How to Set Up a Subsidiary Company in Serbia?

Setting up a subsidiary company in Serbia offers international businesses a strategic gateway into Southeast Europe. As an emerging market with a favorable tax regime, competitive labor costs, and access to both EU and non-EU markets, Serbia is increasingly becoming a popular destination for foreign investment. 

Key Takeaway:

• Strategic Access to Major Markets: Serbia provides international companies with duty-free access to over 2.7 billion consumers through trade.
• Multiple Legal Structures: Foreign investors can choose from various subsidiary types and branch offices.
• Favorable Tax Environment and Investment Incentives: Serbia offers a flat 15% corporate tax rate, low labor costs, and generous incentives.
• Straightforward Incorporation Process: Setting up a subsidiary involves clear steps. 

Whether you’re seeking expansion, nearshoring opportunities, or a cost-effective base in the Balkans, Serbia presents a compelling option for global growth. If you’re wondering how to create a subsidiary in Serbia, this guide offers a comprehensive, step-by-step approach.

What are the Types of Subsidiaries in Serbia?

When figuring out how to establish a subsidiary company in Serbia, foreign investors can choose from several structural options depending on their business goals.

Here’s a breakdown of the different types available:

1. Wholly-Owned Subsidiary

A wholly-owned subsidiary is a Serbian company that is 100% owned by a foreign parent company. This structure offers full control over operations, decision-making, and profits. The most commonly used legal form is the Društvo sa Ograničenom Odgovornošću (DOO), or Limited Liability Company (LLC).

2. Joint Venture

A joint venture involves partnering with a Serbian entity or another foreign investor to create a subsidiary company. Ownership and responsibilities are typically shared according to a formal agreement.

3. Representative Office (Not a subsidiary, but often considered)

While not a subsidiary in the legal sense, a representative office is a common entry point for companies testing the Serbian market. It cannot engage in direct commercial activities but can perform market research, promotional tasks, and liaison functions.

Step-by-Step Guide to Setting Up a Subsidiary in Serbia

You might search for how to form a subsidiary in Serbia in the hope of finding a straightforward process. If yes, below is a simplified, actionable guide to successful business incorporation:

Step 1: Choose the Subsidiary Type and Legal Form

Decide between a wholly-owned subsidiary or a joint venture with Serbian partners. There are no restrictions on foreign ownership in most industries.

Step 2: Reserve the Company Name

Conduct a name availability search via the Serbian Business Registers Agency (SBRA) online portal. The name must be unique, not misleading, and include the legal suffix (e.g., “DOO”). Once approved, submit a name reservation request through SBRA. The reservation is valid for 60 days.

Step 3: Prepare Required Documentation

Gather and draft all necessary documents, which must be translated into Serbian and notarized where applicable:

• Founding Act / Articles of Association (single-member) or Founding Agreement (multi-member)
• Decision on Company Establishment
• Details of shareholders and managing directors
• Proof of registered business address
• Specimen signatures of authorized representatives
• ID or passport copies of the founders and directors
• Bank confirmation of share capital payment

Optional but useful:

• Power of Attorney (POA) if a local representative is acting on your behalf during registration
• Business plan (recommended for banking or immigration purposes)

Step 4: Open a Temporary Bank Account

Visit a local Serbian bank to open a temporary capital deposit account. Deposit the minimum share capital (100 RSD for DOO, approximately €1). Higher amounts may be required based on business activities or industry. The bank will issue a confirmation of deposit, required for registration.

Step 5: Register the Subsidiary with SBRA

Company registration in Serbia is handled through the SBRA. As of 2025, the official registration fees are:

• RSD 5,900 (approx. €50.26) for a Limited Liability Company (DOO)
• RSD 1,500 (approx. €12.78) for an entrepreneur (sole trader)
• RSD 5,900 (approx. €50.26) for a branch office of a foreign company

In addition to these fees, there are pre-registration costs to consider. One essential requirement is the Founding Act (Articles of Association), which must be notarized by a certified notary public in Serbia. Notarization typically costs between €30 and €50, depending on the complexity and number of documents.

Step 6: Open a Permanent Bank Account

Present your company registration documents to convert the temporary account into a fully operational corporate bank account. Choose a bank that supports multi-currency accounts, online banking, and foreign exchange services. This account will be used for all commercial and payroll transactions.

