Multiplier Logo white

Sole Proprietorship In Serbia

Serbia has become one of the premier locations for investment in Central Europe and Eastern Europe.

  • Since 2007, the country has seen more than €37 billion in direct investment in inward trade.
  • Top global names such as Panasonic, Bosch, Toyo Tires, Magna, Aunde, Continental, Siemens, and Swarovski lead the list of foreign investors in the country. Many accolades back the reputation of Serbia as a thriving hub for FDI.
  • Serbia has maintained its top spot globally as the country that creates the maximum jobs in FDI per million inhabitants, as per data from “IBM Global Location Trends 2020”.

The trend in setting up a sole proprietorship in Serbia is currently rising. If you want to understand how to register a sole proprietorship in Serbia, this article is what you need to read!

Who Can be a Sole Proprietor in Serbia?

Setting up a sole proprietorship in Serbia is easy; to penetrate the market, you need minimum requirements. A sole proprietorship, also known as a sole trader, is locally referred to as ‘preduzetnik’.

The entrepreneur (sole proprietor) in Serbia is an individual who bears all consequences and benefits from business activities on self, from a legal perspective. According to Serbian law, anyone can start a sole proprietorship in Serbia. However, local and foriegn entrepreneurs can create only one sole proprietorship in the country.

  • When you incorporate a sole proprietorship in Serbia, remember that an entrepreneur/ sole proprietor is a person who can perform business activities for income generation. As a sole proprietorship, you must operate under a business name. This contains the personal name of the owner, the main activity description, and the term entrepreneur (the abbreviation pr will also do).
  • Even if you are away from the country, you can grant power of attorney to any local representative dealing with the bank and Serbian Companies Registry on your behalf. As a sole proprietor, you take full responsibility for all your business operations. However, there are limited possibilities for business growth and little flexibility. If you plan on engaging in a particular small-sized business in Serbia, registering as a sole proprietor is a right step.

After you register a sole proprietorship in Serbia, there are several things, such as its benefits, documentation, and related information. This guide to starting a sole proprietorship in Sweden and registering as a self-employed business owner in Serbia will help you understand the intricacies better.

Benefits of Sole Proprietorship in Serbia

Setting up a sole proprietorship in Serbia requires little time and low costs. Before starting a sole proprietorship in Serbia, you need to know that Serbia has several zones for free trade.

  • VAT – The primary benefit of incorporating a sole proprietorship in Serbia is that no VAT applies to the import and export of goods. Foreign investors can start businesses in free trade zones without VAT benefits.
  • Online process – When you register a sole proprietorship in Serbia, you must register details with the Serbian Business Register Agency. A benefit associated with this is the availability of online registration. You can submit all documents and related payments for fees entirely online for starting a sole proprietorship.
  • Low Cost – Incorporating a sole proprietorship is simple and costs way less than the costs involved in setting up a limited liability company or LLC. Moreover, it is less complicated than setting up an LLC as well.
  • Proprietorship taxes in Serbia – For entrepreneurs, lump-sum taxation is available regardless of the activity scope or income, up to a specific limit.
  • Closing a sole proprietorship – Finally, closing a sole proprietorship for a registered self-employed individual in Serbia is easier. It requires less documentation than an LLC closure.

Documents Required for Registering Your Business in Serbia

The documents required for registering a sole proprietorship in Serbia are as follows:

1. A verified statement of the company name

Set up a business name that must comprise the proprietor’s full name, followed by the word ‘preduzetnik’. The sole trader name reservation stands valid for only 60 days.

2. Proof of address

You must have documented proof of the location of the sole proprietorship.

3. Filled up registration form

This form needs to have all details of business activities. A sole proprietorship can enlist for just one business activity. Registration with the Serbian Business Register Agency is required.

4. Identity and payment documents

This comprises a valid visa and passport along with payment proof for registration.

5. Permits for foreigners

Foreigners require resident and work permits to conduct business activities.

6. Banking documentation

You must also open a bank account to link with the sole proprietorship. This serves as a vital instrument for all financial activities in the future. Serbian banks can access documents related to sole proprietorship registration. You can hire a legal firm or lawyer to understand the formalities involved in the Serbian bank account opening process.

