Serbian legislation allows small business entities, or individuals, to do the entrepreneur registration in Serbia, just one of few countries. The sole proprietor form is unique in that the proprietor is considered an individual who is liable for business obligations with their entire personal assets, but they possess a tax and social security number and can conduct a relevant business activity.
The Law on Business Entities allows an entrepreneur to freely manage their funds and is not required to file financial statements, at least not until a certain annual revenue threshold is reached.
When we talk about entities registered in this legal form, we must emphasize that there are two types of entrepreneurs:
- The “flat-rate” entrepreneur
- The entrepreneur who keeps business books
Simplified tax entrepreneur (flat rate)
This entrepreneurial form does not require the submission of regular annual financial reports to the competent registry, but there is an annual limit for its validity, which is 6,000,000 dinars, equivalent to 50,000 euros. If the business entity generates annual revenue above the limit, it automatically transitions to another type of entrepreneurial legal form, namely, it becomes obligated to keep business books. What is specific to the “flat-rate” entrepreneur is that he is not required to pay himself a personal salary; he is only obligated to pay three types of contributions and a tax on the projected salary. The three types of contributions are:
- Contribution for pension insurance
- Contribution for health insurance
- Contribution for unemployment insurance
With this legal form, the legislature sought to support the development of micro-enterprises and encourage self-employment, so the entrepreneur registration in Serbia is quite common and easy. The amounts of the stated monthly contributions vary depending on the place of the entrepreneur’s registration and the primary activity they engage in. They range on average from 17,000 to 27,000 dinars, with the estimated income tax included in this figure for smaller towns and poorer municipalities, up to over 30,000 dinars for the wealthiest municipalities in Serbia. such as Belgrade or Novi Sad. Of course, the line of work plays a significant role in determining the amount, but for providing highly intellectual services, the figure doesn’t deviate much from the amounts listed above, with the exception of the IT sector. When it comes to this type of entrepreneur, the amount of monthly obligations is the same for any municipality in Serbia and amounts to 37,500 dinars. Contributions and income tax must be paid by the 15th of the month for the current month.
As already mentioned, this type of entrepreneur does not keep business books and is not required to file a final financial statement. However, from an accountant’s perspective, it is necessary to keep records of monthly income to ensure the 6,000,000 dinar threshold is not exceeded without the accountant’s knowledge. A flat-rate entrepreneur is liable with their entire personal assets for obligations arising from business operations and is not subject to the VAT system.
the entrepreneur who keeps business books
Certain activities require an entrepreneur to be established in this legal form. These include activities such as wholesale and retail trade, or those that require the possession of a cash register. A sole proprietor who keeps business books must be registered for VAT, but can choose whether or not to pay themselves a salary. If the entrepreneur makes a larger business profit, our recommendation is to opt for paying a personal salary, whereas if they make a smaller profit, our recommendation is not to pay a personal salary, but only to pay contributions based on the minimum wage. Of course, the amount of contributions is a personal decision for the entrepreneur, and it is possible to pay higher contribution amounts if the goal is a higher future pension.
A very specific circumstance for this type of entrepreneur is that they are required to pay profit tax in advance, in several installments throughout the year (estimated payments). At the end of the business year, after filing the final financial statements, the amount of profit tax paid during the year is compared to the actual profit. In that case, it is possible that the entrepreneur has paid more tax, and the amount of the overpayment must be refunded.
Please note that when a sole proprietor is established, they declare a projected profit amount on the application, i.e., the income based on which they pay tax in installments (estimated tax). This legal form allows the business entity to have employees. It is very common for a sole proprietor who keeps business records to have more than ten employees.
entrepreneur registration in Serbia (procedure)
Registration for both types of entrepreneurs is identical and is done by filling out the forms available on the website of the Business Registers Agency. The Agency’s website also contains instructions for registration. Before starting the registration, the entrepreneur must have a qualified electronic signature. For residents, this can be obtained for free from a certification authority, while non-residents can get it from two certification authorities:
The price of the certificate for non-residents ranges from 5,000 to 6,000 dinars. The procedure requires creating an account on the certification body’s website. After creating the account, you must submit a copy of your passport, fill out the application form, and pay the fee. It takes 3 to 5 business days to issue the certificate. The certificate is also required for filing an annual statements.
After filling out the registration form for a sole proprietor (Registration Application), you must pay a registration fee of 1,800 dinars. A sole proprietorship can also be established electronically, in which case a slightly lower fee of 1,700 dinars is paid.
Documents required for establishment:
- Registration application
- Proof of payment of 1,800 dinars
- Photocopy of an ID card or a photocopy of a passport for a non-resident
You can also send the required documentation by mail. The legal deadline for the Agency for the Registration of Entrepreneurs is 5 business days. After entrepreneur registration in Serbia, the Agency delivers the decision on the establishment by mail. The entrepreneur receives a tax and statistical number and can begin business activities.
The Tax Administration is required to automatically deliver the decision on the entrepreneur’s monthly flat-rate tax amount. The entrepreneur’s name includes, in addition to the business name, the first and last name of the legal representative and the name of the town where the entrepreneur is registered, as well as the designation “entrepreneur” or “pr.” There is no difference between the two designations, and it is a matter of the client’s personal preference.
It is important to note that there is no difference when establishing a “flat-rate” entrepreneur and an entrepreneur who keeps business books. The Single Registration Application is valid for both types of entrepreneurs; you just need to select the type by checking the appropriate box. If you are establishing the second model, which requires bookkeeping, you must complete the appropriate application with the Tax Administration after incorporation. In this application, you will state your projected profit for the current business year.
Based on this, you will receive a decision from the Tax Administration to pay the tax on the projected profit in several installments. (installments) at regular intervals to pay the tax on the projected profit.
If you wish to make changes to your business name, registered address, or primary business activity, you must complete the aforementioned unified registration application again, as you did upon incorporation, and submit the appropriate addendum regarding the change in question to the Agency.
This addendum can relate to a change of business name, address, cessation of operations, granting of power of attorney, and the like. In any of the aforementioned cases, it is also necessary to pay the corresponding fee of 900 dinars. The aforementioned forms must be sent by mail, just as they were upon establishment, while the Agency has a legal deadline of 5 business days to record, implement, and publish the changes on its website.