Step 7: Register for Taxes

Register the company with the Serbian Tax Administration to activate the PIB. If your projected annual turnover exceeds 8 million RSD (~€68,000), VAT registration is mandatory. Submit the required PPO form, founding documents, and lease agreement to register for VAT.

Key Benefits of Establishing a Subsidiary in Serbia

When thinking of how to set up a parent company with subsidiaries in Serbia, the region offers a range of strategic and operational advantages for international business incorporation. Here are the key benefits:

• Access to Regional and International Markets: Serbia offers duty-free access to a market of over 2.7 billion consumers through trade agreements with the EU, EFTA, CEFTA, Russia, Turkey, and the UK. 
• Competitive Tax Environment: Serbia has a corporate income tax rate of 15%, one of the lowest in Europe. Additional tax incentives are available for investments in innovation, R&D, and the employment of certain workforce categories. 
• Skilled and Cost-Effective Workforce: Serbia boasts a highly educated, multilingual workforce, particularly in fields like IT, engineering, and manufacturing.
• Favorable Business Regulations: A Serbian subsidiary is treated as a separate legal entity, which limits the liability of the parent company. 

Legal Structures Available for Subsidiaries in Serbia

When opening a subsidiary in Serbia, foreign investors can choose from several legal entity types, depending on their ownership structure, liability preferences, and operational needs. 

Below are the primary business structures available for subsidiaries in Serbia:

1. Limited Liability Company (DOO – Društvo sa Ograničenom Odgovornošću)

• Ownership: Can have one or more shareholders (individuals or legal entities, domestic or foreign).
• Liability: Shareholders’ liability is limited to the value of their capital contributions.
• Minimum Capital: 100 RSD (approx. €1).
• Management: Managed by one or more directors appointed by the founders.

2. Joint Stock Company (AD – Akcionarsko Društvo)

• Ownership: Can be privately or publicly held, with one or more shareholders.
• Liability: Shareholders are liable only up to the value of their shares.
• Minimum Capital:

• Private AD: 3 million RSD
• Public AD: 10 million RSD
• Management: Governed by a board of directors and a supervisory board.

3. General Partnership (ORT – Ortačko Društvo)

• Ownership: Formed by two or more partners who share profits and liabilities.
• Liability: Partners have unlimited joint liability for business obligations.
• Legal Entity: Yes, but not commonly used by foreign investors.

4. Limited Partnership (KD – Komanditno Društvo)

• Ownership: Includes at least one general partner (unlimited liability) and one limited partner (limited liability).
• Liability: General partners have full liability; limited partners are liable only up to their capital contribution.

5. Branch Office (Alternative to a subsidiary)

• Ownership: Not a separate legal entity from the parent company.
• Liability: The Parent company is fully liable for all obligations.
• Registration: Simpler than forming a subsidiary, but limited operational independence.

Taxation Rules and Incentives for Subsidiaries in Serbia

Understanding Serbia’s corporate tax framework is essential when figuring out how to start a parent company in Serbia. The country offers a competitive tax environment, along with generous incentives designed to attract foreign investment and support business growth.

Corporate Income Tax (CIT)

• Flat Rate: 15% on taxable profits.
• Tax Base: Calculated on worldwide income for resident companies (including subsidiaries).
• Loss Carryforward: Tax losses can be carried forward for up to 5 years.

Withholding Taxes

Dividends, Interest, and Royalties are subject to 20% withholding tax, unless reduced by:

• A Double Taxation Treaty (DTT) (Serbia has treaties with 60+ countries).
• The EU Parent-Subsidiary Directive (in applicable cases).

Value Added Tax (VAT)

• Standard Rate: 20%
• Reduced Rate: 10% (for essentials like food, books, medicines)
• Subsidiaries must register for VAT if annual turnover exceeds 8 million RSD (~€68,000).

Capital Gains Tax

• Taxed at the same rate as corporate profits (15%).
• Applies to the sale of property, shares, and other capital assets.

Payroll Taxes and Social Contributions

• Employers must contribute to:
  • Pension fund: 14%
  • Health insurance: 5.15%
  • Unemployment insurance: 0.75%

Incentives for New Businesses and Foreign Subsidiaries

• Tax Holidays: Up to 10 years of corporate tax exemption for companies investing over 1 billion RSD (~€8.5 million) and employing at least 100 workers.
• R&D Incentives: Research and development (R&D) expenses incurred within the Republic of Serbia are eligible for a double deduction when calculating CIT. However, this incentive excludes R&D costs related to extractive industries, such as the exploration of oil, gas, or mineral resources.
• Regional Investment Support: Grants and co-financing are available for businesses opening in underdeveloped regions.

