Category: Serbia

The Commission for Protection of Competition (“CPC”) and the Republic Secretariat for Public Policy (RSPP), in cooperation with the Organization for Economic Cooperation and Development (OECD), enacted a while back a Control List for Assessing the Impact of Regulations on Competition (“Control List”), which establishes whether a specific proposal or draft regulation could lead to competition distortion in the market.

Indeed, competition law has a significant impact on numerous economic and social areas, such as energy, construction, healthcare, education, tourism, and similar sectors. Therefore, when drafting regulations that govern these matters, it is important to consider the competition factor. The Control List was created with the aim of facilitating this task for authorities and consequently improving competition protection in the market.

The Control List is a list of questions that help assess whether a particular regulation may have a negative impact in this regard, serving as a tool to identify potential market issues. Namely, if it is determined based on the Control List that a certain proposal or draft regulation could disrupt competition, it is necessary to submit it to the CPC for analysis and opinion.

In accordance with the Control List, it is considered that a proposal or draft regulation may have an impact on competition in the market if the answer to any of the following three questions is positive:

1. Does the proposal/draft regulation directly or indirectly limit the number or type of traders, i.e., suppliers or buyers, or enable a dominant position for certain participants in the market?
2. Does the proposal/draft regulation reduce the possibility or incentives for market competition or allow collusion between market participants?
3. Does the proposal/draft regulation facilitate discrimination against certain economic entities?

Additionally, the control list includes instructions on when it is necessary to respond “YES” to the above-listed questions.

This article is to be considered as exclusively informative, with no intention to provide legal advice. If you should need additional information, please contact us directly.

By Ivana Ruzicic, Managing Partner, and Lara Maksimovic, Senior Associate, PR Legal

In December 2023, The New York Times (“NYT”) filed a lawsuit against Microsoft and OpenAI for alleged copyright infringement and misuse of intellectual property, all related to the popular AI chatbot ChatGPT.

Subject of dispute

In this lawsuit, NYT is claiming “for Microsoft and OpenAI to be held accountable for billions of dollars in damages due to unauthorized copying and use of NYT’s work.”

This is because ChatGPT uses publicly available texts published by NYT, specifically parts of them or the information contained therein, without permission from the original source, and in a way that the content ChatGPT offers is significantly similar to the original material.

NYT believes that such business model is based on copyright infringement, whereby Microsoft and OpenAI directly compete with their content and limit NYT’s commercial opportunities by altering the content of the sites from which ChatGPT retrieves data (e.g., by removing links to NYT content, thus depriving them of publicity and revenue).

However, this is not the first dispute against Microsoft and OpenAI regarding ChatGPT. NYT’s attorneys also represent numerous other entities that have sued these companies for alleged use of copyrighted works in developing or training this chatbot.

Conclusion

The dispute between artificial intelligence and intellectual property protection raises numerous questions regarding boundaries and responsibilities in the digital age. In other words, it raises the question of whether a compromise is possible that will allow for the advancement of artificial intelligence while simultaneously protecting copyright and intellectual property. This subject certainly requires extensive and thorough consideration, with the participation of relevant stakeholders from both the private and public sectors.

This article is to be considered as exclusively informative, with no intention to provide legal advice. If you should need additional information, please contact us directly.

By Lara Maksimovic, Senior Associate, and Kristina Martin, Junior Associate, PR Legal

Cytowski & Partners has advised Collabwriting on its USD 1.1 million seed financing with Smok Ventures, Credo Ventures, Fiedler Capital, Underline Ventures, Startup Wiseguys, and several CEE angel investors. Schoenherr reportedly advised Collabwriting as well. San Diego-based Komorowski PLLC reportedly advised lead investor Smok Ventures.

Collabwriting is a Belgrade-based technology company that provides tools for knowledge sharing and management. The company won the best start-up competition at How to Web in Bucharest, Romania.

The Cytowski & Partners team included Partner Tytus Cytowski and Associates Kunal Kolhe and Fabiana Morales Centurion.

Editor’s Note: After this article was published, Schoenherr confirmed it had advised Collabwriting as well. The firm’s team was led by Partner Igor Zivkovski.

On January 1, 2024, the amendments to the Law on Fees for the Use of Public Goods, published in the Official Gazette of RS No. 92/2023 (“the Law”), came into effect.

Below is an overview of the most significant changes.

