Moved East

[markowe]

March 2011 update: this information is to a certain extent now out of date. The procedure is much faster, supposedly carried out within a few days, and there is no need to go to the tax office to be issued with a PIB, the APR is now more of a one-stop-shop. It is still your starting-point in any case, but a lot of this info will not apply.

OK, I have decided to take the bull by the horns and register myself as an "entrepreneur" in Serbia. This basically means you are registering yourself as a small-business/self-employed worker, or a kind of "agency". It is a much simpler procedure than registering as a limited liability company, and is simpler to run, with a flat-rate tax bracket and no VAT (unless you cross a certain earnings threshold), and you don't need registered offices, or a director etc.

Until now I have been co-owner of a limited liability company, but I am about to go solo with my Serbian-English translation company (more details as and when) and have opted for this type of company for the time being as being simpler to run.

So I thought I would fill readers in with my progress in this endeavour and hopefully leave some useful information for posterity! In brief, for now, here is the link to the Serbian Business Registers Agency website, where there is some English-language information to start us off. However, the first thing we notice (at time of writing), is that the forms to fill in (the PDF files listed at the top) are not available in English. So you need to get the appropriate Serbian form in PDF, and that is this one.

OK, once I have read everything up, I will proceed to the next step and let you know. One thing I know is that foreigners CAN register themselves in this way, the only issue might be a chicken and egg problem with your residency permit, but I'll see what I can find out about that and let you know.
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[markowe]

OK, so you want to register as self-employed, i.e. as a preduzetnik in Serbia. The next issue is connected with your visa/residency status here. Now the whole visa/residency malarkey is not the topic of this little guide, maybe we'll do that another time.

But the long and short is, for those who were wondering, you CAN get residency status if you are registered self-employed. In other words, if you want to stay in Serbia longer-term, but you are not sure how, this is one way to do it, if you mean to work here, and to ensure your tax and health contributions are paid up too, which means you have access to healthcare, and even a pension (woo-hoo!).

Now, in order to register as a preduzetnik you need to have proof of your residency status in Serbia, a piece of paper called a uverenje bearing your matični broj, or unique citizens' number. Now, there is obviously a chicken-and-egg issue here, because how do you get residency BEFORE you have registered yourself as self-employed? Well, it's been a long time since I did this, but basically if nothing has changed then the MUP (i.e. Interior Ministry) will issue you with a short, temporary residency (3 months probably) for the purposes of your registration with the Business Registers Agency, and issue you with the afore-mentioned uverenje as well. You can then use these to continue the registration process, and once you have finished all that you go back to the police and take out a proper, year-long residency. Don't go to the Business Registers Agency without the uverenje because you cannot begin registration without it.

It can be a hassle the first time, and your first residency application used to take MONTHS (don't know what it is like now), because they have to check you out, or something! So bear that in mind, it might not be quick, but it IS possible to stay legally in Serbia and work too.

More about the self-employed registration process soon, where I try to fill in the form and start the ball rolling.
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[markowe]

The next step to getting registered is filling in the forms. The link to the form is in the first posting I did. It is actually amazingly simple! Of course, you are going to need some Serbian knowledge for this - there is no English version of the form as far as I can find. But these are the basic details you need:

Details of the name
Here you enter how many "owners" there are - whether it is a solo enterprise, or a partnership. I will not be going into partnerships here. You also have to enter the name of the "company", your own name and address and how you want the name to be displayed.

Details of the owner
Here we enter our sex, and also whether we are registering ourselves as a sole occupation, or we are also employed elsewhere and this is an additional activity. They also want to know our full name, and ID number, or as a foreign citizen, our passport number and country of issue. Here they also ask for the code relating to qualifications, which are listed on the next page. We can explain these sometime if necessary, but mine is 800, which means I am university educated.

Legal info
The date we want to begin doing business - best leave a good month's leeway, you don't want to be liable for tax before you have even started doing business. Also, here you need to enter the "company business activity code" (Шифра делатности - a hard one to translate). This is from a list of official codes which you can obtain here. Again, you will need help with the Serbian for this. You have to find the activity which best describes your chief activity and enter this, together with the description, in the form.

Contact info
Self explanatory

After this comes the list of "qualifications codes", where you need to tick the one that applies to you (again, 800 in my case) - no idea why you have to do it again.

And believe it or not, if you are merely working from home, without a partner, that is all you need to fill in. Just sign where you are supposed to and that is it!