Regulatory and Compliance Requirements for Subsidiaries in Serbia

Once your subsidiary is established in Serbia, staying compliant with local regulations is essential to ensure smooth operations and avoid legal penalties. Below are the key ongoing legal, tax, and reporting obligations you must fulfill:

• Company Registration and Updates: All subsidiaries must be registered with the SBRA. Any changes to company details (e.g., legal representatives, address, ownership) must be reported to SBRA within 15 days.
• Annual Financial Reporting: Submit annual financial statements by June 30 of the following year. Reports must comply with Serbian accounting standards (IFRS or IFRS for SMEs). Must be prepared and signed by a licensed accountant or auditing firm (mandatory for large or public entities).
• Corporate Income Tax (CIT) Filing: Annual CIT return must be filed with the Tax Administration by June 30. Prepaid monthly or quarterly tax installments are required based on prior-year performance.
• VAT Compliance: VAT returns must be filed monthly. VAT books and records must be kept in Serbian and submitted electronically.
• Employment Law and Labor Compliance: All employment contracts must be in writing and registered with the Central Registry of Compulsory Social Insurance (CROSO). Employers must comply with labor Law requirements (working hours, overtime, leave), minimum wage and social contributions, and health and safety regulations.

Do You Need a Physical Address for a Subsidiary in Serbia?

Yes, when setting up a subsidiary company in Serbia, a registered physical address is required. This address must be provided during the business registration process and will serve as the official headquarters of the company for legal and administrative purposes.

Why a Registered Office Is Required?

• It is used by the SBRA and other government bodies for official correspondence.
• It must be a real, verifiable location in Serbia and not a P.O. box.
• Authorities may inspect or verify the existence of the office during or after registration.

Operational Setup for a Subsidiary in Serbia

Successfully operating a subsidiary in Serbia requires careful planning of your staffing, office setup, and day-to-day operational framework. Here are the key elements to consider for establishing a functional and compliant presence:

• Local Labor Market: Serbia offers a skilled, cost-competitive workforce, especially in IT, manufacturing, and services.
• Employment Contracts: Must be in writing and comply with Serbian labor laws, covering wages, working hours, leave, and termination procedures.
• Work Permits for Foreigners: Non-Serbian nationals require work and residence permits. The subsidiary must initiate these applications and demonstrate the need for foreign expertise.

• Registered Address: A legal requirement; this can be a traditional office, virtual office, or shared workspace.
• Physical Workspace: Depending on your business type, you may need office space for your employees, meeting rooms, and storage facilities.

How to Open a Business Bank Account for a Subsidiary in Serbia?

Opening a corporate bank account is a crucial step for your subsidiary’s operations in Serbia. Here’s a simple step-by-step guide to get you started:

• Choose a Bank: Research banks operating in Serbia that offer corporate accounts for foreign-owned subsidiaries. Popular banks include Banca Intesa, UniCredit, Raiffeisen Bank, OTP Bank, and Komercijalna Banka.
• Prepare Required Documents: Banks typically require the following documents for opening a subsidiary’s corporate account:

• Certificate of Incorporation of the subsidiary company
• Business Registration Extract from the SBRA
• Subsidiary’s Articles of Association (Statute)
• Tax Identification Number (TIN)
• Resolution of the Parent Company approving the opening of the account and naming authorized signatories
• Identification Documents (passport or ID card) of the subsidiary’s authorized signatories and beneficial owners.
• Proof of registered office address in Serbia

• Submit Application: Visit the chosen bank branch or complete the application online if available.
• Account Approval and Setup: The bank will review your application and conduct due diligence. Once approved, you’ll receive account details and access to online banking platforms.
• Deposit Initial Funds: Deposit the required minimum initial deposit (if applicable). 

Is an Operating Agreement Necessary for a Subsidiary?

An operating agreement is a key internal document that outlines the management structure, ownership, and operational rules of a company, commonly used for LLCs or similar entities.

When Is an Operating Agreement Needed for a Subsidiary?

• If your subsidiary in Serbia is set up as an LLC (društvo sa ograničenom odgovornošću – DOO), having an operating agreement (or a similar internal document, often called the Articles of Association) is highly recommended and often required.
• It formalizes how the subsidiary will be governed, detailing roles, decision-making processes, profit distribution, and dispute resolution.
• For other business structures, like joint-stock companies (a.d.), governance rules are typically defined in the statute or corporate bylaws rather than an operating agreement.