Reasons for amending the Law

When drafting the Law amendments, the following reasons were cited:

• preventing the avoidance of fees for the use of public goods;
• reducing the burden regarding certain fees, i.e., for certain categories of fee payers;
• harmonization with regulations from other areas (primarily with provisions related to energy, i.e., energy efficiency and rational use of energy, and electronic communications, i.e., radio frequencies); and
• technical-legal harmonization and clarifications.

Major changes to the Law

The most significant amendments to the Law include the following:

• Fee for geological exploration: The Law now stipulates that this fee also covers the fee for using data and documentation from basic and applied geological explorations conducted for the needs of the Republic of Serbia, financed from the budget of the Republic of Serbia.
• Fee for changing the purpose of agricultural land: The Law specifies that a request to change land use can be submitted when a different purpose is planned through the relevant spatial plan (previously, this was only possible when another purpose was planned by a separate act of local self-government). Additionally, the method of determining the fee base has been changed. It is also clarified that if agricultural land’s purpose is changed to construction in a spatial plan, it must still be used for agricultural production until it is actually converted. In such cases, the fee payer must settle the fee before obtaining a construction permit.
• Drainage fee: It’s specified that a user includes not only the owner or user of land and facilities in the drainage area but also the user of immovable property in public ownership and the manager of a public road or railway infrastructure. An exception is made for individuals and entrepreneurs who are owners or users of land and facilities in the drainage area registered in the Register of Agricultural Holdings or buildings registered in various official registers if also registered in the Register of Agricultural Holdings.
• Environmental pollution fees: These fees include fees for plastic bags, defined as packaging made of plastic material, with or without handles, available in retail establishments and intended for carrying goods or products. The fee payer for environmental pollution caused by plastic bags is the manufacturer or importer of plastic bags, except for compostable bags according to standard SRPS EN 13432:2005.
• Fee for environmental protection and improvement (eco-tax): To standardize the business environment for all entities performing identical activities, the Law now considers branches of foreign legal entities performing certain environmentally impacting activities as fee payers. It further specifies what constitutes activity (undertaking activities by legal entities, entrepreneurs, and branches of foreign legal entities in headquarters and separate business units) and a separate business unit (business premises and rooms outside headquarters where activities are carried out, including activities on construction sites lasting continuously for more than 12 months). Additionally, the deadline for submitting applications for this fee has been changed to April 30 (previously July 31, as mentioned in our previous articles available here and here), and the fee will now be paid quarterly instead of monthly. The fee’s base is the level of negative impact caused by the activity, also defined by the Law.
• Fee for direct water pollution: The Law states that this fee consists of two parts and is determined based on the measured total quantity of discharged wastewater annually (measured on a continuous flow meter at the discharge point into the recipient or based on data on the quantity of water taken or supplied to the fee payer if they do not measure the quantity of discharged wastewater or if the measured quantity is not in line with the water balance in the technological process).
• Fee for the use of public spaces: It clarifies what constitutes using public space for advertising (using advertising media placed in public areas or on surfaces of buildings located in public areas, or using building surfaces or advertising media on non-public surfaces when it directly impacts the availability, quality, or other characteristics of the public space, requiring permission from the competent authority of local self-government). It also defines direct impact on the availability of public space and impact on its quality or other characteristics. The fee base is the area determined by the permit issued by the competent authority of local self-government or other acts in the case of using public space without permission (expressed in m2). The fee calculation is based on the area of space, advertising media, or technical and operational characteristics of the building or advertising media, proportional to the approved period of use determined by the permit issued by the competent authority of local self-government.
• Fee for the use of protected areas: The Law empowers the minister responsible for environmental protection to prescribe activities directly contributing to improving the state, presentation, and promotion of the values of protected areas, as well as criteria for receiving benefits, the procedure for obtaining benefits, including deadlines for submitting requests, and the deadline for deciding on submitted requests.
• Fee for the use of parts of road land and other land used by the road authority that are in general use: The Law specifies that using parts of road land and other land used by the road authority includes using land occupied by constructing a traffic junction on a road plot, and exceptionally (in settlements) using road land for parking as a public road’s accompanying feature if it’s specified in technical documentation for construction or reconstruction. The fee base is the m2 of road land occupied by constructing a traffic junction on a road plot, and payment is made monthly, by the 15th for the previous month. The fee calculation starts from the date of receipt of the decision confirming the conditions for constructing or reconstructing the traffic junction.