Now you need to:

1) Pay the 540.00 dinar tax, using a "paying-in-slip" (opšta uplatnica) into account no. 840-969627-83, payable to Agencija za privredne registre, additionally entering model : 97 and poziv na broj : 86 04 in the appropriate fields. For Svrha uplate write something like Taksa za registraciju preduzetnika
2) Collect the following and take them with you to the local branch of Agencija za privredne registre (Trg Nikole Pašića in Belgrade 5, 4th floor, Sutjeska 2 Novi Sad):
- the counterfoil of the payment you just made
- your uverenje from MUP (discussed last time)
- your filled-in and signed form
- a photocopy of your passport, i.e. all the relevant pages.

What comes next... Well, I'll let you know, because I am about to jump through the hoop myself!
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[EastInterest]

Hi
I read your posting about setting up as self employed in Serbia and was wondering if you managed this successfully and if there are any changes to the process you described in january.

Also is your translation business up and running? If so, do you have an email or webaddress that can be used for busines purposes as my company may have some referrals for you for foreign individuals coming to Serbia.

Thanks

[markowe]

Hi.

As it happens, just today I picked up my finished registration, so let me briefly describe what happens here and then I can answer your other question.

I submitted the above application as described - nothing has changed in the procedure. I submitted in Novi Sad on 23rd April and it was ready today (6th), and may have been ready some days before, which is pretty good considering it was Easter and Mayday.

I have received an officially stamped piece of paper with the details of my trading name, address etc, which is basically a copy (izvod) from their central register. In my application, incidentally, I set the date for commencement of trading for 31st May - this to make sure I can dovetail things with my old business, you can register to commence on a future date, but of course cannot start trading before then.

NOTE: See the post from 21st June - it appears I was also supposed to receive an stamped M3A form which indicates when I commenced business, for the purposes of regulating my social security contributions, but I didn't get it for some reason. Am waiting for it now, watch this space.

BUT this registration is only provisional. The next tasks are (as detailed on a nice piece of paper you are given at the APR):

1) Get a rubber stamp made
2) Apply for a tax code (PIB)
3) Open a trading account with a commercial bank.

It must be done in this order. The first bit is easy and that is what I have just done - there are lots of graveri or pečatoresci around. You take a photocopy of your registration paper along (they have to take this and lodge it with the authorities) and they make a rubber stamp according to the details on it. You can custom-design this yourself and take a Corel file along in many studios, so you can incorporate your official logo. As long as it has all your trading details on it as laid out in your registration document you have some freedom. If you can't be bothered, they will lay it out for you with some generic layout.

This usually takes a day or two, so once I have picked this up tomorrow, I will get cracking on the next step and let you know.
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[markowe]

Just to add, in regard to your question, EastInterest, about my company and the translation services we offer, I have posted a separate "sticky" message about that here, so as not to get off the topic.

Of course, referrals are always welcome, so thanks in advance. We are really aiming to offer a premium service to companies and individuals who need Serbian-English-Serbian translation of the highest quality for business-critical texts such as websites, brochures etc. So if people need a birth certificate translated say, then we are probably not the right choice, but if they need ad copy or web pages translated to a professional standard then we should probably talk!

OK, back to the rubber stamp...!
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[EastInterest]

Thanks for the update - initially we will probably have basic documentary requirements but as our project goes on we might have more need for your detailed services.

Good luck with the stamp.

[markowe]

After picking up your stamp you need to apply for a tax code (PIB) which basically gets you registered as a tax-paying legal entity.

I should point out that you have a limited time to do all this - as I mentioned, the registration you were given is provisional, and you have around 14 days to get the other steps done (rubber stamp, PIB, bank account), though I believe they're not too strict about it (another experienced voice says, "I think there is some sort of fine if you are late. Of course they can be as late as they like!!").

Note added: 16th May - supposedly this fine is 300 dinars, so don't sweat it too much. If you're looking for something to do whilst waiting for your PIB, see the next post.

The PIB is obtained from the relevant counter in the relevant tax office - this is Mihaila Pupina 14 in Novi Sad, not sure about Belgrade but the APR should tell you. You need to take along 2 photocopies each of:

- your provisional registration
- your police (MUP) uverenje that we mentioned earlier
- your passport (relevant pages)
- your little white card you got from the police when registering residency. I didn't know this was needed, so had to go home and rummage for it

You also need to fill in a form that you can get from the counter (form PR3, or something like that), poorly photocopied if it's in Novi Sad. Now this is all in Serbian, and Cyrillic at that, so more help will be required. But it boils down to copying the relevant information off your registration and onto the form (can't they just do that themselves..?)

