Category: Serbia

The outbreak of COVID-19 in Serbia, which resulted in Government declared State of emergency, has strong impact on companies across all industries, creating a number of challenges that need to be addressed by the employers. Over the last few days, we’ve received many enquiries from our clients about business implications of the current situation. We present you below some of the most common ones, followed by answers that will help you in your response to the immediate key issues affecting your business.

Should you require legal support in connection with COVID-19, feel free to get in touch with us. SOG has formed a special work group that focuses specifically on legal and business implications of the epidemic, the current state of emergency, and its effects on your everyday business.

Q1: Are there any specific obligations imposed on employers in light of the declared State of Emergency due to COVID-19?

Yes. Employers must enable remote work or work from home to all employees whose work can be performed in such a manner. If the Employment Agreement or the Employment Rulebook do not stipulate remote work or work from home as a manner of performing work activities, the Employer must enact a decision for each employee to enable remote work or work from home. Employers must keep specific records of employees who work remotely or from home.

If Employers cannot organize remote work or work from home due to the nature of employee’s work activities, Employers should:

• if possible, organize work in shifts so that the employees do not overlap;
• enable business meetings to be held electronically (video link, video call, etc);
• postpone official travel in the country and abroad;
• implement enhanced hygienic measures at facilities;
• secure protective equipment for employees.

In relation to the ban on movement of citizens between 8 p.m. and 5 a.m. (explained in detail in Q3), Employers which have organized work within the aforementioned period must obtain a permit for the movement of each employee between 8 p.m. and 5 a.m. The movement permits are issued by the Ministry of Internal Affairs based on the filled in form that needs to be submitted to the following e-mail address: vanrednostanje@privreda.gov.rs.

Besides the movement permit, the Employer must issue a work order to each employee on a daily basis and will be held responsible for the accuracy of information contained therein. There is a higher degree of responsibility of Employers for employees older than 65 years working within the aforementioned period.

Sick leaves have automatically been extended for 30 days.

Q2: Are there any restrictions related to movement of goods?

Movement of goods remains generally free, except for the ban on export of:

• flour, oil, semi-processed oil, whole sunflower seeds, sugar, sanitizers, soup, gloves (rubber, surgical and other), masks (paper and textile), protective suits (rubber and surgical), protective glasses, diapers, toilet and kitchen paper;
• medications produced in Serbia and those which are currently on the territory of Serbia, until 15 April 2020. Ban does not refer to medications which are produced in Serbia, but are not registered in Serbia and are meant only for foreign markets and to medications which are transit through Serbia. 

Q3: Are there any restrictions related to movement of people?

Absolute ban on movement of senior citizens (citizens older than 65 years in urban areas with more than 5,000 inhabitants and citizens older than 70 years in areas with less than 5,000 inhabitants), and a limited ban on movement of other citizens between 8 p.m. and 5 a.m.

The aforementioned restrictions do not apply to: (i) licenced healthcare workers; (ii) officers on duty; (iii) persons granted a special permit for movement by the Ministry of Internal Affairs; (iv) persons in urgent need of medical assistance and two persons accompanying such person.

Starting from 20 March 2020 at 8 a.m. country borders have been closed for passenger transport in road, railroad and river transport. Exceptionally, entry may be allowed temporary in accordance with national interests and due to humanitarian reasons.

International airports in Serbia will be temporarily closed for international passenger transport. This prohibition does not refer to flights: (i) carrying goods and mail, (ii) performing search and rescue, (iii) humanitarian flights, (iv) performing urgent medical transport, (v) performing technical landing and positioning of flights registered with Flights Registry, (vi) in emergency landing and (vii) state flights and special purpose flights. Exceptionally, Minister of transport may provide exception to the aforementioned rules depending on the epidemic circumstances.

Ban on intercity public transportation and night public transport. Daily public transport remains, but will be reduced.

