Serbia Market Entry

Serbia Market Entry

Subchapters:

  • Market entry
  • Forms and conditions of operation on the market
  • Marketing and Communications
  • Issues of intellectual property protection
  • Public procurement market
  • Payment terms, payment ethics and resolution of commercial disputes
  • Visas, fees, specific conditions of travel to the territory
  • Employment of citizens from the Czech Republic
  • Fairs and events

Market entry

The standard distribution and sales network of goods of domestic origin and imported goods usually covers the territory of a certain region, and for some items (e.g. passenger cars) the territory of the entire country. The majority of distribution and sales activities are carried out by small and medium-sized companies. Large wholesale and retail chains are represented in Serbia rather only in food – e.g. the “DIS” trading system. Foreign multinational retail chains are represented by Croatian Agrokor with IDEA / Merkator stores, Belgian company Delhaize with MAXI stores and Greek Veropulos. The German LIDL and the Russian MERE chain also entered the market. There are also methods of direct sales of goods such as “to the door”, most often these are Western companies of the multilevel marketing type (Avon cosmetics, etc.). Check smber for agriculture and fishing facts of Serbia.

A popular way of using imported goods (and services) on the market is the representation of foreign companies by local representatives. In this area, strong competition is felt for obtaining representation of (any) foreign client. The significance of this form of application in the market is not negligible, because in local conditions, long-term personal, often family ties and relationships of representatives with potential customers play an important role. On the other hand, final consumers resist the use of intermediary services, as this increases the final price of goods. Foreign companies most often resort to providing representation to local representatives for a limited period of time, which is further extended if both parties are satisfied. During this time, the pressure of local companies to grant exclusive representation also mostly eases, which is usually connected with the awareness of one’s own limitations (financial, organizational, technical), or the size of the market (local companies often operate only in a certain specific territory). With the continued stabilization of the economy in Serbia and the expected growth in the coming years, more and more companies decide to establish a subsidiary in Serbia.

Serbia is not yet a member of the World Trade Organization and thus is not bound by the provisions of the GATT and other agreements. However, Serbia’s membership in the WTO is one of the basic conditions for its entry into the EU and involvement in the EU’s common trade policy. However, the country’s accession process to the WTO is currently at an advanced stage, so far it is hindered by, among other things, the approval of the amended GMO Act. Serbia is a candidate country for joining the EU. It negotiates the terms of its membership and gradually adapts its internal legislation and administrative capacity to the EU acquis as part of the accession process. Serbia’s accession to the EU is not expected before 2025. Mutual trade between Serbia and EU member states is almost completely open, based on the Stabilization and Association Agreement. Exceptions are some special items such as wine, young beef or fish, for which quotas are introduced in the direction to the EU, in the opposite direction you may encounter certification requirements, etc. Serbia has negotiated free trade agreements within the framework of CEFTA (with the Balkan states that are not members of the EU), as well as with EFTA, Belarus and Turkey. From the point of view of possible investments in Serbia, the existence of a free trade agreement with the Russian Federation is certainly interesting, on the basis of which most items originating in Serbia are exported duty-free (with an administrative fee of 1% of the value of the goods). However, at the moment of Serbia’s accession to the EU, the validity of these agreements will end and the EU trade-political regime will be applied. From the point of view of possible investments in Serbia, the existence of a free trade agreement with the Russian Federation is certainly interesting, on the basis of which most items originating in Serbia are exported duty-free (with an administrative fee of 1% of the value of the goods). However, at the moment of Serbia’s accession to the EU, the validity of these agreements will end and the EU trade-political regime will be applied. From the point of view of possible investments in Serbia, the existence of a free trade agreement with the Russian Federation is certainly interesting, on the basis of which most items originating in Serbia are exported duty-free (with an administrative fee of 1% of the value of the goods). However, at the moment of Serbia’s accession to the EU, the validity of these agreements will end and the EU trade-political regime will be applied.

The system of technical requirements for products, as well as veterinary and phytosanitary regulations, is a very complex issue in Serbian realities. We therefore definitely recommend checking the current requirements in advance, preferably by engaging a local partner. For basic information on this issue, you can visit www.tehnis.merr.gov.rs/en.html, where links to the most important institutions are also provided.

Forms and conditions of operation on the market

The legal status of business companies, their establishment, management, change and liquidation in Serbia is regulated by the Law on Business Companies (“Official Gazette of RS”, no. 36/11, 99/11, 83/2014), the latest version valid from May 2015 Possible legal forms of business companies in Serbia are: public company, limited partnership, limited liability company, joint stock company.

