Category: Serbia

NKO Partners has advised Sopharma on the acquisition of Pharmanova. Radovanovic Stojanovic & Partners reportedly advised Pharmanova.

Sopharma is a Bulgarian pharmaceutical company. According to NKO Partners, this acquisition is “structured in three steps; the first having been closed in November last year with the acquisition of an initial 25% (as reported by CEE Legal Matters on November 10, 2023). Pharmanova has now increased this to 75% and is expected to increase its stake to 100% within the next year.”

The NKO team include Partners Djordje Nikolic, Branko Jankovic, and Djuro Otasevic.

The Radovanovic Stojanovic & Partners team included Partner Sasa Stojanovic and Attorneys at Law Djordje Vicic, Anja Tasic, and Zivko Kovacevic.

Dragana Poljak has joined AirSerbia as its new Ethics, Compliance, and Corporate Law Manager.

Before the move, Poljak spent almost 12 years as a sole practitioner.

Earlier, she spent a year with KBC Bank as its Director of the Legal Directorate and, earlier still, seven and a half years with Deloitte Serbia as a Tax Consultant and a Legal Counsel.

Originally reported by CEE In-House Matters.

In a recent legal resolution, an author, a mechanical engineer employed to oversee the printing machinery at a prominent publishing house, found himself at the heart of an unexpected ghostwriting controversy.

While his official duties revolved around ensuring the smooth operation of the printing equipment, he ended up contributing significantly to the company’s literary output by drafting multiple romance books. Despite these creative contributions, he received neither recognition nor financial compensation.

The situation gained urgency when it was revealed that over 80,000 copies of these books had been sold globally, translated into numerous languages, and widely appreciated by readers. Yet, the true author, working behind the scenes, remained unnoticed and unrewarded.

Recognising the copyright injustice, the author initiated negotiations, firmly signalling his readiness to pursue the matter in court if necessary. The strength of the author, supported by clear evidence of his authorship, led to a successful settlement. The publishing company agreed to a fair and substantial sum, finally acknowledging the work that had been improperly credited to others.

This case underscores the often-overlooked issue of ghostwriting within the publishing industry, especially when it involves employees whose primary roles are outside the creative domain. And as this case proves once again, in the end, copyright always wins.

The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.

By Nikola Kliska, Senior Associate, independent Attorney at Law in cooperation with Karanovic & Partners

Although not recognized in domestic legislation for a long time, freelancers finally saw a resolution to their long-standing battle for legal recognition of their status by the end of 2022. Amendments to the Law on Personal Income Tax (“Law”), which followed months of protests and negotiations with relevant authorities, officially established and regulated the status of this category of workers. This legal framework now clearly defines their rights and obligations in a transparent manner.

A freelancer is considered any individual who earns income in the Republic of Serbia by providing specific services and is not registered in any form recognized by domestic laws. In practice, this group often includes teachers, translators, IT experts, photographers, as well as individuals providing more traditional services like painters or craftsmen. On the other hand, freelancing is not an option available to traders, as trading activities can only be conducted by legal entities or entrepreneurs registered with the Business Registers Agency.

The new rules placed freelancers in the category of taxpayers who are self-taxed, which means they do not receive a tax decision issued by the tax authority by official duty. Instead, they are required to independently calculate and report their income, on which legally defined tax rates and contributions will apply.

Income that is subject to taxation and on which contributions are calculated is income from copyright and related rights, as well as income for work performed, on which tax is paid through self-taxation.

When it comes to the specific amounts freelancers need to pay, there are two taxation models they can choose between. It’s important to note that all amounts are for quarterly periods, not monthly or yearly.

In other words, obligations towards the state are determined four times a year, at the end of each quarter.

1. The first model is more favorable for freelancers earning lower incomes. Specifically, if opted for the first model, a freelancer is entitled to recognized expenses up to 103,296 dinars (amount subject to change), and income up to that amount is not taxed, nor are contributions paid on it. If a freelancer earns income exceeding this threshold, income exceeding this amount will be subject to a tax rate of 20% and contributions for pension and disability insurance (“PDI”) at a rate of 24%.
2. The second model is more favorable for individuals with higher incomes and also involves the recognition of standard costs but at a different rate – 62,300 dinars increased by 34% of the earned income. Anything above this amount is taxed at a rate of 10% and subject to payment of PDI contributions at a rate of 24%. However, if a freelancer does not earn income exceeding this threshold, there is no obligation to pay taxes, but contributions are still required; in this case, the rate is applied to the minimum base for PDI contributions, which equals three times the lowest monthly contribution base established at the national and annual levels.

