Discusses distribution network from how products enter to final destination, including reliability of distribution systems, distribution centers, ports, etc.
The Trade Law is compliant with EU regulations and divides commercial trade into wholesale and retail sales. In addition to licensed sales outlets, consumers can conduct trade remotely (e.g., by internet, catalog, mail order, or telemarketing) or without the prior order (or consent) by way of direct offer (e.g., door-to-door salesmen) through authorized representatives. Other sales outlets include trade from portable or mobile objects (kiosk, counter, vehicle, etc.). The Trade Law also defines special market institutions such as commodities markets, fairs, and other industry trade-like fairs including green markets, wholesale markets, and auction houses. The law prohibits the establishment of pyramid trade and marketing schemes.
There are several foreign retail chains in the Serbian market, including regional and international players. Foreign retail chains maintain two-thirds of the total retail market. Consumer malls and shopping centers have become popular in Serbia. However, there are not many American specialty shops. The key to success is offering an increasing variety of new products and services to the Serbian consumer.
Capital goods normally are sold directly to manufacturers and businesses. A good agent is essential when selling capital goods or machinery to businesses. The U.S. Commercial Service Serbia assists U.S. exporters in finding an agent through its International Partner Search or Gold Key Matching Service.
Using an Agent to Sell U.S. Products and Services
Choosing a partner carefully, whether it is a local agent, representative, or distributor, is the most effective method of entering the Serbian market. Such local partners can contribute to the success of a U.S. company by shortening its entry time and strengthening its market position. The benefits of a local partner include having a dedicated local presence that is familiar with the local language and business culture and has access to business channels. A local partner can take advantage of fast-breaking opportunities, absorb some expenses of doing business, and manage the logistics of importation, product marketing, and distribution.
In considering a potential agent or distributor, conducting appropriate due diligence is important prior to signing a contract. Although English is spoken widely in the business community and among young professionals, U.S. companies will want to have a representative with strong Serbian language skills and cultural knowledge. In addition, business in Serbia is conducted to a large extent through personal contact. In this respect, it is critical to find a partner who is committed to abiding by both local and U.S. laws. Companies are advised to consult with local legal counsel before signing any contact.
The U.S. Commercial Service at the U.S. Embassy in Belgrade can provide International Company Profiles (ICPs) that include detailed background checks on potential clients and representatives. These reports include up-to-date information on potential partners, such as bank and trade references, principals, key officers and managers, product lines, number of employees, financial data, sales volume, reputation, and market outlook. For more information, please visit the U.S. Commercial Service Serbia website.
For initial information about the companies registered in Serbia, U.S. companies may contact the following institutions directly:
The Development Agency of Serbia, (formerly known as the Serbian Investment and Export Promotion Agency, SIEPA) maintains a detailed database of Serbian suppliers in English, with great filters, that can be used to identify potential B2B clients.
The Serbian Credit Bureau, which is affiliated with the Association of Serbian Banks, provides information on the credit rating of local companies and is an important resource for verifying the credibility of a potential local partner. To request an English-language copy of the report (for a fee), you may contact the Association of Serbian Banks.
Establishing an Office
According to the Companies Act, foreign investors can set up their businesses for a determined period of at least one year or for an indefinite period of time, depending on the company’s purposes and activities.
The Act recognizes several types of business entities:
- private limited liability companies;
- joint stock companies (open or closed);
- general partnerships;
- limited partnerships;
- branches of foreign companies.
The legislation related to foreign investments in Serbia is permissive and allows entrepreneurs from abroad to easily establish their presence. A subsidiary, an independent and distinct legal entity, can be established by a large enterprise from abroad or held by a holding company from a specific country.
A branch office in Serbia relies on its parent company in terms of activities, profits, and losses by reporting each operation, change, investment, etc. Branch offices may not sell goods or services directly but may be used to support sales transactions or business development. They may conduct operations including market research and development, contract or investment preparations, technical cooperation, and similar business facilitation activities. They may not operate in the trade of armaments or other military equipment.
Both entities operate under the rules of limited liability companies (d.o.o.), which is the most suitable structure for both domestic and foreign entrepreneurs. Limited liability companies may be established in five to ten days, with founding capital requirements of only roughly RSD 100 (less than USD 1) and restrictions of maintaining no more than 50 shareholders. If the entity in question has more than 50 shareholders (but less than 100), for more than a year, the company must change its status to a joint stock company. The minimum capital required for a joint-stock company is RSD 3,000,000 (approximately USD 27,250).
The Serbian Business Registers Agency (Agencija za Privredne Registre, APR) oversees the establishment of foreign limited liability companies in Serbia and processes the registration of a branch or a subsidiary office. All documents must be notarized, accompanied by the Serbian translation, and submitted to the APR, which issues the certificate of incorporation (registration certificate). Foreign entities/persons and imported goods enjoy the same treatment and status as domestic entities (i.e., national treatment). As of January 1, 2018, APR now provides electronic registration services to entrepreneurs holding qualified digital certificates.