Also, there is a part I did not know about - you may be sent to another counter to get another tax code. This is apparently a personal tax code, which the woman at the counter scribbles somewhere on your documents for reference. You may already have one if you pay any tax already in Serbia, but if not it only takes a second to issue one (why not the same for the PIB, one wonders)

Once you hand all this over, it takes 7-10 days to process. I am off to pick mine up tomorrow, and then it's a quick dash to open a bank account and return all this to the APR before I head off for a quick holiday next week.
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[markowe]

There is one thing you can do whilst waiting for your PIB - start the ball rolling with opening a trading account in a bank. You can't actually finish this until you have your PIB, but there is something you do need before you can open an account - get a notarised signature. A what?

Serbia is a land of rubber stamps, and when you deposit your signature with the bank of your choice when opening an account, you can't just sign the form in front of the bank employee, oh no! You need to go to your relevant municipal office (where you get various local paperwork stuff done) and fill in two copies of an "OP" form for companies, which basically boils down to your company stamp at the top (which you now have) and your name, surname and your signature, which is then verified with a rubber stamp and now that is YOUR signature, as confirmed by the powers-that-be! There is also a tax of around 500 dinars to pay in at the post office or bank into two separate accounts that they will give you the details for.

With this verified signature, and once you have your PIB (mine is taking a while because they are doing some kind of additional check), you can go into the bank of your choice (we use ProCredit bank in my old company, which we're quite happy with, so I will stick with them) and open your trading account.
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[markowe]

Well, in case you are wondering what happened to my attempt to get registered as self-employed (preduzetnik) in Serbia - so am I!

For a full month I was waiting for my PIB (tax code) with constant phone calls to the tax office. The lady there sympathised, couldn't understand why it was so delayed (perhaps they were checking I didn't owe any taxes from my old company?) but seemed unwilling to actually chase anything up.

Eventually her holiday stand-in came along, and within days had chased up the Belgrade tax office and discovered that they had LOST my application!

To cut a long story short, the problem got fixed and I was able to take the piece of paper with my brand shiny new tax code on it (a 9-digit, totally unmemorable number) and get the next steps done:

1) Go to a bank (I use ProCredit, former MicroFinance bank) and submit an application for a current account AS a 'preduzetnik'. If you think you will be making or receiving remittances to/from abroad, then open a separate Euro account too at the same time. While you're at it, apply straight away for e-Banking because it's a life-saver and takes a little longer for them to issue you with a smart-card etc.

2) Now it's back to the Agency. You need to take with you photocopies of:

- your original application
- your contract with the bank
- the document you got with your PIB on it.
- two payment slips ('uplatnica') showing payment of two small taxes - you need to do this in a bank beforehand. At this moment, the taxes are as follows:
- 300 dinars for "Naknada za promenu ili potvrdu" and
- 120 dinars for "Naknada za stampanje obrasca"
- both are payable to "APR", account no. 840-969627-83, "poziv na broj": 97 86 04
- the latter tax is for a form they will give you to fill in (you can probably download it, but I can't seem to find it here). This form simply registers a "change" in your original company data, namely the addition of your PIB to the rest of your details. Once you have handed all this over...

YOU ARE IN BUSINESS!!

You will need to go to visit the relevant tax inspector (depends on the city) and get a form which will be your tax estimate for the coming year. You will need to get health insurance etc. sorted out too, but you CAN start trading now, and get these details done along the way. I will let you know how I get on with this too, but just now I can breathe a tiny-weeny sigh of relief...
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[markowe]

Did I say you were in business? Indeed you are, that’s why you now need to sort out your tax.

But first, an aside – I have just discovered that when I received my registration papers from the Agency, way back when, I was supposed to have also received another form, the M3A, which is a simple one-page affair indicating the date I was actually registered, for the purposes of my social contributions submission which is another hoop I will have to jump through soon. For some reason, I didn't get this form (what, more screw-ups in the system?!) so I’ve been back to the APR, who now have to petition Belgrade to issue this - everything goes via Belgrade, which makes you wonder what the point of having a local office is, really...

Back to tax. As soon as possible after you receive your second registration paper which now includes your PIB - your tax code, which you hopefully didn’t have to wait for as long as me - you need to go and see the taxman, bearing photocopies of everything you have so far in the way of papers, plus two filled-in copies of a form which you can get HERE, the PPDG-1, IN PDF form (I just filled one in and photocopied – if you have Acrobat, you can maybe fill in the form on-screen). This is your tax assessment for the coming calendar year, or portion thereof. It looks a bit complicated but is not as bad as it looks provided a Serbian speaker can help you with it.

