Can a Foreigner Start a Business in Serbia?
Accountant-authored. Written and published by Andrija Eminovic, an accountant approved on OpenAccountants. Their licence number (21041987) is published on their profile, so you can check it against the register yourself. No second accountant has attested to this version yet. General reference material, not advice on your specific facts; don't file, pay, or take a position on it without a professional reviewing your situation.
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Every figure is drawn from this Guide and cited to its source.
Personal income tax on taxable income from independent activity (entrepreneur keeping accounting records)
10%
Corporate income tax on taxable profit (DOO)
15%
Rendered from the canonical facts model. General reference only — confirm with a qualified professional before acting.
Foreign citizens can establish and operate businesses in Serbia. However, before starting the registration process, one of the most important decisions is choosing the appropriate legal form.
For most foreign individuals considering a small or medium-sized business in Serbia, two of the most relevant options are:
These two forms differ significantly in terms of legal status, liability, taxation, management and the possibility of temporarily suspending business activities.
Understanding these differences before registration can prevent unnecessary costs and legal or tax complications later.
Yes.
A foreign citizen can generally establish a Serbian limited liability company (DOO) and may own 100% of the company.
A foreign individual may also register as an entrepreneur in Serbia, subject to the applicable registration and other legal requirements.
A Serbian citizen or Serbian business partner is therefore not generally required simply because the founder is a foreign national.
However, business registration, residence and the right to work in Serbia are separate legal matters.
Registering a business does not automatically grant a foreign citizen the right to reside or work in Serbia.
An entrepreneur in Serbia is a registered individual – not a separate legal entity.
This distinction is extremely important.
Unlike a DOO, where the company exists as a legal entity separate from its shareholder, an entrepreneur conducts business as a registered natural person.
An entrepreneur is personally responsible for obligations arising from the business.
This means that the entrepreneur generally answers for business obligations with their entire personal property.
There is no separation between the liability of a company and the personal liability of its owner comparable to the separation that exists with a DOO.
This is one of the most important factors that should be considered when choosing between an entrepreneur and a DOO.
An entrepreneur does not have a director in the same sense as a DOO.
The registered individual is the entrepreneur and carries responsibility for conducting the business.
Under Serbian regulations, an entrepreneur may entrust business management to a manager (poslovođa), but this should not be confused with the position of director of a limited liability company.
Not every entrepreneur in Serbia is taxed in the same way.
This is an important distinction because the term “paušalac” does not represent a separate legal form.
A paušalac is still an entrepreneur.
Depending on the applicable conditions and the chosen or available tax regime, an entrepreneur may, among other possibilities, be taxed based on accounting records or under the lump-sum taxation regime.
An entrepreneur who keeps accounting records is generally subject to 10% personal income tax on taxable income from independent activity.
The taxable result is determined in accordance with Serbian tax regulations and should not simply be understood as 10% of all money received into the business account.
Depending on the chosen model and circumstances, social security contributions and other obligations must also be considered.
If the entrepreneur meets the prescribed requirements for lump-sum taxation, taxation operates differently.
A paušalac does not simply pay 10% of the actual profit earned.
Instead, the Serbian Tax Administration determines the tax base and the resulting tax and social contribution obligations in accordance with the applicable rules.
The entrepreneur then pays the amounts determined for the relevant period regardless of the exact accounting profit that would otherwise have been calculated from income and expenses.
Not every activity or entrepreneur qualifies for lump-sum taxation, and statutory limitations apply.
A DOO is a separate legal entity from its shareholder or shareholders.
A foreign individual or foreign legal entity can generally establish a Serbian DOO and may hold 100% of its ownership.
A DOO can have one or more shareholders.
The shareholder and the director do not have to be the same person.
A foreign citizen may therefore be:
A DOO is responsible for its obligations with the assets belonging to the company.
As a general rule, the shareholder of a DOO is not personally liable with their private property for the company's obligations merely because they own the company.
This is one of the fundamental differences between a DOO and an entrepreneur.
There are, however, statutory exceptions where personal liability may arise, such as circumstances involving abuse of the limited liability principle.
For normal business operations, the basic distinction can therefore be understood as:
Entrepreneur → personal liability with the entrepreneur's property
DOO → the company is liable with the company's property
A Serbian DOO is generally subject to 15% corporate income tax on its taxable profit.
However, foreign founders should be careful when comparing this rate with the 10% rate applicable to taxable income from independent activity of an entrepreneur.
A lower headline tax rate does not automatically mean that one legal form is cheaper.
For example, when the shareholder of a DOO wants to distribute the company's profit to themselves, taxation of the distribution must also be considered.
The final tax burden therefore depends on how the business operates, how the owner receives money from the business, whether there are employees, whether the owner or director receives remuneration, and other circumstances.
For this reason, the choice between DOO and entrepreneur should not be based solely on comparing 15% vs 10%.
This is another important practical difference between an entrepreneur and a DOO.
An entrepreneur can register a temporary interruption of business activity (prekid obavljanja delatnosti).
