Forms of companies in Serbia
After the establishment of private property in Serbia, numerous companies were registered in Serbia. Companies in Serbia differ according to many criteria: legal status of the founder, form, origin of capital, and the like. However, the most significant division of companies in Serbia is according to the legal form.
If you have read our text about investing in Serbia, you might also be interested in this text about starting a business in Serbia. There are 7 possible legal forms for doing business activity in Serbia:
- Partnership;
- Limited partnership;
- Limited liability company;
- Joint stock company;
- Branch of a foreign legal entity;
- Representation;
- Entrepreneur (sole proprietor).
Partnership
A partnership is a legal form consisting of two or more partners. They are jointly and equally liable with all their property for the obligations of the partnership. If the partnership agreement or any other agreement between the partners contains a provision limiting their liability to a third parties, this provision would have no legal effect. A legal entity may be a member of a partnership. The rule is that partners make equal contributions to the business. If a partner wants to do something or decide, he needs the agreement of all other partners. The profit of a partnership is divided equally among partners, but this can be regulated differently by the formation agreement.
Partnership is not often represented as a legal form among companies in Serbia.
Limited partnership
A limited partnership is a one of the seven legal forms of companies in Serbia established by at least two founders – general partners and limited partners. A limited partnership must have at least one general partner and at least one limited partner. The general partner is the founder who is responsible for the obligations of the company for an indefinite period of time and with all his property. The limited partner is another founder who is responsible for the obligations of the company in proportion to the amount of his contribution (therefore, he is not liable with his personal property).
Consequently, limited partnership is not often represented as a legal form among companies in Serbia.
Limited liability company
The limited liability company (LLC) is the most common legal form of company in Serbia. The amount of the founders’ and members’ contributions in the limited liability company in Serbia does not have to be the same.
LLC members are responsible for the obligations of the company only up to the amount of their share. This means that they are liable up to the amount of the paid or contributed share. They are not responsible for the obligations of the company in relation to their personal property, but they bear the risk in proportion to the amount of their share.
LLC is a type of company that can have one or more founders. Each member has a share of the share capital of the company. The share capital of a limited liability company consists of the sum of the founders’ contributions (in the form of monetary and non-monetary contributions). The amount of the founders’ and members’ contributions to the LLC need not be equal. The minimum amount of the share capital of the limited liability company is 100 dinars (a little less than 1 euro).
Joint Stock Company
A joint-stock company is a legal form of organization of many state owned companies in Serbia. Shareholders are owners of the company’s shares and have the right to receive dividends based on their share. They also have the right to participate in the decision on the choice of management, as well as the right to a part of the liquidation assets in case of liquidation. The minimum value of the share capital of a joint stock company is 3.000.000 dinars (about 25.000 euros).
Branch of a Foreign Legal Entity
A branch of a foreign legal entity is a separate organizational part of a foreign company through which it carries out activities in the Republic of Serbia. It has its registered predominant activity, but it can also carry out all other activities that are not prohibited by law. The predominant activity of the branch and the predominant activity of the founding company do not have to be the same.
The branch must have its own legal representative. A branch of a foreign company in Serbia does not have the status of a legal entity, but performs actions and acts on behalf of the founders. The founder of the branch is a foreign company that is responsible for the business of the branch. From the tax point of view (OECD and Serbian legislation), the branch has the status of domestic tax resident, although it is not formally part of the companies in Serbia.
Representation of a Foreign Legal Entity
Representations of a foreign legal entity is a separate organizational part of the foreign companies in Serbia, which can perform preparatory activities. The representation does not have the status of legal entity. Although the representative office does not perform any activities of the founder except preparatory activities, the representative office must be registered in Serbia. The work of the representation is subject to restrictions, i.e. it cannot perform regular business activities. That means it cannot sell goods or services on the market. The representative office can only conclude preparatory transactions related to its current business (for example, accepting orders).
Sole entrepreneurship
An entrepreneur is a natural person who registers them self to make a profit. An entrepreneur can make profit on his own or hire other workers. The entrepreneur is responsible for all his activities with the entire of his property. There are two different forms of entrepreneurs:
- flat rate entrepreneur;
- entrepreneur who keeps books.
A flat-rate entrepreneur is a type of entrepreneur who has a turnover of up to 6 million dinars per year (round 50.000 euros). Depending on the place of registration, age and type of activity, entrepreneur is taxed for a fixed amount. An entrepreneur who keeps books is an entrepreneur who has a turnover of more than 6 million dinars or who decides to keep books from the beginning of the business. He is taxed according to business result from the books.
Please note that all Legal forms of companies in Serbia are registered in the Serbian Business Register Agency.