Gatherings in indoor spaces with more than 50 people (including sport events, theatres and cinemas, concerts, public debates, exhibitions and seminars, restaurants, night clubs) has been prohibited.

Movement of asylum seekers and irregular migrants housed in asylum centers and reception centers in Serbia is temporarily restricted, and an increased surveillance and security of these facilities established. These categories of people will be allowed to leave the facilities exceptionally and in justified cases (e.g. visit to a doctor), for a limited period, and with a special permission of the Commissariat for Refugees and Migration of the Republic of Serbia.

Q4: My business is significantly affected by the epidemic – are financial reliefs, subsidies or state aid available?

The most significant financial relief is the moratorium on loans and financial leasing (re)payments. The moratorium enters into force within 10 days as of 21 March 2020 or sooner under certain conditions.

In order to secure the stability of the financial market, the National Bank of Serbia has reduced the reference interest rate to 1.75%.

More financial reliefs, subsidies or state aid have been announced by the relevant government officials, but not specified.

Q5: Can COVID-19 be considered a case of force majeure and how does it affect obligations of parties to perform under contracts?

A pandemic, such is the one caused by COVID-19, is a typical force majeure event which may cause impossibility to perform under contracts or frustration of purpose of contracts. If this is the case, obligations of parties to perform may be affected in different ways.

Each contract must be assessed on its own terms and no general advice can be provided in this respect.

Q6: What is the current status of courts and other authorities?

Court hearings have been adjourned, except in cases requiring urgent action (e.g. temporary measures, domestic violence hearings etc.). Debt collection and other enforcement actions are suspended (with some exceptions).

Certification of signatures, manuscripts and transcripts before notaries, as well as hearings in non-contentious cases are suspended, except in particularly urgent and justified cases. Solemnization and notary public records (in Serbian: javnobeležnički zapis) of documents are still being conducted.

All competent authorities, except for the Customs Administration, certain counters of Tax Administration and Treasury Administration, public post service (PE “Pošta Srbija”) and public electricity company (PE “Elektroprivreda Srbije”), have ceased direct work with citizens and other entities and are now only working by post and email correspondence.

Q7: Are there any market restrictions imposed by the Government due to the State of emergency?

There is a limitation on purchases of protective equipment (10 masks/protective gloves per person) and disinfectants (2 large packs/5 small packs per person).

For the purpose of preventing market disruption, price control has been imposed for essential basic foodstuffs, protective equipment, disinfectants, cosmetics until 18 April 2020. Prices can only be raised within the limits of the annual inflation rate.

Export bans for certain goods and medications are also in place, as explained in detail within Q2.

Note: the measures undertaken by the Government of Serbia explained above are being adopted and/or amended on a daily basis, and in most cases with immediate effect. While we believe that our answers above are well founded and justifiable, we cannot exclude the possibility that due to the state of emergency the Government of Serbia or other authorities may take views which will that deviate from our current findings.

By Samardzic, Oreski & Grbovic

The state of emergency due to the COVID 19 was declared in Serbia on 15 March 2020.

In order to protect the rights of the parties in court proceedings, on 20 March 2020 the Government of the Republic of Serbia adopted the Regulation on Deadlines in Court Proceedings During the State of Emergency Declared on 15 March 2020 (“Regulation”). The subject of this Regulation are the following court proceedings: litigation, criminal proceedings initiated with private lawsuit, non-contentious, enforcement and court-administrative proceedings, as well as proceedings initiated with constitutional appeal.

The Regulation provides that as of 15 March 2020 the deadlines for filing lawsuits, appeals, motions for initiating proceedings and for undertaking all other procedural actions shall be suspended for the duration of the state of emergency.

In addition, the same suspension applies for deadlines for filing appeals and extraordinary legal remedies to decisions ending criminal, misdemeanor, commercial-misdemeanor proceedings.

Should you require any additional information or clarification of the course of ongoing proceedings during the state of emergency please do not hesitate to contact us.