Other Factors for Registering a Sole Proprietorship in Serbia

Individuals looking at setting up a sole proprietorship entity must follow the proper procedures while setting up a sole proprietorship in Serbia. Here is an overview of all specific criteria related to the same:

  • Consent – A sole proprietorship does not require special permission to register. A final decision on sole proprietorship registration takes between three and five days.
  • Fees – Fees for registration of any business activity or changes and any deletion for proprietors are less than 100 EUR.
  • Infringement penalties – Penalties related to infringement are around ten times lesser for entrepreneurs compared to an LLC. The penalty for an entrepreneur is uniformly prescribed.
  • Bookkeeping -Entrepreneurs or sole proprietors can maintain account books on either single or double entry systems.
  • Taxation – Proprietors can identify and then apply for lump sum taxation. This does not apply to cases listed in Article 40 and paragraph 2 of Individual Income Tax Law. This signifies activity has a turnover of more than 6,000,000.00 RSD in a single calendar year.Tax on the profit on the net income is payable on the difference between the business income and the expense for a sole proprietor. The rate of tax for an entrepreneur stands at 10%. A proprietor does not need to pay additional tax on the profit transfer to a personal account. Personal net income includes the profit from the sole proprietorship’s business activity.A proprietor who chooses to pay a personal salary needn’t pay any social contributions to the base higher than the lowest. Another option for a sole proprietorship in Serbia could be to make contributions to a base equal to the business result realized from the business activity but at least on the lowest base.

    Employing family members is allowed without employee registration to replace an absentee entrepreneur. The Companies Act’s Article 89, Para 4, and Para 9 mention this.

  • Termination or deletion from the Business Register Agency – As a proprietor or entrepreneur, you can register for temporary cessation of all business activity for a specific time without satisfying conditions.Permanent removal from the Business Register Agency can occur without tax obligations. Deletion of sole proprietorship in Serbia occurs on the same day as an application if all conditions stand fulfilled.

How to Register a Sole Proprietorship Company in Serbia?

Here is a simple overview of how to register a sole proprietorship in Serbia:

Step 1 – Begin your research

  • Before starting a sole proprietorship or any other business form in Serbia, you must conduct a thorough research about Serbia and its demographics, business environment, and industrial capacity.
  • There are several trade organizations across all sectors in Serbia. These will provide valuable insights into the regulations that apply and the overall state of the Serbian market.

Step 2- Select and register the company name

  • Choose the business name, check the availability, and reserve it.

Step 3- Register a sole proprietorship for tax purposes

  • As a sole proprietor, your business must be registered with the Serbia Business Register Agency.Business Register Agency is a one-stop shop for the registration process. Sole proprietors must state fees and submit proof of payment before registration forms.
  • Ensure a valid VAT registration, if applicable.- Along with the registration form, submit a copy of your passport, permission, and consent as per the Law.- It takes approximately 3–5 days for the sole proprietorship to be registered.

Step 4- Set up a sole proprietorship for hiring employees

  • Valid registration as an employer will aid you in hiring local talent and pay social contributions as applicable.

Step 5- Open a local Serbian bank account

  • A sole proprietorship in Serbia must open a bank account.
  • Documents related to business incorporation, registration, and tax will be required for the same.

Conclusion

Sole proprietorship in Serbia laws does not impose minimum requirements for paid-up capital or employee count.

The taxation laws and filing procedures in Serbia for a sole proprietorship are relatively uncomplicated. You can explore new business opportunities when you set up a sole proprietorship in Serbia.

When you look to expand teams and hire employees in Serbia, payroll and team management come across as practical challenges, which are time-consuming and a financial burden.  This is where you can trust Multiplier to help.

Multiplier is a global employment solution for sole proprietors looking to expand globally. It offers reliable EOR solutions to ease your recruitment and management process of international employees. We have one-click payroll services to help seamless payments for international employees and freelancers.

Our experts also help onboard employees and HR responsibility management in Serbia. All our services comply with local rules and regulations for establishing a business in Serbia.

Need Reliable Help In Obtaining A Work Visa?

JUMP TO SECTION

Work Permit Description Template

Do you want to read this later?

Work Permit Description Template

Do you want to read this later?

Frequently Asked Questions

The proof of identity of an entrepreneur or proprietorship includes a photocopy of an ID card and a passport.

There is a TIN or tax identification number for a Serbian sole proprietorship. After checking the fulfillment of conditions related to registration, the Serbian Business Registration Agency approves the application. Once this is affirmative, the sole proprietor gets assigned a registration number while the Tax Administration allots a TIN ex-officio.

Entrepreneurs who engage in advertising and market research, wholesale or retail trade, hotels or restaurants, financial intermediation, and real estate do not qualify for flat-rate taxation. This taxation doesn’t apply to sole trade businesses wherein others make investments. If the turnover in the year before the current year of taxation exceeds 6,000,000 dinars, this flat rate taxation isn’t applicable. The flat taxation structure isn’t valid for your sole proprietorship if you register for value-added tax per the laws governing VAT.

World’s Preferred EOR/PEO Platform for a Global Workforce