Investment incentives

 

All companies intending to invest in Belgrade can take advantage of a whole range of financial and fiscal incentives for their projects. Some of the most important forms of support offered by the government are grants for new investments amounting to between 2,000 and 10,000 euros, as well as a large number of tax concessions.

Financial Incentives

  • manufacturing: grants of between 2,000 and 5,000 euros for each new job created
  • services: grants of between 2,000 and 10,000 euros for each new job created
  • R&D: grants of between 5,000 and 10,000 euros for each new job created
  • grants of up to 1,200 euros for each new job created
  • grants of up to 1,200 euros for employing redundant workers
  • grants of up to 860 euros for employee training

Tax incentives

  • Ten-year exemption from payment of profits tax on large-scale investments
  • Tax credits of up to 80% of investments in capital assets
  • Carry-over of losses for a period of ten years
  • Accelerated capital allowances for fixed assets
  • Exemption from payment of profits tax on concessions for 5 years
  • Reduced tax base for calculation of income tax
  • Exemption from payment of income tax on earnings of persons younger than 30 or older than 45
  • Exemption from payment of social security contributions on earnings of persons younger than 30 or older than 45
  • Duty-free import of equipment for use in foreign investments

Financial Incentives

FINANCIAL INCENTIVES FOR GREENFIELD AND BROWNFIELD INVESTMENTS

Investment projects in all sectors, except retailing, tourism, catering and agriculture, may compete for grants from the national budget. The funds are intended to finance investment projects in the manufacturing and service sectors, those involved in international trade and research and development.

Investment in the manufacturing sector:

  • total funds available: grants of 2,000 to 5,000 euros for each new job created
  • minimum value of investment: from 1 million to 3 million euros;
  • minimum number of new jobs created: 50.

Investment in the service sector:

  • total funds available: grants of 2,000 to 10,000 euros for each new job created
  • minimum value of investment: 500,000 euros;
  • minimum number of new jobs created: 10.

Investment in the research and development sector:

  • total funds available: grants of 5,000 to 10,000 euros for each new job created
  • minimum value of investment: 250,000 euros;
  • minimum number of new jobs created: 10.

Applications for grants should be submitted to the Serbian Investment and Export Promotion Agency (SIEPA). A list of the documents required, together with grant eligibility requirements can be found at www.siepa.sr.gov.yu.

REGIONAL EMPLOYMENT PROGRAMS

Finance is provided for the employment of at least 5 new permanent staff through the regional employment programs. Grants are approved up to a value of 100,000 dinars, or about 1,220 euros per new job. Preference is given to projects of strategic importance for regional development, which employ staff from those categories where employment is normally more difficult to find.

"FROM REDUNDANCY TO EMPLOYMENT" PROJECT

This project provides financial assistance for the employment of new staff that have been made redundant because of technological, economic and organisational changes, commencing 1st September 2006. Grants of 100,000 dinars or about 1,220 euros may be awarded to those employers who submit an undertaking that the total number of employees will be increased on the employment of new staff.

PROBATIONARY EMPLOYEE PROGRAMS

Government grants are available through probationary employee programs for the employment of probationers for a period of 6, 9, or 12 months, depending on qualifications (secondary, college and university education).  The financial assistance is at present:

  • 10,000 dinars or 120 euros for probationers with secondary school education;
  • 11,000 dinars or 135 euros for probationers with college education;
  • 13,000 dinars or 160 euros for probationers with university education.

REQUALIFICATION AND ADDITIONAL QUALIFICATION

Requalification and additional qualification programs are organised at the request of companies, provided that the National Employment Service has no persons with the required occupations on its books, or the persons concerned do not have the required knowledge. The National Service will contribute up to 70,000 dinars, or 860 euros to the total training costs.

More information about the above four programs can be obtained from Belgrade branches of the National Employment Service. A list of branches can be found at www.rztr.co.yu.

Tax incentives

1. PROFITS TAX

TAX EXEMPTION

10 years exemption from profits tax is available for companies investing in their own fixed assets, or where other companies invest more than 600 million dinars or 7.5 million euros in their fixed assets and they employ at least 100 permanent employees during the investment period.

In the case of concession investments the concessionaire is exempted from profits tax for a period of up to 5 years, from the date of the contracted completion date of the total concession investment.

TAX CREDITS

Profits tax may be reduced for 20% of investments in fixed assets in any one year, while in a certain number of sectors (agriculture, fishing, yarn and textile manufacture, clothing, leather goods, base metals, standard metal products, machinery and equipment, office and computer equipment, electrical machines and equipment, radio, TV and communications equipment, medical, precision and optical instruments, motor vehicles, trailers and semi-trailers and other means of transport, recycling and cinematographic and video production) the reduction amounts to 80%.

Tax on profits is further reduced by 100% of the gross earnings of new employees for a period of 2 years from the date of employment, on condition that the number of employees has not been reduced during that period.

CARRY-OVER OF LOSSES

Losses sustained in business, financial and non-business transactions may be offset against profits as stated in the annual accounts for future accounting periods, up to a maximum of 10 years.

ACCELERATED CAPITAL ALLOWANCES

Accelerated capital allowance, at rates which may exceed the normal ones by up to 25% are available for capital assets to be used for:

  • the prevention of air, water and soil pollution, noise reduction, energy conservation, forestation, collection and processing of waste as a source of industrial raw materials and fuels;
  • research work;
  • staff education and training.

Accelerated capital allowances also cover computer equipment.

2. INCOME TAX

The taxable amount for income tax is reduced by a fixed amount of 5,000 dinars or about 65 euros per month.

Exemption from payment of income tax, when new permanent staff are employed, covers the following periods:

  • 3 years: for probationers younger than 30 and for disabled persons;
  • 2 years: for persons up to 30 or over 45 years of age;
  • 1 year: for all employees regardless of age and other criteria.

3. SOCIAL SECURITY CONRIBUTIONS

Exemption from payment of social security contributions, when new permanent staff are employed covers the following periods:

  • 3 years: for probationers younger than 30 and disabled persons;
  • 2 years: for persons younger than 30, persons older than 50 and persons older than 45 (reduction of 80%).

4. DUTY-FREE IMPORT OF EQUIPMENT

The import of equipment as part of a foreign investment, with the exception of motor vehicles and gaming machines, is exempt from customs duties and other import levies.