By Samardzic, Oreski & Grbovic

The Government of the Republic of Serbia has introduced the first tax relief measures connected with the state of emergency due to COVID-19.

The measures include relief for all taxpayers to which payment of the taxes has been delayed pursuant to the Article 74 of the Tax Procedure and Tax Administration Law. Such taxpayers shall not lose the right to delay, the Tax Authority shall not enforce collection of due amounts and the interest shall not be calculated.

By Nikola Djordjevic, Partner, JPM Jankovic Popovic Mitic

In the light of the pandemic of COVID – 19, controllers are processing different types of personal data in their reasonable effort to prevent the spread of COVID-19. Such processing must comply with the Serbian Law on Personal Data Protection (“LPDP”).

Every processing should be following data protection principles, including the current atypical processing of personal data caused by the pandemic.

To provide a safe working environment and to protect the health of employees, we are of the opinion that the employers may process personal data of employees related to:

• their travel history (whether and when the employee visited countries considered to be at risk; whether the employee was in contact with anyone who has visited those countries recently);
• their health data related to the presence of symptoms of COVID – 19.

The employers are not allowed to perform medical checks, but only to process employees’ personal data that is adequate, relevant and limited to what is necessary to obtain a safe working environment and prevent the spreading of COVID-19.

The employers may reveal personal data of potentially infected employees/s within the organisation to prevent spreading COVID – 19 within the organization and in the community.

Legal grounds on which controllers may rely for the processing of data not considered as health data is processing that is necessary in order to protect the vital interest of the data subjects or another natural person (Article 12 Paragraph 1 item 4 of the LPDP) as well as legal obligation of the employer to obtain safe working environment (Article 12 Paragraph 1 item 3 of the LPDP). The latter is further provided in Article 80 of Serbian Labour Law and Article 11 of Serbian Law on Safety and Security at Work.

As per the health-related data, the acceptable legal ground for processing may be that processing is necessary for reasons of public interest in the area of public health, such as protecting against serious cross-border threats to health or ensuring high standards of quality and safety of health care and of medicinal products or medical devices, on the basis of the law which provides for suitable and specific measures to safeguard the rights and freedoms of the data subject, in particular professional secrecy. (Article 17 Paragraph 2 item 9 of the LPDP).

Various European Supervisory Authorities issued guidelines on this topic in the past days and these guidelines provide for similar interpretations of the applicable data protection regulations (please find some of the links below).

https://www.cnil.fr/fr/coronavirus-covid-19-les-rappels-de-la-cnil-sur-la-collecte-de-donnees-personnelles

https://www.ip-rs.si/novice/odgovorno-ravnanje-vseh-je-kljucno-v-casu-virusne-krize-1170/

https://naih.hu/files/NAIH_2020_2586.pdf

https://www.garanteprivacy.it/web/guest/home/docweb/-/docweb-display/docweb/9282117

By Ivan Milosevic, Partner, JPM Jankovic Popovic Mitic

SOG has advised Tesla on the launch of its first fast-charging station in Serbia.

The station is located in Belgrade, on an IKEA store parking lot, and it consists of four Tesla superchargers.

According to SOG, Serbia is expected, eventually, to get a total of three fast-charging stations.

SOG’s team consisted of Partner Radovan Grbovic and Senior Associate Milan Novakov.

As of 2011, the Serbian Capital Market Act has been changed multiple times due to the need for improvement of domestic legislation and alignment with the market’s demands, as well as harmonization of Serbian legislation with the EU acquis. Once again, on 3 February 2020, the National Assembly of the Republic of Serbia adopted amendments to the Capital Market Act, which came into force on 12 February 2020.

On this occasion, one of the main aims for adopting the amendments to the Capital Market Act was its alignment with the Public Debt Act. Additionally, it is expected that the amendments will facilitate foreign investors and funds to invest in domestic securities.

Namely, after a thorough analysis of the Serbian capital market, it was determined that it is necessary to reduce financing costs and provide efficient diversification of investments in order to attract more foreign investments in domestic securities and allow for further development of the Serbian market.