This article is to be considered as exclusively informative, with no intention to provide legal advice. If you should need additional information, please contact us directly.

By Milan Petrovic, Managing Partner, and Kristina Martin, Junior Associate, PR Legal

We continue to deal with court decisions that creatively interpret the provisions of the Labor Law concerning the termination of employment contracts, thereby introducing significant legal uncertainty in practice.

While the Labor Law stipulates that an employer can terminate an employment contract if the employee breaches their work obligations and discipline, of which coming to work under the influence of alcohol or other intoxicants is particularly noteworthy, in practice employers have difficulties dismissing employees who come to work in a drunken state or are otherwise unaccountable.

• Alcoholism

Article 179 paragraph 2 item 4 of the Labor Law expressly stipulates that the employer may dismiss an employee who violates work discipline by coming to work under the influence of alcohol or other intoxicants or by consuming them during working hours.

From this, it is clear that employment could end if the employer determined, based on alcohol testing, that the employee is under the influence of alcohol or consumes alcohol during work hours.

However, the Supreme Court took the position that a person suffering from alcoholism has no voluntary influence over their actions meaning that they cannot influence their alcohol consumption. According to the court, coming to work in a drunken state or consuming alcohol during working hours is not a voluntary act of the employee, but a consequence of their illness – alcoholism. Since drunkenness in such a case is an involuntary act, the employee is not responsible for violation of work discipline if they come to work in a drunken state, meaning that there are no grounds for dismissal of such an employee.

(Judgement of the Supreme Court of Cassation, Rev2 3051/2020 of December 16, 2021)

The court’s opinion can probably by analogy be applied to employees who come to work under the influence of narcotics or who consume narcotics while at work, assuming they have been diagnosed with drug addiction (we found no matching case law concerning narcotics, but the principle should be the same as for alcoholism).

• Unaccountability

Just as alcoholism or drug addiction results in the unaccountability of employees and thus their ability to control and understand the significance of their actions, any other mental or psychological condition of employees that results in a state of unaccountability may also affect their employment status.

According to a variety of decisions of appellate courts and the Supreme Court, employees are not responsible if a breach of work duties or discipline was caused due to mental illness, stress, irritability, or anxiety. For example, an employer cannot dismiss an employee who does not show up for work because they imagine (due to illness) that they are on vacation, since the employee has not been absent from work on their own free will, but for reasons beyond their control. The same applies, for example, to an employee who leaves work every day due to a psychological state, arrives late for work, takes breaks outside of the schedule, or disturbs other employees.

(Judgement of the Supreme Court of Cassation, Rev2 438/2017 of March 2, 2017, and Decision of the Court of Appeal in Belgrade, Gž1 2144/1019 of October 4, 2019)

Bearing in mind the above case law, employers are further deprived of the ability to predictably decide on the employment status of employees, even in situations where it is quite clear that there is a violation of work obligations or discipline, and especially when employee behavior harms other employees or creates an unpleasant work environment. With recent changes to the law, the medical reports on the temporary incapacity for work no longer include the code of the illness the employee is suffering from, so employers are deprived of this information and whether such illness may affect employees to involuntarily violate work obligations and discipline. On the other hand, it regularly happens that doctors do not give sick leave to employees who have been diagnosed with an illness which can result in an involuntary breach of work obligations and discipline. This leads to other problems, as in these cases, the employer cannot voluntarily remove such employees from the workplace and prevent them from harming the work environment, even if their acts are involuntary.

One gets the impression that the courts making such decisions did not consider the overall picture and the specific problems such decisions can cause for employers and other employees. Therefore, it is necessary in the coming period to change the practice by pointing out in court proceedings the practical untenability of the positions taken by the courts or to review some legal solutions to protect the interests of all parties and, what is also important, to create legal certainty.

This text is written for informational purposes only and does not constitute legal advice. We are at your disposal for any additional information.

By Milorad Glavan, Partner, DNVG Attorneys

BDK Advokati has advised Hodler Asset Management on its acquisition of the remaining 32% of shares in Superior Foods, thus becoming its sole owner. Belgrade’s Nikolic law office advised Superior Foods.

Hodler Asset Management is a Hungarian private equity fund primarily involved in the agricultural and food industries.

Superior Foods is a Serbian company active in poultry meat processing.

Both law firms also advised on the initial transaction, back in 2022, when Hodler purchased a 45% stake in Superior Foods (as reported by CEE Legal Matters on October 21, 2022).

