Subsidiary Versus Branch in Serbia - Updated for 2021
Subsidiary Versus Branch in SerbiaUpdated on Sunday 04th April 2021
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Subsidiaries and branches are the type of entities that can be chosen by international companies wanting to establish the business operations in Serbia. Each structure has specific features and characteristics, so it is quite easy to determine which entity suits most the business needs. Below we have gathered information and details about branches and subsidiaries, in order for foreign entrepreneurs to select the appropriate business form, helped by our Serbian lawyers in legal matters.
The characteristics of subsidiaries in Serbia
A subsidiary is a legal independent structure and an extension of a foreign company which is 100% flexible. Such a structure can have a different name from the parent company and more than that, it can also develop other activities. Below you can find a few important features about subsidiaries in Serbia that can be easily established in 2021:
- the minimum share capital of a subsidiary in Serbia is owned by the company from abroad.
- a local bank account needs to be opened for future financial operations of the subsidiary in Serbia – any currency is accepted.
- the VAT registration is mandatory for subsidiaries in Serbia.
- the employment contracts need to the signed before any activity of the business.
- the company needs to be registered with the Pension and Health Funds in Serbia.
- once the company seal is obtained, the company can start the activities.
A subsidiary can be easily established with complete assistance provided by our attorneys in Serbia, in respect with the applicable laws in the country. Here is an infographic about the differences between subsidiaries and branches in Serbia:
What are the characteristics of branches in Serbia?
Branches in Serbia are entities that are entirely dependent on the parent company from abroad and they can be easily established, if the conditions for incorporation are respected. Here is important information about branches in Serbia:
- a declaration stating the intention of opening a branch in Serbia needs to be issued by the parent company;
- it is also needed to open a bank account and deposit the share capital provided by the foreign business;
- the registration for tax purposes is obligatory, just like for any kind of company;
- a branch in Serbia will only develop the activities of the company from abroad.
Whether you are interested in opening a branch or a subsidiary in Serbia in 2021, it is required to solicit the legal assistance of our lawyers in Serbia. The experience of our team in this field will prove helpful, particularly if you do not have a clear picture about the local laws and regulations. You can also ask them help you obtain the EORI number for your company in Serbia.
Pros and cons of branches and subsidiaries in Serbia
A subsidiary is the type of structure that can be expensive if we consider the amount of money which need to be invested by the parent company. This is were a feasibility report is needed at the time the foreign entrepreneurs decide on subsidiary. On the other hand, a subsidiary is preferred due to the possibility of entering new markets in any country.
More than that, subsidiaries of international companies can develop and implement other operations besides the ones already established. In the case of branches, these have a simple incorporation process, there is no need to register a minimum share capital, and the taxation is made on the local profits. However, branches are not separate legal entities and that because the liabilities are entirely connected to the parent company. In terms of accounting, a branch needs to respect and align with the foreign corporation compared to subsidiaries for which the parent company deals with most of the accounting aspects.
Regardless of the type of structure you select for establishing your operations in Serbia, do not hesitate to get in touch with our team of lawyers in Serbia and solicit legal advice and assistance throughout the entire registration process. Support in business formation, license and permits, visa matters, mergers and acquisitions can be obtained from our team. Below we have gathered information and statistics about investments and business in Serbia:
- the Serbian government grants to foreign investors sums between EUR 2,000 and EUR 10,000 for job creations in the services, production and research sectors;
- due to Serbia’s improved business environment, the total FDI stock for 2019 was of around USD 44 billion.
- Serbia ranked 44th among 190 international economies, as stated by the “2020 Doing Business Report”;
- most of the investments in Serbia come from European countries.
FAQ about branches and subsidiaries in Serbia
1. Are subsidiaries flexible entities?
Yes, subsidiaries are quite advantageous because are independent legal entities with 100% flexibility. The benefits of subsidiaries compared to branches can be discussed with one of our Serbian lawyers who can also help you register one.
2.Do branches have the same activities as the parent company has?
Yes, this is the main feature of a branch. This structure must respect the regulations of the parent company, without exceptions. If you believe that a branch is a right type of business for you in Serbia, feel free to talk to our specialists.
3. Is a subsidiary expensive compared to a branch?
Yes, it is a known fact that subsidiaries are expensive compared to branches. There is a specific investment that needs to be made for a subsidiary, yet entrepreneurs know the pros and cons of each structure. Branches are less expensive and are subject to other rules.
4. Is VAT registration mandatory for subsidiaries in Serbia in 2021?
Yes, subsidiaries in Serbia must be registered for VAT before starting the activities in this country. The registration of a subsidiary in Serbia can be overseen by one of our Serbian lawyers who can also represent your firm.
5. How are branches levied in Serbia?
Branches must pay the taxes only on the income generated in Serbia. The registration for taxation is mandatory in Serbia and it is an important step in company registration in this country.
6. How are subsidiaries levied in Serbia?
Subsidiaries are levied on the worldwide income, even if registered in Serbia. The tax registration in Serbia is not complicated and can be overseen by one of our Serbian lawyers.
7. Can subsidiaries have other activities too, besides the ones related to the parent company?
Yes, this is another great advantage for investors who want to register a subsidiary in Serbia. These companies can develop other activities besides the primary ones, yet there are specific formalities to respect in this matter. You can talk to our attorneys in Serbia and find out more.
8. Can branches develop other operations in Serbia?
No, branches cannot have other operations besides the ones already established through the parent company. The regulations are strict for branches, regardless of the activities developed in Serbia or anywhere in the world.
9. Why register a subsidiary in Serbia?
Subsidiaries come with many advantages and provide a certain level of independence for those choosing this structure. These are independent legal entities that can be established with respect to the laws and regulations imposed.
10. Why register a branch in Serbia?
Branches are less expensive compared to subsidiaries and often the choice of a foreign entrepreneur who is interested in a different kind of business structure. Plus, branches are levied only on the income generated in Serbia.
Looking for the proper business structure in Serbia in 2021
It might seem difficult for foreigners in Serbia to choose the right type of business form. In some cases, branches and subsidiaries can be optimal instead of other structures, yet it all depends on operations and stages of development in the future. It is quite recommended to properly analyze the available options and even talk to a team of lawyers in Serbia and ask for legal consulting. This way you can make sure you make the right business decision based on the properties of branches and subsidiaries, for example. Plus, the incorporation process of a company in 2021 will be attentively overseen by one of our specialists with experience in this field, in order to benefit from a smooth process and start the activities as soon as possible.
Choosing our lawyers in Serbia
Opening a company in Serbia in 2021 is a straightforward process that requires fewer formalities, yet complete attention is required in this matter. A team of lawyers in Serbia can help investors start a business in a fast manner, regardless of the selected structure. Large companies can decide on branches or subsidiaries, depending on the business needs and more. Knowing the legislation is important, so our dedicated advisors can provide assistance in business formation. Our customers rely on professionalism, proficiency, transparency and complete support right from the beginning of our collaboration. Tax advice, debt collection, business incorporation, accounting, legal consulting, support for immigration issues are among the legal services provided by our Serbian attorneys.
No matter if you choose to set up a branch or a subsidiary in Serbia, it is suggested to have the legal support of our law firm in Serbia, so feel free to contact us at any time.