The amendments to the Capital Market Act also introduce one important novelty into the Serbian legislation: besides the Central Securities Depository and Clearing House, now also foreign legal entities may perform clearing and settlement of financial instruments issued by the Republic of Serbia if they are engaged in accordance with the Public Debt Act and Central Securities Depository and Clearing House’s act. In practice, this means that the procedure of account opening will be significantly simplified for foreign investors since from now on they do not have to open them with the Central Securities Depository and Clearing House.

Also, foreign entities that want to perform clearing and settlement of financial instruments won’t have to establish branch offices in Serbia, but will only have to obtain authorization from the Serbian Government. The National Bank of Serbia will be able to open and maintain money accounts of foreign entities that perform these operations.

Henceforth and given all of the above mentioned, we expect that these novelties will attract more foreign investments and overall improve the domestic financial market.

This text is for informational purposes only and should not be considered legal advice. Should you require any additional information, feel free to contact us.

By Milos Velimirovic, Partner, and Nevena Milosevic, Associate, Samardzic, Oreski & Grbovic

Milos Velimirovic, Partner at Samardzic Oreski & Grbovic in Belgrade, declares that “two things are hot right now in Serbia: the matter of Kosovo and the Parliamentary elections that are in April.“

Velimirovic feels that the matter of Kosovo is likely to reach a quick solution, now that “the USA getting involved in a more active manner.“ According to him, “I think we can expect some sort of a concrete move from them before their general elections this November which will help clear the air here.“

As for Serbia’s Parliamentary elections, Velimirovic says that he believes “that the current government will keep its position of power and will continue along the lines of their rule so far – which will also allow the economy to grow as planned and predicted. On the other hand, there are likely going to be some changes to its cabinet and personnel members.“ He believes that these changes will likely reflect a more eco-aware stance that the government, like the region as a whole, has been expressing recently. “This will also be in accordance with the international obligations Serbia has undertaken in recent years.“

“However, maybe even more important than Kosovo and the elections are infrastructure investments, the gray economy, and the waves of migrations,“ Velimirovic says wearily. “Especially when it comes to migration – these waves have been the most serious in the past few decades.“ Serbia, of course, has significant experience on this front, particularly with the refugees flocking to the country following the Yugoslav wars in the 1990s.

Velimirovic reports that Serbia’s financial position is “rather good“ and that public spending is “at the same level as some more developed economies have – what we lack here are public investments that could divert this capital to something more valuable.“ According to him, in part of because of the lack of developed financial products and capital market, the country’s real estate sector is among the most active at the moment. “In developed economies, excess capital flows into businesses, but in less developed ones it finds its way into real estate – which is what we’re experiencing here.“

Velimirovic reports that the process of harmonizing Serbia’s legislation with the EU’s Payment Services Directive will start soon. “This can open doors to a crowdfunding perspective when it comes to investments,“ he says, “but it still won’t necessarily mean drastic changes. Simply having a framework in place doesn’t mean that market reality will follow suit.”

Additionally, Velimirovic reports that “a new set of laws related to investment funds – the Investment Fund Act and the Alternative Investment Fund Act – will harmonize our legal framework with that of the EU.“ He states that further regulations designed to help make these acts practically useful are currently being drafted and that they should ready the field for “new investments coming in on all sorts of levels – Venture Capital, Private Equity, and the like.“

Over the recent years, we have witnessed a huge rise in popularity of cryptocurrencies on the global stage. This phenomenon is present in Serbia as well and recently became a trending topic in general public.

Although difficult to define due to their nature, there are certain commonalities exhibited in almost every available description of cryptocurrencies out there. These include the following:

• “currency” whose existence is solely digital;
• no central authority issues them;
• using a virtual decentralized system to record transactions and issuance of new units;
• reliance on cryptography and blockchain technologies.

While some view cryptocurrencies as a potential new future alternative to state-issued currencies, others are particularly wary of the risks involved in dealing with this new technological achievement.