The Companies Act also regulates the establishment and operation of organizational units and commercial representations of foreign legal entities. All these business entities register with the APR. The registration process itself in APR, if all the requirements required by law are met, takes a maximum of 5 days from the moment of submitting the registration application. Each organizational component or business company, including limited liability companies, registers only the main activity. In addition to the main activity, the organizational component may perform any other business activity that is not prohibited by law (activities for which prior permission, consent or other act of an authorized body of the Republic of Serbia is required by a special law).

A common form of business in Serbia is similar to a Czech s.r.o. Contribution to the company can be monetary or non-monetary (things and rights), with the law prescribing a minimum amount of the monetary part of the s.r.o.’s share capital, which is only RSD 100.00. Payment of profit to partners is possible in accordance with the articles of incorporation and is limited only in the case of so-called “over-indebtedness of the company”. The advantages and disadvantages of doing business in Serbia through a limited liability company are similar to those in the Czech Republic. This is a good way in the case of an expected long-term presence in this market or in the case of a joint business with a Serbian partner.

The establishment of an organizational component of a foreign legal entity in Serbia is possible based on the decision of the authorized body of the foreign legal entity, which is subject to registration in the Agency for Business Companies of the Republic of Serbia (hereinafter referred to as “APR”). The parent company is unlimitedly liable with its assets for the obligations of the organizational component towards third parties. The organizational component does not have legal personality, acts on behalf and on behalf of the parent company and does not have its own property. However, it has a major activity registered in Serbia, which may differ from the parent company’s business. In the Serbian tax system, the organizational component of a foreign legal entity is considered a resident of the Republic of Serbia, is a mandatory payer of profit tax and other taxes and can be registered in the VAT system. Organizational components are used, for example, in extensive, however, often one-off infrastructure projects, where the advantage is involvement in the VAT system, including returns. They are characterized by the lowest costs for establishment and cancellation with direct control from the headquarters.

Marketing and communication

The requirements for the quality, appearance and editing of promotional materials, especially in printed form, are not particularly different from other European countries. When a new company enters the market, publishing materials in the Serbian language is always appreciated (pay attention to the professional level of translations!). Due to the fragmentation of the TV and radio market, there are almost no precisely profiled channels or stations with the help of which it would be possible to precisely hit the target group. From the point of view of PR, a frequent shortcoming is the inexperience and insufficient economic erudition of a large part of journalists. Be aware of this and insist on authorization when planning communications via HSP (not taken for granted).

Issues of intellectual property protection

Serbian regulations in the area of ​​intellectual property protection are already harmonized to a greater extent with EU Directives, but in reality they are poorly implemented. In Serbia, the problem of intellectual property infringement and falsification continues to persist. There are 5 basic laws in the field of intellectual property protection (Patent Law, Copyright Law, Trademark Law, Industrial Design Protection Law and Integrated Circuit Topography Law). On October 1, 2010, Serbia became a member of the European Patent Office. However, in copyright matters, deficiencies in rental and lending rights are sometimes criticized. The basic position of the Serbian customs administration is in the field of IPR protection. There is a database of customs actions for infringement of IPRs. However, the lack of judicial specialists for IPRs significantly reduces the efficiency of the entire system. All laws can be downloaded from the website of the Serbian Intellectual Property Office (www.zis.gov.rs).

Public procurement market

The legal framework for public procurement in Serbia is essentially at the standard European level (which does not apply to the scope of exceptions and the precision of the authorities’ powers). However, problems occur in its application. The institutions that are supposed to oversee the smooth running of public tenders are undercapitalized. An amendment to the Law on Public Procurement was adopted in December 2019, and the law has been implemented since July 1, 2020. The amendment further strengthened the independence of the Office for Public Procurement and brought a number of changes, e.g. the obligation of each contracting authority to send no later than 31 January of the current year to the Office for Public Procurement and the state audit institution information on the annual procurement plan. This information should include the reasons and justification for each individual contract and the method of determining the estimated value of the public contract. Each contracting authority is also obliged to draw up a report on the implementation of the contract plan in the previous year, no later than March 31 of the current year, which it also sends to the above-mentioned institutions. The law stipulates the so-called open procedure (“otvoreni procedure”) as the standard way of selecting a supplier in public tenders. Exceptions to this rule are the so-called restrictive procedure (“restrictive procedure”) and the so-called negotiation procedure (“pregovarački procedure”), which are often the subject of criticism, especially from the EU. The aim of the law is, among other things, to limit these exceptions, which will only be approved in the most urgent cases. open procedure (“otvoreni procedure”). Exceptions to this rule are the so-called restrictive procedure (“restrictive procedure”) and the so-called negotiation procedure (“pregovarački procedure”), which are often the subject of criticism, especially from the EU. The aim of the law is, among other things, to limit these exceptions, which will only be approved in the most urgent cases. open procedure (“otvoreni procedure”). Exceptions to this rule are the so-called restrictive procedure (“restrictive procedure”) and the so-called negotiation procedure (“pregovarački procedure”), which are often the subject of criticism, especially from the EU. The aim of the law is, among other things, to limit these exceptions, which will only be approved in the most urgent cases.

