Investment Incentives
The National Employment Service Grants
Corporate Income Tax Holiday for Concessions
Salary Tax and Social Insurance Charges Exemptions
Value Added Tax Exemptions in Free Zones
FINANCIAL INCENTIVES
For large investors in the automotive, electronics, and IT industries, a special financial package is available. If a project's value exceeds €200 million, with the minimum of 1,000 new jobs created, the state may cover up to 25% of the investment.
For smaller-scale Greenfield and Brownfield projects in the manufacturing, services, and R&D sectors, non-refundable state funds are offered in the range between €2,000 and €10,000 per new job created.
THE NATIONAL EMPLOYMENT SERVICE GRANTS
The National Employment Service (NES) grants include:
1. the Employment Subsidies Program,
2. the Apprentice Program, and
3. the Re-Training Program.
Companies are exempt from Corporate Income Tax for a period of 10 years starting from the first year in which they report taxable profit if they invest in fixed assets an amount exceeding approximately €8 million, and throughout the investment period they employ at least 100 additional employees.
The amount of tax due can be reduced by 20% of the amount invested in fixed assets for the respective tax period. A number of sectors are entitled to receive a tax credit, totaling 80% of investment made in fixed assets.
CORPORATE INCOME TAX HOLIDAY FOR CONCESSIONS
A 5-year tax holiday is granted for concession-related investments, from the day the concession investment has been completed. No tax is due if income is derived before the completion of the concession investment.
The tax loss stated in the tax return can be carried forward and offset against future profits over a period up to 5 years.
If a taxpayer already paid tax on the profit generated abroad, he is entitled to a Corporate Income Tax credit in Serbia to the already paid amount. The same right is enjoyed by a taxpayer who earns revenue and pays Personal Income Tax in another country, provided there is a Double Taxation Treaty with that country.
SALARY TAX SOCIAL INSURANCE CHARGES EXEMPTIONS
The employer who hires certain categories of workers on a permanent basis is exempt from paying Salary Tax over the periods of 3 or 2 years.
The employer is exempt from paying social insurance contributions over the periods of 3 or 2 years, depending on the category of workers hired.
For non-Serbian citizens, the annual income is taxed if exceeding the amount of threefold the average annual salary in Serbia. The tax rate is 10% for the annual income below the amount of 6 times average annual salary in Serbia, and 15% for the annual income above the amount of 6 times average annual salary in Serbia. The taxable income is further reduced by 40% of an average annual salary for the taxpayer and by 15% of an average annual salary for each dependent member of the family. The total amount of deductions cannot exceed 50% of the taxable income.
VALUE ADDED TAX EXEMPTIONS IN FREE ZONES
Income generated through commercial activities in the Free Zones in Serbia is exempted from Value Added Tax. There are six Free Zones, currently operating in the country: Subotica, Novi Sad, Zrenjanin, Sabac, Kragujevac, and Pirot. Foreign companies can establish a privately-owned Free Zone based on the project approved by the Government.
OTHER INCENTIVES
Foreign investors are exempt from paying customs duties or are allowed to pay the duties at a lower rate for new or used equipment, certain raw materials, construction materials imported into Free Zones, and processed tobacco.
A wide array of incentives is also available at the local level, varying in scope and size from one city to another. The major ones comprise the following:
- City building land lease fee exemptions or deductions, including the option of paying in installments, with the prior consent of the Serbian Government;
- City building land development fee relief such as fee exemptions or discounts for one-off payments;
- Other local fees exemptions or deductions (e.g. the fee for displaying the company's name).
