Serbia is doing its best to create an attractive environment for entrepreneurs. Separately, the country is interested in startups, so the government offers a number of tax incentives that entrepreneurs can take advantage of.
What incentives does Serbia offer to innovative startups?
All startups established before 31 December 2021 that are engaged in innovative activities can benefit from tax and social security exemptions on the salaries of founders who work in the company. This benefit is valid for up to 36 months.
It is important to understand that in order to use the benefits, the company must be new, and not created as a result of a change in the status of another company.
Also, an innovative startup that plans to take advantage of tax incentives must have a business center of activity in the territory of the Republic of Serbia. That is, all activities for the development of innovations should be carried out in Serbia.
The rules that companies must comply with in order to participate in obtaining tax benefits:
- according to the latest financial statements, the company should not have an annual income of more than 500 million RSD (approximately 499 thousand US dollars),
- it shall not, since its inception, distribute dividends and will not distribute them for the next three years, and
- invests in research and development at least 15% of total costs, or
- more than 80% of all employees are highly qualified employees, or
- the company is the owner or user of the deposited work or patent protected by copyright that is directly related to its innovation activities.
In order to exercise the right to tax exemption, an innovative startup must not be a related party to another legal entity in terms of corporate income tax law. This means that another legal entity should not have control or significant influence on business decisions of an innovative startup, i.e. that shares or voting rights of another legal entity in an innovative startup or its governing bodies cannot be 25%; or that a company from one of the preferential tax systems has any participation or influence in the startup.
Serbia’s excellent location, tax incentives, and the creation of an environment for company development make this country attractive to foreigners.
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