The restrictive procedure is the closest to the pre-qualification system, where in the 1st round the participants of the selection procedure must prove their professional competence to perform the offered work. In the case of foreign participants in the tender, the tenderer must check the correctness of the submitted documents, which have confirmation from the competent authorities of the country where the tender participant is registered. In practice, some contracting authorities also require that bids from foreign entities be stamped by the relevant embassy. “Negotiation” is a process where the tenderer can contact only selected companies without prior publication of information. This applies primarily to cases where, for objective reasons or due to copyright protection, only specific suppliers can perform the delivery. This can only happen if that neither the open nor the restrictive procedure leads to the desired result (offers are not adequate, unacceptable for the tenderer or if no offers are received after the open or restrictive procedure has been announced). The law also recognizes time constraints as an objective cause.

All more detailed information, including tenders and the text of the Public Procurement Act in English, can be found on the website of the competent authority.

Payment terms, payment ethics and resolution of commercial disputes

In most areas (issuing bank letters of credit and guarantees, supplementing the legislative base, providing information), the situation is comparable to other countries in South-Eastern Europe. The trend is further improvement in the area of ​​debt collection and political stability. Relations with local town halls and the municipal and other services managed by them are an occasional problem, especially when supplying technological units or investing. Given the political interconnectedness of individual regional representatives, it may happen that political problems affect the functioning of organizations vis-à-vis entrepreneurs. This can extend, for example, the issuing of various permits, etc.

A separate chapter is the occasional experience of our companies, when they negotiate with their potential partners for a long time without the debate having any real basis (the partner does not have financial coverage or the like). During the interview, it is advisable to look for an answer to the question of whether the discussion is necessary and leads to the goal, or whether it is a waste of time. At the same time, however, one must be patient. Czech companies closed many deals thanks to patience.

The resolution of disputes, if they arise, depends on the wording of the terms in the business contract. In the vast majority of cases, the Serbian partner insists on resolving them at the Commercial Court in Belgrade (“Trgovinski sud”) or at the Arbitration Court of the Chamber of Commerce of Serbia, according to local law. With some important companies, it is possible to negotiate the resolution of potential disputes abroad according to other commercial law, e.g. at the Arbitration Court in Vienna according to Austrian commercial law.

Visas, fees, specific conditions for traveling to the territory

Serbia took over the decision of the SČH unilaterally (on the basis of the government’s decision, which is still valid) to cancel the visa requirement for citizens of selected countries, including EU countries together with the Czech Republic, for tourist trips within 90 days with effect from 31/05/2003 – also for transit trips. The visa-free regime is without any additional entry fees.

From June 12, 2010, citizens of the Czech Republic and other EU countries can enter the Republic of Slovenia with their identity cards. Carrying a passport is no longer a requirement. A child under the age of 15, if he does not have his own passport, must be entered in the parent’s passport (please note that since 2012, children are not entered in the parent’s passport in the Czech Republic). If only one parent is traveling with the child, it is a good idea to have an officially certified written consent of the other parent with you. The same applies if the child is traveling with a person other than a legal guardian. The Serbian authorities will not allow entry into the territory of Serbia from the territory of Kosovo if persons do not have an entry stamp in their passport from a Serbian border crossing with one of the other neighboring states not older than 90 days, provided that during these 90 days they did not leave the territory of Serbia or Kosovo. Entry into the territory of Serbia from the territory of Kosovo is possible with a valid identity card.

Obligation to register stay (up to 24 hours): Every foreigner must register their stay longer than 24 hours at the local police department. One copy of the form certified by the police must be kept with you during your stay in Serbia. If you are staying in a hotel, campsite, etc., the accommodation facility fulfills this obligation; we recommend that you keep the proof of payment for the accommodation at least until you leave the territory of Serbia, for the reason of a possible complaint in case of non-fulfilment of the obligation to report your stay on the part of the accommodation provider. In all other cases (staying with relatives, friends, etc.), you must be registered by the owner of the property in which you will live during your visit to Serbia. It can do so without you present, but it will need your travel document to log in. Everyone must check out in person before departure. Confirmation of residence registration is required by riot and traffic police patrols and occasionally passport control upon exiting the country. Until recently, failure to fulfill this obligation could result in short-term imprisonment (usually up to 7 days), a fine, and a ban on further trips to the country as part of the proceedings at the misdemeanor court.

