Areas with special trade relations
The implementation of the Interim agreement with the European Union was ratified by the EU in the beginning of 2010 and the Serbian toll limits are in accord with the tariff barriers of the European Union. In 2009 Serbia initiated unilateral application of the agreement, thereby starting to decrease level of customs and non-tariff barriers with the dynamics defined in the Agreement. By 2016 all custom tariffs for EU products will be dismantled and all non-tariff removed through harmonization of relevant legislation.
The Free Trade Agreement with the European Free Trade Association (EFTA) will be active starting April 2010. EFTA is an intergovernmental organization set up for the promotion of free trade and economic integration to the benefit of its four member states: Iceland, Liechtenstein, Norway and Switzerland. The agreement stipulates similar tariffs scheme as the Interim Agreement with the EU.
The Central European Free Trade Agreement (CEFTA) is the trade agreement between countries in Central and South East Europe, which has replaced bilateral agreements between the following countries in the region: Albania, Bosnia and Herzegovina, Croatia, FYR Macedonia, Moldova, Montenegro, Serbia, and the United Nations Interim Administration Mission (UNMIK) in Kosovo. The Agreement has been in effect as of July 2007. CEFTA envisages the abolishment of customs restrictions for industrial and agricultural products in the CEE countries by 2010. In addition, the Agreement stipulates accumulation of products origin, meaning that products exported from Serbia are considered of the Serbian origin if integrated materials originate from any other CEFTA country, the European Union, Iceland, Norway, Switzerland (including Liechtenstein) or Turkey, provided that such products have undergone sufficient processing (if the value added there is greater than the value of the materials used in Serbia). For exports to the member countries of CEFTA, the EUR 1 Certificate is required as a proof of goods origin. Diagonal accumulation of origin can also be applied in trading between CEFTA originated products and EU, under the condition that the CEFTA country of origin has ratified SAA agreement.
The Free Trade Agreement with Russia, signed in August 2000, makes Serbia particularly attractive to foreign investors in the manufacturing sector. The Agreement stipulates that goods produced in Serbia, with over 50% value added in the country, are considered to be of the Serbian origin. For exports to Russia, the FORM A Certificate is required as a proof of goods origin. The only tariff charged is the customs record keeping tariff, amounting to 1%.
The Free Trade Agreement with Belarus envisages mutual abolishment of customs and non-customs duties in trade between the two countries. There are only a few exceptions to the Agreement, including sugar, alcohol, cigarettes, as well as used cars, buses, and tires.
Beside above mentioned agreements Serbia is in process of negotiating Free trade agreements with Ukraine, Iraq and Turkey. As for the United States of America, Serbia enjoys benefits of Generalized System of Preferences.
Membership in international organizations
Serbia is a full member of the International Monetary Fund (IMF), the World Bank (WB), the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), the Council of Europe, the Partnership for Peace, and other international institutions. In addition, the EU accession is a topmost national priority for the coming years. The Stabilization and Association Agreement (SAA) with the EU was inked in April 2008 and ratified late 2009, when the formal application for the EU membership was submitted as well. The country also aims to join the World Trade Organization (WTO) which is expected to be completed in 2010.
Custom free imports
Foreign investors are exempt from paying customs duties or are allowed to pay the duties at a lower rate for new or used equipment, certain raw materials, and processed tobacco.
The implementation of the VAT-system was done from the first of January 2005 to replacement of the existing differentiated sales tax system. Standard VAT is today at 20% while there are certain product groups in groceries, daily newspapers, supply companies and aids that fall under a lower VAT barrier on 8%.
Cooperate income tax
Corporate profit tax is paid at the uniform rate of 15%. Non-residents are taxed only based on their income generated in Serbia.
Withholding tax is calculated and paid at the rate of 20% on various forms of income (dividends, shares in profits, royalties, interest income, capital gains, lease payments for real estate, and other assets) by a non-resident.
Personal income tax
The personal income tax rate is 10% for salaries, while other personal income is predominantly taxed at the rate of 20%. Furthermore there are social contributions, pensions and other insurances adding up to a total of 56% on top of the net salary
Annual income tax
For non-Serbian citizens, the annual income is taxed if exceeding the amount of 5 times the average annual salary in Serbia. The tax rate is 10% for the annual income below the amount of 8 times the average annual salary, and 15% for the annual income above the amount of 8 times the average annual salary.
Patent, brands and rights
Since the separation of Serbia and Montenegro the 3rd of June 2006 the countries have transferred the former legislation on the rights areas. Serbia is a member of the World intellectual Property Organisation (WIPO), the Paris convention, the Madrid Agreement, the Madrid Protocol and the Patent Cooperation Treaty (PCT) and enjoy a special agreement with the European Patent Organisation according to which Serbia sorts under European Patents. The Patent Office in Belgrade works as the federal “Intellectual Property Office”. However, protection of intellectual property is still on low level when it comes to practical issues.
Earlier Yugoslavian industrial patents brands and rights are still valid in Serbia and to harmonise the awarding of rights with existing European legislation the following laws have been passed in 2004:
- The Patent Law
- The Brand Law
- The Law on protection of models and design
- The Law on protection of geographical indication of origin
Agriculture and food processing products are significantly protected by both tariff and non-tariff barriers. Average level of import duties for agricultural and food products is about 25%.
Beside these, sanitary and veterinary certificates are in process of being adjusted and usually represent an important barrier for trade. Furthermore, Serbian accession to the WTO is underway meaning that many of non-tariff barriers, quantitative restrictions and certifications are yet to be in-lined and harmonized with WTO standards.
Export Technical Counselling
Export Technical Counselling is a part of Denmark’s Export Council under the Foreign Ministry. They follow the ongoing changes in the frameworks of international trade and have access to transversal information on the market regulations on concrete products - also when it comes to transactions of goods or services between third countries. Trade Counselling and consolidated guidance is offered at the embassy. It is structured to cover the needs of the exporting company both when it comes to first time exporters as well as settling problems for seasoned exporters.
The various services offered at the Export technical Counsel are for instance counselling with regards to trade barriers and estimates of whether the agreements are legal or illegal with regards to international and multil- or bilateral agreements.
On the basis of this a recommendation of the relevant procedure for a possible solution of the company’s problems is offered at the Export Technical Counsel.