Work, in addition to employment, includes the representation of a company on the basis of entry in the register of Serbian Business Register Agency, as well as the performance of management powers and management tasks in accordance with the law governing the status of companies. There many situations where contribution for legal representatives of Serbian company must be paid, and these are just few of them.

FOREIGN CITIZENS who are the Founders of a company

Foreign citizen – natural person – who is not a resident of the Republic of Serbia, can be a Founder and / or a Member of a company in Serbia. Which regulations will apply to the determination and payment of compulsory social security contributions for the Founder and / or a Member of a company depends on the circumstances of whether a contract has been concluded with the state of residence of Founder and/ or Member in the field of social security.

If a bilateral agreement is concluded, there is no obligation for that person to pay social security contributions under the regulations of the Republic of Serbia if two cumulative conditions are met:

1. If the natural person submits a certificate that s/he is a resident of the country with which the social security contract has been signed, certified by the competent authority of that state, and
2. If the natural person submits a certificate that s/he is compulsorily insured in the State of residence (Contracting State), certified by the competent authority of that State.

Failure to provide the above evidence, as well as in the case where no bilateral social security contract is concluded, the regulations of the Republic of Serbia in the field of compulsory social security shall apply.

Founders who do NOT work in their company and are NOT registered to represent the company but are in a working relationship in their company regarding jobs that are not representation

Founder or a Member of a company who is employed by his company is obligatory insured on the basis of employment as an employee. This person may perform any business activity in that company, as well as any other employee, except to represent the business of the company, due to the fact that for these jobs’ s/he is not registered in the Serbian Business Register Agency (it is understood that there is another person registered to represent the company).

Founders and / or Members of a company who have established an employment relationship in their company are entitled to earnings, reimbursement and other income based on the employment relationship in accordance with the law governing employment, a general act with the employer and a contract of employment. This person has all the rights and obligations on the basis of employment like any other employee.

Income Tax is calculated and paid at the rate of 10%.

Founders and / or Members of a company are entitled to a dividend or a share in the profits of the company in accordance with the general act of the company (which is taxed as capital income at the rate of 15%).

Founders who WORK in their company and are REGISTERED to represent the company but are NOT in employment with their company or with another employer

For individuals who are Founders or Members of a company, and are registered to represent that company in which they do not have an employment relationship (and are not employed by another employer), the contribution base is at least the lowest monthly contribution basis.
For these persons, as Founders or Members of a company, all three contributions are calculated and paid as follows:

1. For compulsory pension and disability insurance – 26%;
2. For compulsory health insurance – 10.3%;
3. For unemployment insurance – 1.5%.

The personal income tax is NOT calculated because the individual does not receive the contractual remuneration for his / her employment as a Founder or a Member of a company.

If you need trustworthy associates with experience and knowledge regarding contributions for legal representatives of Serbian Company contact Asst Office.

Article 17 of the Law on the Centralized Records of Beneficial Owners (The Law) stipulates that all registered entities, established until 31st December 2018, must record the beneficial owners data in the Central Record of Beneficial Owners at the latest until 31st January 2019.

These subjects, as well as the legal entities established after 31st December 2018, on the basis of Articles of the Law have the obligation to record stated changes, within 15 days from the day of the founding or changes of the ownership structure, organ members and other changes on which basis the conditions of the beneficial owner of the registered subject can be estimated.

What are the consequences of failing to record beneficial owner of a legal entity in Serbia?

The consequences of failing to fulfill the obligation of recording are stipulated by Article 13 and the Article 14 of The Law.

In accordance to the Article 13 of the Law, who, in order to conceal the beneficial owner of a legal entity in Serbia, does not enter into the Central Registry information about the beneficial owner of the registered entity, submits false information about the beneficial owner of the registered entity as true, change or delete the true information about the beneficial owner of the registered entity, shall be punished by imprisonment for a period of time between three months and five years.

As an violation, Article 14 stipulates non-registration of data on the beneficial owner within 15 days from the date of establishment or change of ownership structure, members of the bodies of the registered entity and other changes on the basis of which the conditions for acquiring the property of the beneficial owner of the registered entity and non-possession and the non-preservation of relevant, accurate and up-to-date information and documents on the basis of which the beneficial owner of the registered entity is registered.

Fines for not fulfilling the obligation

For the stated violations, a registered entity shall be fined – a legal entity with a fine of 500.000,00 to 2 million dinars, and a responsible person in legal entity with a fine of 50,000 to 150,000 dinars.

Therefore, if you want to register a company in Serbia bear in mind that you will have these obligations towards Serbian Business Registers Agency. Also, if you already have ownership in Serbian legal entity or you are beneficial owner of a legal entity in Serbia, and you did not fulfill this obligation feel free to contact us and ask for advice or our assistance.

According to Serbian Company Law, one legal entity can be a member of another legal entity. Furthermore, it is allowed that one legal entity is registered as a legal representative of another legal entity. In addition to this that other legal entity must have at least one legal representative who is an individual.

In practice, this means that you can register your company in Serbia, register yourself as a legal representative and director of the company and agree that AsstOffice is also registered as a legal representative. By doing so, you will have full control of your company, but it will be easier for you to manage the company and to fulfill all the requirements towards government administration such as Tax Administration, Business Registers Administration and other. AsstOffice will not be authorized to make any changes or to make any payments without your permission. The scope of AsstOffice authorization is stated in the Agreement between your company, on one side, and AsstOffice on the other side, as well as in the Memorandum of Association and Registration Forms.

This type of service represents a part of legal entity management and is considered to be quite effective and usual when incorporating and operating a company in a new country, region or new market. It is representatives job to inform you about business climate, culture and customs, and to adapt your business model to requirements of the new market. Knowledge of legal and tax system is a necessity if you tend to succeed in your venture.

All of the above stated serves so that your focus is solely on business activity and give us the opportunity to do the administration work for you. This will make running a company much easier and more efficient.

One more benefit is that you can operate your business without even coming to Serbia. From company formation and opening a bank account to managing legal entity, everything can be stipulated and arranged through the Power of Attorney and Contracts.