This is commonly referred to in practice as putting the business into “mirovanje”.
This can be particularly useful for seasonal businesses or individuals who temporarily do not intend to conduct business.
The entrepreneur remains registered, but the business activity is formally interrupted for the registered period.
The tax, contribution and administrative consequences of the interruption depend on the circumstances and applicable regulations.
A DOO does not have an equivalent mechanism allowing the company simply to be placed into “mirovanje”.
The company can stop generating revenue or temporarily have no commercial activity, but the legal entity continues to exist.
Consequently, the fact that the company currently has no business activity does not automatically eliminate its accounting, reporting and other statutory obligations.
This is an important consideration for foreign owners who may want to establish a company for a project and then leave it inactive for an extended period.
Another major difference concerns management.
A DOO has a director or directors who represent and manage the company.
The shareholder and director may be the same person, but they represent legally different roles.
This distinction can be particularly important for foreign citizens because ownership of a Serbian company, acting as its director, physically working in Serbia and residing in Serbia may have different legal, immigration, tax and social-security consequences.
With an entrepreneur, there is no equivalent separation between “company owner” and “director”.
The individual is registered as the entrepreneur and conducts the business in that capacity, although management may under prescribed conditions be entrusted to a registered manager.
Foreign founders should not confuse business registration with immigration status.
Owning a Serbian DOO or registering as an entrepreneur does not by itself automatically grant residence or work rights in Serbia.
If the foreign citizen intends to live and work in Serbia, the applicable immigration requirements must be considered separately.
Depending on the individual's citizenship and circumstances, this may involve a Visa D and/or a single permit for temporary residence and work.
The appropriate procedure should therefore be considered together with the intended business structure.
Both entrepreneurs and companies are registered through the Serbian Business Registers Agency (APR – Agencija za privredne registre).
The documentation and procedure differ depending on whether the applicant is registering as an entrepreneur or establishing a DOO.
Foreign identification documents and, where relevant, documents concerning foreign legal entities may require appropriate certification and translation.
Foreign founders should therefore determine the appropriate structure before preparing the incorporation documents.
After registration, banking is often one of the most important practical steps for a foreign-owned Serbian business.
Banks apply their own Know Your Customer (KYC) and anti-money-laundering procedures.
Depending on the client, banks may request information and documentation concerning:
Registration with APR therefore does not automatically guarantee that a particular bank will open an account without conducting its own compliance assessment.
Whether the business is operated as a DOO or entrepreneur, VAT and other tax obligations must be considered separately.
The appropriate tax treatment depends on factors such as:
This is particularly important for foreign founders providing services internationally because the VAT treatment cannot be determined solely from the fact that the customer is located outside Serbia.
There is no single answer that applies to every foreign founder.
An entrepreneur may offer a simpler structure for certain small businesses and individual service providers.
The possibility of temporarily suspending activity can also make the entrepreneur form attractive for businesses that may not operate continuously.
However, the entrepreneur bears personal liability with their property for business obligations.
A DOO provides a clearer separation between the owner's personal property and the company's property.
The company itself is responsible for its obligations with its own assets, while shareholders generally enjoy limited liability.
On the other hand, a DOO involves a different tax structure and generally more continuing corporate and administrative obligations.
The appropriate choice therefore depends on the actual business model rather than simply on which form is cheaper to register.
Before establishing a business in Serbia, a foreign founder should consider:
These questions should ideally be answered before registration, not after the business has already started operating.
Foreign citizens have several options for starting a business in Serbia, but choosing the appropriate legal and tax structure is an important first step.
For many individual founders, the main choice is between operating as an entrepreneur (preduzetnik) and establishing a limited liability company (DOO).
The fundamental difference is that an entrepreneur is a registered individual who is personally liable for business obligations, while a DOO is a separate legal entity responsible for its obligations with the company's assets.
Taxation is also different: a DOO is generally subject to a 15% corporate income tax rate, while an entrepreneur keeping accounting records is generally subject to a 10% personal income tax rate on taxable business income. Entrepreneurs who qualify for lump-sum taxation are taxed under a different system based on amounts determined in accordance with Serbian tax regulations.
Another practical difference is flexibility: an entrepreneur can formally register a temporary interruption of business activity, while a DOO cannot simply be placed into an equivalent state of “mirovanje”.
For foreign founders, the correct choice should therefore be based on the planned activity, expected turnover, liability risk, taxation, residence plans and how the owner intends to operate and receive income from the business.
This article provides general information about doing business in Serbia and does not constitute individual legal, tax or immigration advice. The appropriate structure and obligations depend on the circumstances of each founder and business.
Contributed by Andrija Eminovic, 21041987.
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Not every entrepreneur in Serbia is taxed in the same way.
- Corporate income tax on taxable profit (DOO) — 15% percent (A Serbian DOO is generally subject to 15% corporate income tax on its taxable profit)
This is another important practical difference between an entrepreneur and a DOO.
There is no single answer that applies to every foreign founder.
Other Serbia computations in the OpenAccountants Tax Library.
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