Investment in Serbia – Foreign Investor’s Investment
The adoption of the Law on Investments has created a general legal framework for investments made in the Republic of Serbia, with a focus on the equality of domestic and foreign legal or natural persons.
The Law on investments defines basic terms, so that the term investment, in terms of this law, is defined as:
– a direct investment – investing in tangible and intangible assets of a company
– an indirect investment – acquisition of shares or stocks in a company
Taking into consideration certain dilemmas that have arisen in practice, this law determines what is considered to be an investment. Therefore, a due amount or other receivables arising from a commercial contract, as well as a due amount arising from a loan related to the commercial contract, are not considered to be an investment.
The Article 3, Paragraph 1, Item 2 of the Law defines an investor as a domestic or foreign legal or natural person, who has made the investment mentioned in the Item 1 of this article within the territory of the Republic of Serbia.
The indirect investment mentioned in the Law on Investments, made by acquiring equity interests and shares, can be associated with direct investments. However, a foreign direct investment includes a non-resident’s investment in a legal entity, made in the Republic of Serbia, in order to participate in the legal entity’s management affairs by acquiring at least 10% equity interest, i.e. at least 10% voting rights.
In addition to the above mentioned, a reference has also been made to the definition of the term “direct investment”. It includes the following:
– foundation of a company, branch, representative office
– purchase of capital interests or shares
– company capital increase
– any other type of a foreign citizen’s investment made in the Republic of Serbia
Foreign investors shall have the equal status as domestic investors. In this respect, the investors, who are foreign legal or natural persons, have the same rights and obligations as domestic investors. Apart from this, foreign investors shall acquire ownership and other property rights related to movable and fixes assets located on the territory of the Republic of Serbia in accordance with the Constitution and Legislation.
Also, foreign investors shall have the right to transfer assets and profit. Accordingly, foreign investors have the right to transfer financial and other assets in relation to the investment, such as:
– funds gained from sale of stakes or shares
– funds gained from equity decrease
– funds gained from additional payments
– expropriation compensations
The above listed monetary assets can be transferred internationally in a currency that can be used in domestic currency transactions, in compliance with the regulations regulating the types of currencies and foreign cash that is purchased and sold on the currency market but only after all tax and other obligations based on public revenues have been payed.