When it comes to contributions for health insurance and unemployment insurance, slightly different rules apply:

• If a freelancer is covered by health insurance through another basis (such as being employed or being an entrepreneur), there is no obligation for additional calculation and payment of health insurance contributions. Otherwise, health insurance is paid under the same principle for both models, applying a rate of 10.3% to taxable income, or (if income is lower than the amount of standard costs), on three times the monthly contribution base, which is determined annually by the competent statistical authority, and amounts to 15% of the average monthly salary in the previous year.
• Contribution for unemployment insurance is not paid under either of the selected models.

According to the rule that freelancers’ obligations are determined quarterly, it should be noted that freelancers have the right to change their chosen tax model each quarter. Additionally, it’s important to note that even freelancers who do not earn income exceeding the recognized cost amounts are required to declare taxes. Therefore, tax reporting is a requirement irrespective of income level – even minimal income must be reported through the freelancer portal, which was launched when the new regulations came into effect.

By legally recognizing freelancers as a distinct category of workers, a significantly more secure and transparent environment has unquestionably been established for all individuals operating outside traditional employment forms. This not only promotes the development of industries characterized by freelancing but also enhances communication and collaboration between citizens and authorities. Overall, this contributes significantly to the domestic economy and economic growth.

This article is for informational purposes only and does not constitute legal advice. If you need further information, please feel free to contact us.

By Anja Beric, Senior Associate, PR Legal

The Parliament of the Republic of Serbia recently adopted amendments to the Law on Payment Services (“Law”) that will start to apply from 6 May 2025 (“Amendments”). By the Amendments, the Law is harmonised with the EU’s PSD2. The key goal of the Amendments is the enhancement of innovations on the market and securing increased competition and transparency in the area of payment services, as well as better protection of payment services users and payment security. Below we provide an overview of the main novelties brought by the Amendments.

The most important novelty is the introduction of the open banking concept and two new types of payment services:

• Payment initiation service (“PIS”), which is a service to initiate a payment order at the request of the payment service user with respect to a payment account held at another payment service provider. The PIS essentially allows consumers that shop online to pay for their purchases through a simple credit transfer from their payment account. In the context of online payments, they constitute an alternative to credit card payments.
• Account information services (“AIS”), which is an online service to provide consolidated information on one or more payment accounts held by the payment service user with either another payment service provider or with more than one payment service provider. The AIS enables users to have a global view of their financial situation, as well as to categorise their spending according to different typologies (food, energy, rent, leisure, etc.).

PIS and AIS may be provided by the existing types of payment services providers (banks, e-money institutions, payment institutions and public postal operators), whereby the Amendments prescribe additional more flexible rules for entities intending to provide only the AIS (for example, unlike standard payment institutions, the AIS provider may be established as an entrepreneur). Such AIS providers are registered in the registry of payment institutions. Banks generally have to enable PIS and AIS service providers access to the payment service user’s payment accounts, with limited grounds for refusal with notice to the regulator such as unauthorised access to the account or initiation of a payment transaction or fraud.

Another notable aspect of the Amendments concerns the exemptions from the application of the Law. Among others, the so-called “commercial agent exemption”, ”limited network exemption” and “electronic communication exemption” have suffered changes. 

• The commercial agent exemption no longer leaves room for different interpretations in terms of whether the agent may act for both parties; from now on it is clarified that the agent may act either for the payor or the payee, but not for both parties.
• The limited network exemption is now confined to services based on specific payment instruments that can be used only in a limited way if one of the following conditions is met: (i) instruments allowing the holder to acquire goods or services only in the premises of the issuer, or, under direct commercial agreement with such issuer, within a limited network of sellers of goods and services; (ii) instruments which can be used only to acquire a very limited range of goods or services; (iii) instruments issued upon a request of a company or a public sector entity and regulated by a state authority or another public authority for specific social or tax purposes, whereby they may be used only in Serbia and to acquire specific goods or services from suppliers having an agreement with the issuer. Providers of the services under (i) and/or (ii) for which the total value of payment transactions during the previous 12 calendar months exceeds EUR 1 million in RSD counter value are obliged to notify the National Bank of Serbia (“NBS”) until 15^th of the current month about their activities and the reasons why these services fall under the exemption. Based on the notification, the NBS decides on whether the services are exempted.
• The electronic communication exemption has been changed to set clear rules on when the electronic communication networks or operators may process payment transactions as additional services. Payment transactions which fall within the scope of this exemption are payment transactions for the purchase of digital content and voice-based services, regardless of the device used for the purchase or consumption of the content or services, and payment transactions performed from or via an electronic device within the framework of a charitable activity with participation of registered humanitarian organisations or for the purchase of tickets, whereby in each of these cases the amount is charged from the subscriber together with the electronic communication services provided. The value of any single payment transaction may not exceed RSD 6,000, and the cumulative value of payment transactions initiated by an individual subscriber may not exceed RSD 36,000 in a calendar month. Service providers relying on this exemption must notify the competent authorities, and provide to them at least once a year an opinion of a competent auditor that its activity is in line with the above rules.