The BDK Advokati team included Senior Partners Vladimir Dasic and Dragoljub Sretenovic, Associates Milos Kaplanovic, Milan Popovic, and Ana Jovanovic, and Junior Associate Petar Eric.

The Nikolic team included Attorneys at Law Nemanja Nikolic and Djordje Popic.

NKO Partners has advised CTP on a new real estate transaction in Serbia: the purchase of a 22-hectare plot located in the industrial zone of Sombor, near the borders of Hungary and Croatia, from the local municipality.

According to the law firm, “CTP plans to leverage this premium location to construct over 100,000 square meters of state-of-the-art industrial and logistic facilities.”

“The property was acquired from the City of Sombor and marks a significant milestone both for CTP and the City of Sombor, with the mayor expressing his enthusiasm for the project and commenting that this is one of the most important investments for the city and the surrounding area in the last few decades,” NKO Partners reported.

NKO Partners has advised CTP on multiple land acquisitions in Serbia, most recently last year (as reported by CEE Legal Matters on July 31, 2023).

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

Belgrade’s MPartners Legal, working with Perth’s Steinepreis Paganin and Bird & Bird in London, has advised Ibaera Capital Fund subsidiary ISIHC on the sale of the Rogozna Gold Project in Serbia to Strickland Metals Limited for a consideration of AUD 34.2 million in shares.

According to Steinepreis Paganin, the Rogozna Gold Project is located in southern Serbia and contains a JORC-compliant inferred mineral resource totaling 5.44 million ounces gold equivalent.

Strickland has agreed to issue approximately AUD 34.2 million worth of Strickland shares as consideration for the acquisition, which remains subject to the approval of Strickland’s shareholders.

The MPartners Legal team included Managing Partner Mihajlo Matkovic.

The reasoning behind the draft laws not included in the laws those provisions from the EU regulations that can be applied only by the member states of the European Union, as well as those that prescribe obligations only for the member states, is questionable.

There are solutions in European legislation that the countries of the Western Balkans could adopt regardless of the fact that they are not members of the EU. This is supported by the fact that the governments of these countries often emphasize that their strategic commitment is to gain full membership in the EU. Governments would have to ensure that the core European values are respected to accomplish this intent. Respecting core European values is achieved, inter alia, by establishing an effective and dissuasive system of sanctions for violations of the laws proclaiming these values. This article explains the system of administrative fines in the EU and the possibilities for its establishment in the countries of the Western Balkans, as well as what kind of message the authorities of these countries are sending to citizens and industries by not showing their willingness to adopt European values.

• Legal solutions and EU practice

EU legislation prescribes a system of imposing effective, proportionate, and dissuasive administrative fines for violations of laws by companies. The general rule is that the authority to impose administrative fines is assigned to independent regulatory bodies of member states or the European Commission. Regulatory national bodies impose fines in administrative proceedings; national laws may regulate the procedure for imposing penalties by national regulatory bodies, whereby member states must meet the requirements regarding the effectiveness, proportionality, and dissuasive effect of the penalties.

Administrative fines are imposed on legal entities (companies), whereby determining the degree of guilt of responsible persons in companies is not a prerequisite for their imposition. It is to determine whether the legal entity itself, through its employees, committed a violation of the law intentionally or negligently. This practice was first established by the European Court of Justice and the European Commission, primarily in cases of competition law violations. In case C 807/21 of 05 December 2023 (Deutsche Wohnen v State Prosecutor’s Office in Berlin) it is confirmed that this practice is also applied in the area of personal data protection.

First, the European Council adopted the Council Regulation (EC) No 1/2003 on 16 December 2002. This regulation prescribes that the European Commission is authorized to, in case of abuse of a dominant position on the market or the conclusion of restrictive agreements, impose an administrative fine on market participants and a group of market participants (undertaking) in the amount of up to 10% of the annual income generated by the participant or participants participating in the violation of the law in the previous business year. The Regulation expressly stipulates that the procedure for imposing administrative fines is neither a misdemeanour nor a criminal procedure.