Serbian Regulatory Perspective

Unfortunately for those that see them as a better alternative to state-issued currencies, cryptocurrencies are currently not recognized as an official payment device in Republic of Serbia.

Generally, cryptocurrencies can be treated as either currencies or commodities. Act on National Bank of Serbia clearly states that the official currency of Republic of Serbia is “dinar” (RSD) and all payments must be settled in the official currency, while the Act on Foreign Exchange Operations allows for settlement of claims between residents and non-residents in official foreign currencies. However, cryptocurrencies are not issued by an official government entity such as National Banks and cannot be considered an official (foreign) currency. They are considered to be “virtual currencies” that bypass monetary or financial regulations and are viewed by default as commodities at the moment. National Bank of Serbia confirmed this in publicly available statements along with a warning that anyone engaged in selling, purchasing or otherwise transferring cryptocurrencies is undertaking a risk of not being protected by relevant financial market regulations, most notably Act on the Protection of Financial Service Consumers.

Furthermore, the NBS states that if/when the use of cryptocurrencies becomes widespread, new regulation will be drafted with the purpose of determining their status.

Additionally, the Ministry of Finance issued an Opinion no. 413-00-168/2017-04 on 26 November 2017, confirming that the Article 25 of Act on Value Added Tax does not apply to cryptocurrencies, which means that cryptocurrencies are treated, from the tax provisions standpoint, as commodities as opposed to money or currency for which value added tax is not payable.

EU Regulation Impact

Having in mind that the Republic of Serbia is currently in the process of accession to the European Union (EU), it is expected that Serbian legislation on cryptocurrencies will follow EU standards, recommendations, and guidelines or possibly legislation. Unfortunately, no such legislation has been drafted and no uniform regulation has been established at the level of EU at this time, as the member states of the EU approach this subject from different standpoints. For example, German regulatory rules treat cryptocurrencies as financial instruments, while in France they remain mostly unregulated.

It will be interesting to see which approach will Serbian legislators and other authorities such as National Bank of Serbia and Ministry of finance take in drafting rules and regulations that will introduce cryptocurrencies into Serbian financial system. As the use of cryptocurrencies is becoming more common, the demand for legislative action to protect its users form abuse and/or fraud is increasing. Furthermore, this legislation will not only ensure that users of cryptocurrencies are protected, but also provide an opportunity to combat use of cryptocurrencies for money laundering and financing of terrorism, which should serve as an additional incentive for Serbian legislators to tackle this issue.

In order to protect yourself from any of the above mentioned risks involved in buying, selling or otherwise using cryptocurrencies, our recommendation is to consult with your legal advisors before taking any action.

This text is for informational purposes only and should not be considered legal advice. Should you require any additional information, feel free to contact us.

By Milos Velimirovic, Partner, and Dragan Martin, Junior Associate, Samardzic, Oreski & Grbovic

BDK Advokati has announced the launch of a new service – blinkdraft| – a database of employment law-based templates which the firm says can be converted into “custom-made, ready-to-use, legal documents through an easy and highly intuitive process.”

The first set of over 40 templates, available in both Serbian language-only and bilingual (English and Serbian) versions, was created by the BDK employment team. The templates are “synced with Serbian law” and “will be continuously updated, and subscribers will be automatically alerted when an update occurs.”

Tijana Kojovic, Managing Partner of BDK Advokati, commented on the launch: “Over the years, BDK institutionalized a large body of know-how created in the firm in the form of document templates, practice notes, and the like. We have now decided to offer some of our templates to the clients in the form of a new, technology-enhanced, service. blinkdraft| is a service that reflects our commitment to transform the way we provide legal services. The employment-related templates are only the first blinkdraft| chapter. We continue to expand the service by including templates in other fields as well.”

According to the firm’s release, the new service is available through either a full annual subscription model, a package subscription model, or a model that allows access to individual templates.

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