Spending the night in the wild is prohibited. Sleeping under a tent, in a tent or only in a sleeping bag is only possible in designated campsites. Also, staying overnight in a caravan-trailer is only allowed in designated places (campsites). Due to the more frequent cases of car break-ins while passengers are sleeping and robberies, it is strongly not recommended to sleep in a car parked at a rest stop, gas station or elsewhere outside the camp site, or to stop at (usually unlit) rest stops without gas stations.

If you are traveling to Serbia with a car that you do not own, you must also have a power of attorney issued by the owner of the car (in English) with a verified signature of the owner. A power of attorney can be requested at the border and is always required in cases of towing a car for bad parking. We recommend verifying the signature at a notary public or at the municipal office, in some areas of Serbia there may be problems with the verification performed by the Czech Post.

Areas with increased risk for foreigners: The situation in RS is stable and calm. The risk of incidents can arise, for example, in the case of important sporting events (e.g. due to the hard core of fans of the football clubs Crvena Zvezda and Partizan Belgrade or, for example, in the case of an international match, e.g. with Croatia). In the case of a trip to areas immediately adjacent to Kosovo and North Macedonia, we recommend that you inform yourself in advance about the current situation. When traveling on the road, it is recommended not to use rest stops at all and only use well-lit gas stations for short stops. We definitely do not recommend staying overnight in any of these places.

Conditions for the use of local health care by Czech and EU citizens: When traveling to Serbia, the Czech holder of the European Health Insurance Card is entitled to benefits in kind to the extent of necessary and urgent health care according to Serbian law on the account of his Czech health insurance company. Such care must be provided, the provision of which is necessary to avert a threat to health or life and the provision of which cannot be postponed until after the return to the Czech Republic. The right to health care based on an international agreement can be claimed in Serbia only with doctors and hospitals that have a contract with the Republic Health Insurance Fund.

In the case of certain medical procedures and treatments, according to Serbian law, a co-payment is payable. If you need medical care in Serbia, you must first contact the Republic Health Insurance Fund (Republički fond za zdravstvo osiguranje, in Belgrade the branch is located at Nemanjina 30), where, after presenting the European Health Insurance Card (for tourists) or the Certificate of Belonging to legal regulations CZ/SRB 101 (for long-term residents), the insured is issued form INO-1. With this confirmation, the insured presents himself to contracted doctors. If the above requirements are not met, payment in cash (in dinars) must be expected. The ZÚ Belgrade recommends everyone who has a long-term stay in the RS to get the INO-1 form. Especially for shorter trips or transit through the territory of Serbia, the ZÚ continues to recommend taking out travel health insurance on a commercial basis in the Czech Republic before the trip. If the insured cannot contact a branch of the Republic Fund in advance (especially in the event of a sudden deterioration in health, e.g. in a car accident), the contracted medical facility will treat him even without prior registration. More information can be found at www.kancelarzp.cz/cs/smluv-staty/srbsko.

Employment of citizens from the Czech Republic

If an employment relationship is established with a foreign citizen, the provisions of the Act on concluding an employment relationship with foreign citizens are applied.

A foreign citizen can be employed and work in Serbia if he has a work permit and is registered according to the relevant article of the law. A work permit can be issued to a foreigner who has a permanent or temporary residence permit or other document in accordance with the law. A foreigner who has a work permit in Serbia can only perform the work for which he received the work permit. The work permit is issued for a fixed period and its duration depends on the purpose. Work permits are issued by the State Employment Office of the Republic of Serbia. The Government of the RS ensures an annual quota of work permits for foreigners, which limits the number of foreign citizens on the labor market in Serbia.

Fairs and events

In addition to a number of local and regional exhibitions, three main fairgrounds operate in Serbia: Belgrade Fair (www.sajam.co.rs), Novi Sad Fair (www.sajam.net), Kragujevac Fair (www.sumadijasajam.rs). Current overviews of organized events can be found on their website.

The most important fairs in which Czech companies traditionally participate include, for example, the SEEBBE construction fair (April 27-30, 2022), the Tehnika engineering fair (Belgrade, May 24-27, 2022) and, last but not least, the agricultural fair in Novi Sad (Novi Sad 21 – 27 May 2022).

Serbia Market Entry