According to the practice of the European Court of Justice, the term “undertaking” is any form of organization (entity) that is involved in economic activity, regardless of the legal form of such organization and the method of financing. Several entities that belong to the same group can form an economic unit, i.e. “undertaking”. The term “undertaking” from Articles 101 and 102 of the Treaty on the Functioning of the EU means a single economic unit composed of several natural and legal entities. This further means that the term “undertaking” is any entity that is part of an economic entity; for example, a company within a concern or the parent company that manages the concern or the concern itself as an economic entity. The criteria on which it depends on whether the entity makes decisions independently or whether the parent company has a decisive influence on other entities are based on economic, legal, and organizational ties between the parent company and subsidiaries, such as the size of the stake, personnel or organizational ties, instructions and the existence of company contracts.

According to the so-called functional concept of an undertaking, European competition law establishes the concept of direct liability of legal entities, according to which all actions or omissions of persons acting in the name and on behalf of a legal entity are attributed to those legal entities, that is, they are considered to have been committed by the legal entities themselves. According to the standing of the European Court of Justice, the fact that the employees of a certain company did not act in accordance with the internal rules of that company does not exclude the responsibility of the company within the undertaking. Awareness of the management, (wrong) instructions, or the absence of due supervision are not necessary for the existence of responsibility for an undertaking. The essence of the concept of a single economic unit, according to the functional principle, is that the undertaking is responsible as a functional unit for the non-implementation of the law. If the undertaking has several legal entities, the penalty may be imposed on all legal entities. Those legal entities are relevant only as formal addressees of the decision on sanctions, proceedings are being conducted against them and they are the addressees of enforcement. Legal entities are jointly responsible for paying the administrative fine.

Regulation (EU) 2016/679 of the European Parliament and the Council of April 27, 2016, on the protection of natural persons in relation to the processing of personal data and on the free movement of such data and on the repeal of Directive 95/46/EC (General Data Protection Regulation or GDPR) prescribes a system of administrative fines for violation of the GDPR. GDPR prescribes upper limits of monetary fines (fixed amount) and percentage amounts from the realized income, as well as criteria for imposing administrative fines.

In the event that the violation of the GDPR was committed by a legal entity that operates within a group of companies or manages a group of companies (undertaking), an administrative fine is imposed in the percentage amount of the annual income of the undertaking. This approach is justified by the requirement for the imposing of administrative fines to be effective, proportionate, and dissuasive.

In the aforementioned judgment of the European Court of Justice in case C 807/21, the court concludes that the GDPR defines the term controller – as a natural or legal person, authority, agency, or other body that alone or together with others determines the purposes and means of personal data processing. The GDPR stipulates that the obligations and responsibilities of controllers shall be established for any processing of personal data carried out by the controller itself or on its behalf. In particular, the obligation of the controller is to implement adequate and effective measures and be able to demonstrate compliance of the processing activities with this regulation, including the effectiveness of the measures. These measures must take into account the nature, scope, context, and purposes of the processing and the risk to the rights and freedoms of natural persons. Article 83 (1) of the Regulation prescribes that each supervisory authority ensures that the imposing of administrative fines in each individual case is effective, proportionate, and dissuasive.

The controller is directly responsible for the implementation of the GDPR, i.e. for the acting of its managing bodies and for this reason, administrative fines are imposed directly on the controllers, whereby the competent authorities do not determine the degree of guilt of the responsible persons with the controller. This concept aims to achieve the goals proclaimed by the GDPR: i) to ensure a consistent and high level of protection of natural persons and to remove obstacles to the flow of personal data within the EU, the level of protection of the rights and freedoms of natural persons in relation to the processing of such data must be the same in all member states; ii) the effective protection of personal data throughout the EU requires the strengthening and setting out in detail of the rights of data subjects and the obligations of those who process and determine the processing of personal data, as well as equivalent powers for monitoring and ensuring compliance with the rules for the protection of personal data and equivalent sanctions for violations in the member states.

Determining the degree of guilt of responsible persons in legal entities would hamper the conduct of proceedings, and in the case of corporations, this activity is of limited scope due to administration and complex organization.

On the other hand, the existence of a system of penalties making it possible to impose, where justified by the specific circumstances of each individual case, an administrative fine pursuant to Article 83 of the GDPR creates an incentive for controllers and processors to comply with that regulation. Through their deterrent effect, administrative fines contribute to strengthening the protection of natural persons with regard to the processing of personal data and therefore constitute a key element in ensuring respect for the rights of those persons, in accordance with the purpose of that regulation of ensuring a high level of protection of such persons with regard to the processing of personal data.

