% up until 2025. In 2021, 52.7% of Serbs are online shoppers and this percentage is expected to reach 61.4% in 2025 (Statistica).
Consumers Associations
National Consumer Organisation of Serbia (NOPS)
 

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Importing & Distributing

Import Procedures
Serbia uses a standardised import/export documentation process (generally requiring a bill of lading, etc.). With the liberalisation of the trade regime and the reformation of trade/customs-related institutions, Serbia continues to synchronise its documentation with the European Union.

The Serbian Customs Tariff is harmonised annually with the EU Combined Nomenclature. In Serbia, several tariff regulations are binding:

  • Decisions on Tariff Classification published in the Official Journal of the European Union;
  • Decisions on Tariff Classification issued by the World Customs Organization (WCO);
  • Binding Tariff Information issued by the Serbian Customs Administration, upon request, regarding the classification of certain goods, in case of ambiguity or uncertainty.

Official translations of EU and WCO decisions are published regularly in the Official Gazette of the Republic of Serbia.

Import licenses are required for narcotics (including psychotropic substances), medicines containing narcotics, precursors for the manufacture of narcotics, vitamins, blood products, microorganisms, human body parts, non-registered medicines and medical devices, endangered species of wild fauna and flora, substances depleting the ozone layer, radioactive materials, reactors and reactor parts, arms, military equipment and dual-use goods, asbestos, industrial explosives, hunting and sports arms and ammunition for such arms, precious metals, and specific agricultural products for veterinary purposes.  The majority of the above-mentioned goods are subject to import licenses in accordance with existing international conventions.

For more information, please visit the website of Serbian Customs.

Distribution market players
There are a number of foreign, both regional and international, mass retailers in the Serbian market. Foreign mass retailers hold two-thirds of the total retail market and shopping centres have become popular in Serbia. Nevertheless, the bulk of purchases are concentrated on fresh produce and in small amounts. The main places of purchase are the markets and convenience stores.
Small local shops make up a large proportion of the distribution sector. The food sector includes 20,000 to 30,000 points of sale. Prices are often lower than those of supermarkets. Open street markets are also very numerous across the country.
The main supermarket chains are:

Regarding non-food retail, it should be noted that shopping centres are still few. A significant development is expected in the upcoming years, along with the boom of hypermarkets. The ready-to-wear and accessories sectors are currently the most represented, but retail of leisure, beauty products and, especially, home and DIY products is expected to grow.

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Operating a Business

Type of companies

 The"drustvo sa ogranicenom odgovornoscu" (d.o.o.) corresponds to a limited liability company
Number of partners: One or more.
Capital (max/min): RSD 100 (EUR 1).
Shareholders and liability: The liability of members is up to the value of their investment.
 The"akcionarsko drustvo" (a.d.) corresponds to a public limited company
Number of partners: Minimum 2 shareholders, maximum 100 for a closed a.d., no maximum for an open a.d.
Capital (max/min): Equivalent of EUR 10,000 minimum for a closed a.d.; EUR 25,000 for an open a.d.
Shareholders and liability: Their liability is limited to the amount of capital contributed.  
 The"ortacko drustvo" (o.d.) corresponds to a general partnership
Number of partners:  Minimum 2 partners.
Capital (max/min):  No minimum capital required.
Shareholders and liability: Their liability is joint and indefinite.  
 The"komanditno drustvo" (k.d.) corresponds to a limited partnership
Number of partners:  Minimum 2 partners
Capital (max/min):  No minimum capital required.
Shareholders and liability: The liability of the active partners is unlimited. The liability of the silent partners is limited to the amount of capital contributed.  
 
Setting Up a Company Serbia Eastern Europe & Central Asia
Procedures (number) 7.0 5.3
Time (days) 7.0 11.8

Source: Doing Business - Latest available data.

 

Cost of Labour

Minimum Wage
The minimum wage is around RSD 43,100 (EUR 366.04) per month in 2021 according to Eurostat.
Average Wage
In 2021, the average monthly gross earnings in Serbia is RSD 87,058 (EUR 739.58) according to the Statistical Office of the Republic of Serbia.
Social Contributions
Social Security Contributions Paid By Employers: 16.65% (pension and disability insurance: 11.5% and health insurance: 5.15%).
Social Security Contributions Paid By Employees: 19.9% (pension and disability insurance: 14%; health insurance: 5.15%; and unemployment contributions: 0.75%).
 

