Common Mistakes When Starting a Business in Serbia

Starting a business in Serbia is not difficult: registration takes days, the capital is symbolic, the taxes are comprehensible. The problems arise not at registration but a few months later — when a letter lands in an electronic mailbox nobody has opened, when the bank asks a question about the address, or when the Interior Ministry inspector asks what the company has been doing all year. We have collected the mistakes we see most often among foreign founders, and for each one, what to do instead.

1. Choosing the form on chat-group advice rather than on your own numbers

A lump-sum sole proprietor (preduzetnik) suits a freelancer with several clients and revenue below the limit. A DOO suits a company with employees, contracts and growth plans. When the form is chosen on someone else’s experience, a year later it turns out that revenue has outgrown the lump sum, or that a DOO with a single owner spends more on accounting than it pays in tax. Work out your expected revenue, your number of clients and your hiring plans in advance — we went through the selection criteria in the article sole proprietor or DOO in Serbia.

2. Registering at a mass address

An address for a token fee with hundreds of companies listed at it is the most expensive saving there is. The tax authority checks such addresses in person and, failing to find the company, temporarily withdraws its PIB; banks see the address in the register and refuse an account; the Interior Ministry asks where the company works when you renew your residence permit. Choose an address with a lease in the company’s name, a reasonable number of tenants and a person who will receive the inspector and the mail. The details are in the article on the registered seat.

3. Skipping the register of beneficial owners

Within 15 days of registration the company must enter its beneficial owner’s details in the Central Register maintained by the APR. Nobody reminds you about this deadline, and the consequences are twofold: a fine, and the bank refusing to open an account until the entry is made. Set a reminder for the day the APR decision arrives, or hand the task to whoever files the registration documents.

4. Not activating the electronic mailbox

Official letters from state bodies arrive in the single electronic mailbox on e-Uprava and are deemed delivered whether or not they have been read. A tax decision on an additional assessment, a summons to an inspection, a notice from the APR — everything goes there. Companies find out about them once the deadline for appeal has passed. Activate the mailbox after registration, switch on notifications and give your accountant access. For how to obtain the signature needed to log in, read the article on the electronic signature and e-Uprava.

5. Leaving the director without grounds and without contributions

The director of a DOO must have formal grounds for working — an employment contract or a contract on rights and duties — and pension contributions are paid for them unless they are insured on another basis. A company whose director is “just in the register”, with no contract and no payments, looks like an offender to the tax authority and looks dormant to the Interior Ministry. Put the grounds in place in the first month and build the contributions into the monthly budget.

6. Working for a single client as a sole proprietor

A former employer moves an employee onto a contract with their sole proprietorship and keeps the schedule, the corporate laptop and the single source of income — that is five of the nine criteria of the independence test. The income will be reclassified and the tax assessed. Diversify your clients, use your own equipment, and do not sign a ban on working for others. The criteria are in the article on the lump-sum tax.

7. Registering for VAT (PDV) “just in case”

Voluntary VAT (PDV) registration is sometimes worthwhile for an exporter of services, but it brings monthly or quarterly returns, mandatory work in SEF and electronic VAT records. Companies that register “to look more solid” receive their first demand over an unfiled return a quarter later. Calculate the input VAT you would genuinely recover and compare it with the cost of the extra reporting.

8. Funding the company with loans from abroad without registering them

Transferring a non-resident owner’s personal money to the company’s account as a loan is a credit transaction with a non-resident, and it has to be registered with the National Bank of Serbia. An unregistered loan is a breach of foreign exchange legislation and a question from the bank when the money arrives. Contribute the funds as share capital or as an additional member’s contribution: that is simpler to document and requires no registration with the NBS.

9. Mixing personal and company money

Paying company expenses with a personal card and filing no expense report, taking revenue into a personal account, transfers “to yourself” without any grounds — each such transaction is either disallowed as an expense or treated as a withdrawal of funds with tax consequences. Get a corporate card in the first month and run everything through the company account. How to set up your records so the accountant is not hunting for documents after the fact is covered in the article on accounting in Serbia.

10. Leaving the residence permit until the visa-free period runs out

The visa-free period — 30 or 90 days depending on your citizenship — runs out faster than the document pack comes together. A white card not obtained within the first 24 hours, a lease without the owner’s certified signature, insurance that does not cover the whole period — any small thing pushes the filing beyond the limits of lawful stay. Start with the registration of stay and collect the documents in parallel with registering the company. The order of steps is in the article on residence through business.

11. Confusing a residence permit with tax residency

A residence permit does not make a person a tax resident, whereas 183 days spent in Serbia does, even without a permit. A resident declares worldwide income in Serbia, including dividends and salary from other countries, with credit for tax paid abroad. Owners who spend most of the year in the country and go on paying tax only “back home” risk an additional assessment. Plan your residency in advance with an accountant who works with double taxation treaties.

12. Filing your first reports after the first letter

Financial statements to the APR by 31 March, the profit tax return within 180 days of year end, VAT (PDV) by the 15th, payroll calculations before payment — the deadlines are known on the day you register. Companies that pick an accountant after the first demand pay interest at the NBS rate plus 10 percentage points along with fines, and two years without statements at the APR end in compulsory liquidation. Arrange accounting services before you issue your first invoice.

Mistakes that come up less often but cost a lot

• Hiring employees as sole proprietor contractors and having the arrangement reclassified, with the additional tax assessed on the company.
• Signing a residential lease with no right to register a business and hearing about it from the owner after the APR registration.
• Stating the capital in the founding act in euros without the dinar equivalent and losing a week to a returned application.
• Failing to check whether your activity code falls within the exclusions from the lump sum and receiving a decision taxing you on actual income.
• Leaving for several months without arranging the accountant’s access to ePorezi and the electronic mailbox.
• Closing the company before obtaining permanent residence and losing the grounds for the residence permit.

First-month checklist

1. The form has been chosen on a calculation of revenue, clients and hiring.
2. The address comes with an agreement in the company’s name and a real presence.
3. The beneficial owner has been entered in the APR register within 15 days.
4. The EBS and a qualified electronic signature have been obtained.
5. The electronic mailbox is activated and the accountant has access.
6. A bank account is open and a corporate card has been issued.
7. The grounds for the director’s work are in place and contributions are in the budget.
8. The accountant knows the reporting calendar and is connected to ePorezi and SEF.
9. The white card is done and the residence documents are being collected in parallel.
10. The VAT decision has been taken deliberately, not “just in case”.

Most of these mistakes cost attention in the first four weeks rather than money. If you would rather walk this path with support, look at how DOO registration, sole proprietor registration and a virtual office with a real agreement are arranged — each of these services closes several items on the list at once.