But first to explain the tax system for self-employed persons in Serbia – I know I should have done this at the beginning but I have only just got my head round it now! The idea, quite laudable and reasonably functional is to simplify your bookkeeping as much as possible. As a preduzetnik you are entitled to a turnover of up to 3 million dinars (about €37,500 at time of writing) before you are obliged to keep full records of expenses and invoices issued, and 4 million dinars (about €50,000) before you are obliged to enter the PDV (VAT) system, though you can do this voluntarily if you think it will benefit you – few do, it’s not worth the extra book-keeping. Above that and I am not sure what happens, but probably your business will have outgrown the category of preduzetnik anyway and you will probably progress to some other form.

Now, those who are under the 3,000,000 limit and do not voluntarily keep books are known colloquially as ‘paušalci’, because they pay tax and social contributions ‘paušalno’, meaning at a flat rate, while those who are over the 3,000,000 limit are called knjigaši, meaning they keep full knjige (books/accounts). When you go to see the taxman (you will have to find where the taxmen are for preduzetnici in your town, and find the one who is responsible for your 'industry') he will ask you if you want to be a paušalac or a knjigaš and, as I say, you will most probably go for the first option (unless maybe you think the tax bill will come out less if you calculate your own - unlikely, or not worth the hassle anyway). You will submit your tax assessment, your PPDG-1, as mentioned, wherein you will have specified your projected turnover for the coming year. This, however, is irrelevant, since you will not be assessed on that basis nor, as I say, will you be required to keep a record of your expenses. Rather, the taxman will come up with a figure (actually, two) based on your 'industry' and your level of education (primary, secondary, higher, etc.) which will be your monthly flat rate of tax and social contributions for the remainder of the year. This will probably total 10-15,000 dinars per month. It will take a week or two for him to issue his assessment, which is what I am waiting for now, but you can operate your business in the meantime.

So it’s a pretty simple system – the only requirement at the end of the year is to submit a journal of all invoices you have issued, and a copy of your entire bank statement. Provided you have not exceeded 3 million dinars in turnover, your assessment for the following year should remain the same (though that remains to be seen!). So basically, all you have to do is pay your flat-rate tax every month and you can dispose of the rest of your income as you see fit. Not a model for a serious, long-term business, and you are fully liable for the debts of your business, but great if you want to make a start without too much hassle.

Now there are just a few more hoops to jump through with Serbian social security. Will keep you posted!
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[markowe]

I have now received my tax assessment that I applied for a couple of weeks ago. I don't think I am revealing any big secrets if I tell you my monthly contributions bill will be about 8,000 dinars (100 EUR) and that my monthly flat-rate tax bill will be 3,000 dinars, or about 38 EUR. I was also given a bill for backdated tax for the few weeks that have elapsed since I officially got registered. The tax report is pretty straightforward and tells you everything you need to know, but again, you will need the help of a Serbian speaker, preferably an accountant, to make head or tail of it.

Cheap at half the price
So you can see that

a) the social security payments are much larger than the tax payments and include pensions, disability allowance and health insurance contributions and

b) the tax bill is hardly huge. If I was bringing in the full 3,000,000 dinars allowed annually then that would only be a rate of 0.1%!! Of course in practice you will have expenses, which are not taken into account, and it still remains to be seen whether they change your flat-rate if you start earning significantly more than their flat-rate estimate.

Health insurance
Sigh... The NEXT thing is to get a health insurance "booklet" ('radna knjižica') which is essentially proof you are up-to-date with your contributions (updated 6-monthly) and that you are entitled to healthcare. However, as I said, this does not stop you working normally, so in this respect you ARE "in business".

I will let you know how I get on with that next time.
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[tucovic]

Grateful for your posts on how to register as an entrepreneur in Serbia. Curious how it is working out since your last post, if you've heard of any changes with the new Law on Foreigners, if you have any advice for someone starting with this process now, and if you could recommend someone that may be able to (figuratively) hold my hand through the process (e.g., would it be worth hiring a lawyer to help?).

Many thanks!

[markowe]

[tucovic]

Many thanks for your kind and quick reply. I don't have any specific questions at this stage. I'd been looking into the possibility of establishing a limited liability company, and just recently learned about the option of registering as an entrepreneur. It sounds like a more suitable alternative, as I'm freelancing at the moment - often outside of Serbia, though I'd like to use Serbia as my base.

The new Law on Foreigners entered the Gazetta in October or November. From April 1, it will limit short-term stays in Serbia to a total of 90 days within a six-month period. I am thus looking for ways to secure longer-term residency.