Opening a Branch vs. a Subsidiary in Serbia: What’s the Difference?

When expanding your business into Serbia, you can choose between establishing a branch or a subsidiary. Both have distinct legal and tax implications that affect your company’s operations, liability, and financial responsibilities. Here’s a clear comparison:

How Can Commenda Help You Expand in Serbia?

Expanding your business into Serbia can be complex, but Commenda simplifies the process of setting up a subsidiary and ensures a smooth market entry. 

Here’s how Commenda supports your growth:

• Expert Company Formation Services: Commenda handles all the legal and administrative steps involved. From preparing and submitting incorporation documents to liaising with the SBRA, Commenda ensures your subsidiary is established efficiently.
• Comprehensive Compliance Support: Stay on top of ongoing legal, tax, and reporting obligations with Commenda’s proactive compliance management. We assist with tax registrations, payroll setup, and regulatory filings to keep your subsidiary fully compliant.
• Local Knowledge and Personalized Guidance: Benefit from Commenda’s deep understanding of Serbian business laws, tax incentives, and market conditions. Our local experts advise on the best subsidiary structures, corporate governance, and operational setup tailored to your industry and business goals.
• Banking and Financial Services Assistance: Commenda supports you in opening corporate bank accounts and establishing financial processes that comply with Serbian regulations.

Ready to start your business in Serbia? Talk to an expert today!

FAQs

Q. How much does it cost to set up a subsidiary in Serbia?

In Serbia, VAT registration is mandatory before commencing business operations. An application fee must be paid, which varies depending on the legal form of the subsidiary. For a DOO, the fee is RSD 5,900. Additionally, the company’s Founding Act must be notarized by a certified Serbian notary, which typically costs around RSD 5,840.

Q. How long does it take to register a subsidiary in Serbia?

Registration usually takes up to three weeks, depending on the completeness of documents and processing times at the SBRA.

Q. Can a foreigner fully own a subsidiary in Serbia?

Yes, foreign investors can own 100% of a subsidiary in Serbia without restrictions in most industries.

Q. What are the common challenges when opening a subsidiary in Serbia?

Common challenges include dealing with local bureaucracy, language barriers, understanding Serbian tax law, and meeting ongoing regulatory compliance.

Q. Do subsidiaries in Serbia need a local director or representative?

Yes, Serbian law requires at least one local director or authorized representative who can legally act on behalf of the company.

Q. What are the annual compliance requirements for subsidiaries in Serbia?

Subsidiaries must submit annual financial statements, file corporate tax returns, conduct statutory audits (if applicable), and comply with labor and tax regulations.

Q. Can a subsidiary hire employees directly in Serbia?

Yes, subsidiaries can hire employees directly and must comply with Serbian labor laws, including employment contracts, social security contributions, and workplace regulations.

Q. What happens if a subsidiary fails to meet compliance rules in Serbia?

Non-compliance may result in fines, penalties, legal action, and potential suspension of business activities by Serbian authorities.

Overview of Subsidiary Setup in Serbia

1. Benefits of establishing a subsidiary in Serbia

2. Comparison with other business entities like branches

3. Initial considerations for opening a company

Understanding Serbia’s Subsidiary Regulations

1. Types of companies recognized in Serbia

2. Advantages within Serbia’s regulatory environment

3. Subsidiary’s independence and its mandatory VAT registration

Legal and Administrative Requirements

1. Registration process and electronic incorporation

2. Obtaining a Serbian-issued electronic signature

3. Necessary legal documentation and proof of identity

Financial and Tax Requirements

1. Opening a local bank account

2. Tax compliance and VAT registration

3. Planning finances and payroll tax considerations

Employment and Operational Setup

1. Employment contracts and local employment laws

2. Registering with Pension and Health Funds

3. Ensuring compliance with local labor laws

Steps to Establish Your Subsidiary

1. Choosing the type of subsidiary

2. Registering the business name and legal address

3. Acquisition of necessary licenses and permits

Finalizing Subsidiary Operations

1. Complying with local and international reporting standards

2. Ensuring ongoing tax and legal compliance

3. Gaining support from local accountants and lawyers

Conclusion

1. Summarizing the strategic advantages of a Serbian subsidiary

2. Encouragement for foreign investment in Serbia