All relevant information related to registering business entities, representative office or financial leasing, pledges on movable property and rights, and financial statements may be obtained here: https://www.apr.gov.rs/services.1652.html or via e-mail: firstname.lastname@example.org.
Directors of companies in Serbia need to have a digital signature at the time of company incorporation to facilitate signing of company financial documents. According to the amendments to the Law on Companies that came into force in 2018, all legal entities must register their e-mail address.
Residence and work permits are required for foreign employees. All resident foreigners must pay an annual income tax if their income exceeds three times the average annual salary of an employee paid in Serbia in a given tax year. Obtaining business visas and temporary residence permits is a complicated and time-consuming process. According to the amendments to the Law on Employment of Foreigners, from December 2017, work permits for persons seconded to work in Serbia who are employed by a foreign employer may be issued at the request of an employer in Serbia for the purpose of doing business or performing services in Serbia.
The work permit is issued for a contracted period between the employer and the foreign employer, not to exceed one year. Paragraph 4 of the Article stipulates that work permits for persons seconded to work in Serbia can be extended for up to two years, with the prior approval of the Labor Ministry and the ministry responsible for regulating the activity of the employer in question.
CS Serbia highly recommends using a local law firm to assist in establishing companies on the local market. Many of the legal, consulting, and financial-services members of the American Chamber of Commerce of Serbia have experience registering and assisting U.S. firms, and would be excellent first points of contact.
American Chamber of Commerce of Serbia
Law on Companies (English)
The Serbian market remains relatively untapped for franchising. While a few franchises do operate already in Serbia, the business concept is slowly attracting interest among local entrepreneurs. Growing consumer demand for a variety of merchandise and services make Serbia a promising market for a wide range of franchised businesses, such as catering and apparel. In many cases, master franchisers cover all of southeast Europe from a neighboring market. As in the other countries of the region, a Polish firm, AmRest, is becoming one of the major players in the market, operating multiple KFC restaurants in Serbia, as well as the first Starbucks outlet in Belgrade, which has been a success.
There is no dedicated franchise law in Serbia; however, the Law on Contracts and Torts provides some legal framework and protection. Serbia does not have a franchise association to promote this industry.
Direct marketing is not at the level of mature markets like the EU or the United States. With steady growth in credit card usage, however, consumer goods marketing through catalog sales and direct response advertising (television, radio, and print media) is expanding.
Direct marketing by mail or unsolicited phone calls is quite common, and households receive such promotions on a daily basis, typically from local supermarket chains, restaurants, and personal services providers. Credit card companies regularly include in their bills special offerings of various consumer goods in partnership with other companies. Also, the use of the internet for direct marketing is becoming increasingly popular. Telekom Srbija publishes a Yellow Pages Directory. With the advent of COVID-19, CS Serbia expects a significant jump in online transactions.
Joint Ventures/Licensing Serbian firms are interested in joint venture contracts with foreign firms. They often are looking for foreign partners to provide capital, equipment, and merchandise, while domestic firms would provide working and warehouse space, personnel, local experience, and channels of distribution. U.S. companies considering such ventures should review carefully the viability of potential domestic partners.
All the major U.S. and other foreign express delivery courier companies, such as FedEx, UPS, and DHL operate in Serbia, along with Serbian Post’s own express mail service (EMS). In April 2020, one of the largest logistics and distribution companies in Serbia, Delta DTS, signed a representation contract with C.H. Robinson, one of the largest U.S. logistics companies operating around the world. Most of them also provide customs-clearance services.
All shipments are subject to security screening, regardless of destination. Shipments will be x-rayed and their contents inspected to ensure that they are safe for transit. All parcels shipped to and from territories outside of the European Union are subject to customs clearance. This also applies to special and overseas territories linked to EU member states (e.g. Channel Islands, Canary Islands, Falkland Islands, etc.). Certain commodities are considered as “Non-Document” and need to be accompanied by an invoice and, in some cases, additional customs documentation. Other commodities are considered simply as a “Document” and only require an express delivery courier company Waybill to be completed. More details may be reviewed at the Customs Administration.
American firms interested in doing business in Serbia are advised to perform due diligence before concluding any kind of business deal. Legal audits generally are consistent with international standards, using information gathered from public books, the register of fixed assets, the court register, the statistical register, as well as from the firm itself, chambers, and other sources. The U.S. Commercial Service in Belgrade can counsel U.S. companies on potential partners and provide background information on companies and individuals via the International Company Profile (ICP) service. An ICP provides information about a local company or entity, its financial standing, reputation in the business community, and includes a site visit to the local company and a confidential interview with the company management. For more detailed information, please contact email@example.com.