For foreign e-money issuers which process payments for Serbian residents the regime remains mostly the same – they are obliged to notify the NBS prior to providing such services. It is now expressly prohibited to local payment service providers to execute payments transactions of local residents with the foreign e-money issuer which is not registered with the NBS. Already registered foreign e-money issuers have to supplement the information provided to the NBS with their e-mail address to be used for exchange of notices with the NBS.

The Amendments also bring a regulatory sandbox mechanism for testing new types of services without complying with the regulatory requirements and incurring associated costs. Specifically, the NBS may prescribe closer conditions under which a company or a payment service provider may be exempted from the application of all or specific provisions of the Law in a defined period, for testing of the service, if such service is by nature such to contain a certain degree of innovation due to which it could be considered as new or significantly enhanced payment service compared to payment services already provided in Serbia. Such bylaw has not yet been adopted by the NBS, however, this may be expected as part of the continued policy of the regulator to encourage innovations in the payment services area. 

The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.

By Maja Jovancevic Setka, Partner, and Dimitrije Ilic, Associate, Karanovic & Partners

In accordance with the Law on Charges on Usage of Public Goods (“Law“), the Government of the Republic of Serbia, in April 2024, adopted the Regulation on Criteria for Determining Activities that Impact the Environment and the Amounts of Fees (“Regulation“).

The Regulation further defines the criteria for determining activities that impact the environment, within the prevalent activity of the charge payer (legal entities, entrepreneurs, and branches of foreign legal entities), as well as the amounts of charges for environmental protection and improvement.

Among other things, the Regulation prescribes the method of payment and determination of the charge amount in the case where the charge payer conducts activities in the territory of multiple local government units.

In such a case, the charge is payed:

• In all territories where they conduct activities that impact the environment,
• According to the degree of negative impact of the prevalent activity,

while the payment is effected as follows:

• The total calculated charge amount determined according to the prevalent activity is divided by the total number of local government units where the activities are conducted,
• Proportionally to the period of activity.

Conducting activities refers to the operations carried out by the charge payer both at the headquarters and distinct business units.

On the other hand, a business unit is understood to mean:

• Business premises and offices outside the headquarters where the charge payer conducts activities, as well as
• Land and premises on the land used for conducting activities.

In this regard, the question arose whether the competent authorities make a distinction in calculating the charge amount depending on the type of activity conducted in the distinct business unit.

According to the opinion of the Ministry of Finance, No. 1397679 2024 10520 004 001 011 004 dated May 30, 2024, such a distinction does not exist, meaning the type of activity conducted in the distinct business unit is irrelevant from the perspective of calculating the charge amount for environmental protection and improvement.

This article is for informational purposes only and does not constitute legal advice. If you need further information, please feel free to contact us.

By Marija Muzevic, Counsel, and Minja Mucic, Junior Associate, PR Legal

Serbian law firm DNVG Attorneys has joined the Visegrad Legal network.

The DNVG addition expands the network’s coverage to eight countries: Bulgaria, Croatia, the Czech Republic, Hungary, Poland, Romania, Serbia, and Slovakia.

DNVG Attorneys was established in 2021 by Damjan Despotovic, Marina Nikolic, Milorad Glavan, and Srecko Vujakovic (as reported by CEE Legal Matters on October 13, 2021).

“Working together with other international teams within the Visegrad Legal network, which share our values and commitment to excellence, we will be able to create synergies and provide better service to our clients across different jurisdictions,” commented Despotovic.

NKO Partners has advised CTP on its sixth land acquisition in and around Novi Sad, with the latest acquisition from 11 different individuals taking place in the Kac industrial zone.

According to the firm, the newly acquired land, covering an area slightly above 13 hectares, will be utilized for the further development of CTP’s A-class industrial and commercial facilities. 

Earlier this year NKO Partners advised CTP on a 22-hectare plot purchase in Sombor (as reported by CEE Legal Matters on May 2, 2024). In 2023, NKO Partners advised CTP on its fifth acquisition of land in and around Novi Sad (as reported by CEE Legal Matters on July 31, 2023). In 2022, NKO advised CTP on its first acquisition of land in the Kac area (as reported by CEE Legal Matters on July 7, 2022) as well as on its acquisition of around 20 hectares of land from the City of Novi Sad itself (as reported on August 4, 2022).

The NKO team was led by Partner Djordje Nikolic and Senior Associate Luka Aleksic.

What do Panama, the Netherlands, Latvia, and Serbia have in common? A shipment of over 5,000 high-quality athletic sneakers travelled through these countries before being halted at customs over authenticity concerns.

The primary issue centred on potential trademark infringement due to suspicions that the goods might be counterfeit. Customs officials raised concerns because some labels, tags, and QR codes on the sneakers were damaged. As a result, the goods were detained in several ports, and the importer was compelled to prove their authenticity each time.