Intellectual Property

National Organisations
The organization responsible for intellectual property protection in Serbia is the Federal Bureau for Intellectual Property (Zavod za Intelektualni Svojinu). It depends on the Ministry of the Economy and Foreign Trade.
International Membership
Member of the WIPO (World Intellectual Property Organization)
Signatory to the Paris Convention For the Protection of Intellectual Property
Membership to the TRIPS agreement - Trade-Related Aspects of Intellectual Property Rights (TRIPS)
 

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Tax Rates

Consumption Taxes

Nature of the Tax
Value Added Tax (VAT) - Porez na dodatu vrednost (PDV)
Tax Rate
20%
Reduced Tax Rate
A reduced rate of 10% applies to basic foodstuffs; utility services; tourism accommodation; live and cultural events; daily newspapers; farming supplies; textbooks and teaching aids, etc.
The export of goods, transport and other services directly related to exports, international air transport, are zero-rated with the right of deduction of the input VAT.
Certain items are exempt, including: the export of goods; international air transport; education; medical services; financial services; charity; culture and entertainment; organizing of gambling and lotteries services; etc.
In order to limit the COVID-19 epidemic, goods and services provided free of charge to the Ministry of Health, Health Insurance Fund or public healthcare institutions, are taxed at a rate of 0%, with the right to deduct input VAT during the state of emergency.
Other Consumption Taxes
Imports are subject to VAT in the same way as national production (except in the free zones). Excise duties are levied on producers and importers of the following goods: oil derivatives; tobacco products and fuels for filling electronic cigarettes; alcoholic beverages; coffee and electricity, bioliquids and biofuels.
 

Corporate Taxes

Company Tax
15%
Capital Gains Taxation
Capital gains obtained by resident companies are included in the annual income tax return and subject to tax at 15%, whereas those obtained by non-resident entities are taxed at 20% (unless a lower rate is provided under a tax treaty). Non-residents should appoint a fiscal representative in Serbia who should submit a tax return within 30 days from the realisation of capital gain.
Gains can be offset with capital losses occurring in the same period, and capital losses can be carried forward for five years.
Main Allowable Deductions and Tax Credits
Depreciation of tangible and intangible assets is tax-deductible at rates ranging from 2.5% to 30%. Goodwill is not deductible.
Start-up fees are generally deductible. Interest charges that exceed the thin capitalisation limits and transfer pricing thresholds are not deductible.
Bad debts are tax-deductible if they are at least 60 days overdue.
Donations to charities and humanitarian aid to national and local authorities in urgent cases are deductible up to 5% of income.
Fines are not deductible while taxes that do not depend on the profitability of the company are deductible.
Expenses directly related to qualifying R&D activities performed in Serbia are eligible for a double deduction. The Serbian intellectual property box regime offers an exclusion from the corporate income tax base of 80% of qualified income received by a taxpayer for the use of registered copyrights, patents, or related rights (does not include income derived from the disposal of the rights).
Investments in newly established companies that perform innovative activities give the right to a tax credit equivalent to 30% of the investments made (capped at RSD 100 million).
Entertainment expenses are deductible up to 0.5% of income. Finally, membership fees to chambers of commerce and associations (excluding political parties) are deductible up to 0.1% of income.
Tax losses can be carried forward for up to five years. The carryback of losses is not permitted.
Other Corporate Taxes
A property tax is payable not only by homeowners but also by long-term tenants (one year or more) and urban land users (ten acres or more). The maximum rate is 0.4%.
A transfer tax is levied on all types of transfers (property, vehicles, intellectual property, etc.) at a rate of 2.5%.
Although there are no stamp duties, the competent authorities and/or notary may charge fees when certifying documents relating to property transfers.
Social security contributions payable by the employer amount to 16.65% of the gross salary (11.5% for pension and disability insurance and 5.15% for health insurance), limited to five average monthly salaries.
Other Domestic Resources
Tax Administration
Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.
 

Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed
See the list of the Double Taxation Agreements
Withholding Taxes
Dividends: 20%, Interest: 20%/25% (resident of a tax haven), Royalties: 20%/25% (resident of a tax haven)

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