Initially, the exporter declined to assist, citing that the shipment was conducted under the ExWorks Incoterms clause. However, the importer contended that even with ExWorks, the exporter is still obligated to ensure the goods and accompanying documents are in order.

Since the containers were sealed at the exporter’s warehouse, it was quickly determined that the exporter was responsible for the non-conformity of the goods. This realisation altered the dynamics between the parties involved, prompting the exporter to provide additional documents and guarantees. Eventually, the full chain of title was established, confirming the authenticity of the goods, which led to their release. 

The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.

By Goran Radosevic, Partner, and Nikola Kliska, Senior Associate, Karanovic & Partners

As a result of major market changes, business entities more often suspend their operations and become insolvent, during which arises the question of the collectability of the claims of their creditors and associates, as well as persons who are in other relationships with such insolvent business entities.

The legislative framework governing bankruptcy provides partial answers. However, certain questions still remain unanswered in the shining shadow of legal gaps.

Certain rights of creditors are resolved not only through bankruptcy, but also through civil proceedings, and while civil proceedings usually arise before bankruptcy proceedings are opened, the question arises of the fate of civil proceedings when bankruptcy proceedings are opened against the plaintiff or the defendant.

The Law on Civil Procedure stipulates that civil proceedings are in moratorium when the legal consequences of opening bankruptcy proceedings occur.

The Bankruptcy Law clearly regulates the issue of when bankruptcy proceedings are opened against the plaintiff, regarding the continuation of civil proceedings. Article 91 of the stated law stipulates that the civil proceedings in which the bankruptcy debtor is the plaintiff shall continue when the bankruptcy administrator informs the court before which the proceedings are conducted that has taken over the same, at which time the bankruptcy proceedings shall continue.

If the bankruptcy administrator does not continue the proceedings, it can be considered that with such an action, the bankruptcy debtor as a plaintiff has given up, that is, waived right, considering that will not claim it further. Although this issue is not precisely regulated in terms of the legal fate of such procedure, given that it continues to exist as a proceeding in the moratorium, to a certain extent, the issue of the continuation of the procedure when the bankrupt debtor appears as the defendant and the issue of protecting the rights of the creditor as a plaintiff, i.e. other persons who wish to exercise and establish their rights through civil proceedings.

Article 92 of the Bankruptcy Law stipulates the conditions under which the civil proceedings, in which the bankrupt debtor is sued, continue, namely if: i) the plaintiff, as a bankrupt and separate creditor, submitted a timely and orderly report of claims; ii) at the examination hearing, the bankruptcy administrator contests the claims report; iii) the plaintiff, as a bankruptcy or separate creditor, is directed by the conclusion of the bankruptcy judge to continue the interrupted litigation in order to determine the merits of the claim; iv) the plaintiff, as a bankruptcy or separate creditor, proposes the continuation of the proceeding in moratorium within eight days from the date of receipt of the conclusion of the bankruptcy judge.

Consequently, the court will reject the proposal to continue the proceedings if the conditions from Article 92 of the Bankruptcy Law are not met.

Therefore, in the event that the creditor, that is, another person, does not submit a timely and orderly reported claim, will not have the right to continue the previously initiated civil proceeding which seeks the realization and determination of rights. In practice, the question of the fate of claims that are not eligible to be reported in bankruptcy proceedings arises. Such claims are non-monetary claims that do not have ownership or other right to the property of the bankrupt debtor.

The perceived legal gap must not be to the detriment of creditors of the bankrupt debtor, or other persons.

Namely, a proceeding that is not continued exists as a proceeding in the moratorium. Civil proceedings in moratorium are not completed civil proceedings, but proceedings that are “waiting” for their continuation and as such can be a hindrance to other proceedings.

On the other hand, it cannot be considered that the suspended procedure has really ended. In the end, the procedure in moratorium is suspended after the bankruptcy debtor ceases to exist as a legal entity, according to Article 216 paragraph 4 of the Law on Civil Procedure. It is also a fact that certain bankruptcy proceedings can last several years until the bankrupt debtor ceases to exist as a legal entity.

According to what has been stated, for the plaintiff, there is neither a moratorium nor an end to the civil proceedings, but the uncertainty of the fate of his right.

The courts have the possibility to continue the proceedings at the plaintiff’s request against the other defendants, with the exception of the bankruptcy debtor. However, they mostly agree that it is a question of unique rivals, according to whom the dispute can only be resolved in an equal way for everyone, according to the law or the nature of the legal work, which is sometimes not a clear case.

As legal representatives of the person in the described situation, through procedurally permitted means, we referred the above-mentioned question to the competent courts for legal resolution and interpretation. It remains to be seen how judicial practice will resolve the dilemmas of the resulting legal gap, while it is certain that the legal regulations are ripe for changes.

By Dajana Drljevic, Associate, JPM & Partners