The European Court of Justice further affirms that the condition for the imposing of administrative fines is that the controllers or processors violated the GDPR intentionally or negligently; the concept of the so-called objective responsibility for the violation of the GDPR is not accepted. In the specific case, it will be sufficient for the imposing of administrative fines for the supervisory authorities to determine that the violation of the GDPR occurred as a result of the actions or omissions of management or employees, without the obligation to determine which members of management or employees are involved. For example, the refusal of the management to act on the order of the supervisory body or the management’s action contrary to the advice of the data protection officer would be an intentional violation, while failure to act according to internal documents would be negligent action. The existence of a violation does not require management’s knowledge or lack of awareness that a violation is being committed or that the conduct is contrary to the GDPR.

• The situation in the countries of the Western Balkans

Personal data protection legislation in the countries of the Western Balkans is largely inconsistent with the GDPR requirement for the imposing of sanctions for non-implementation of the law to be effective, proportionate, and dissuasive. According to the report of the European Commission from 2023 for Montenegro, Bosnia and Herzegovina, and Albania, these countries, despite the fact that the GDPR has been applied in Europe for more than 5 years, have not yet adopted a general regulation on the protection of personal data. In Serbia, a general regulation was adopted in 2018, but the system of sanctions for its non-implementation is not aligned with the GDPR. In North Macedonia, a general regulation was adopted in 2020, and the system of fines is harmonized with the GDPR to a certain extent, in terms of their amount. The sectoral laws in Serbia and North Macedonia are not harmonized with the general regulation on the protection of personal data.

In all countries of the Western Balkans, misdemeanour courts are responsible for imposing misdemeanour fines, and the amounts of fines are minor compared to the ones prescribed by the GDPR (except in North Macedonia). The reasoning in the Serbian general regulation on the protection of personal data that the system of imposing fines cannot be harmonized with Article 83 of the GDPR is unacceptable. The Serbian legislator should have applied the solutions from the Draft Law on Protection of Competition from 2009 – to give the Commissioner the authority to impose administrative fines and to prescribe the relevant procedure in a general regulation. Instead of acting in the described manner when the general regulation was adopted, it took five years for the Strategy of the Law on Personal Data Protection to be adopted and for that strategy to mention the possibility of introducing administrative fines. On the other hand, the National Plan for Chapter 23 states “that the Personal Data Protection Strategy for the period from 2023 to 2030 was adopted on August 25, 2023. In accordance with the aforementioned strategy, forming a Working Group that will work on amendments to the Law on Personal Data Protection is one of the priorities, with the aim of further improving the normative framework in this area. The same Working Group will prepare the accompanying Action Plan for the period 2023-2025.”

In North Macedonia, the general law on the protection of personal data should be amended in such a way that misdemeanour fines are replaced by administrative fines and that they are imposed only on controllers and processors, and not on responsible persons in legal entities (in accordance with the latest practice of the European Court of Justice).

Prescribing administrative fines that would be imposed in a special administrative procedure would improve the legal certainty and predictability of the application of the law in the practice of competent authorities, that is, prevent the possibility of different and uneven practices of different authorities. In addition, harmonizing the amounts of administrative fines with the amounts from the GDPR would certainly increase the degree of efficiency and effectiveness of sanctions for non-implementation of the law. It is a generally known fact that misdemeanour proceedings last a long time, and statutes of limitation often occur, while a separate issue is to what extent judges in misdemeanour courts are familiar with regulations on the protection of personal data (for example: how the data protection impact assessment shall be carried out).

According to research by the European Centre for Digital Rights (2,173 “insiders” – data protection officers and other personal data protection experts in companies in European countries), the most influencing factor for a company to improve compliance with the GDPR is the real possibility that companies are fined, while in second place is imposing of high fines on other companies.

Our conclusion is that the system of effective and deterrent sanctions for infringement of the law is an elementary prerequisite for respecting citizens’ rights and that the countries of the Western Balkans will not be able to join the EU unless they harmonize their legislation with the EU’s sanctions policy.

 

By Ivan Milosevic, Partner, and Andrea Cvetanovic, Senior Associate, JPM & Partners

To facilitate easier obtaining of residence and work permits, due to the increasing influx of foreigners coming to live and work in the Republic of Serbia, new amendments were made to the Law on Foreigners and the Law on Employment of Foreigners in 2023. As a result of these legal amendments, there was a need to adopt new bylaws that would comply with the latest changes.

Accordingly, at the beginning of this year, the Government of the Republic of Serbia adopted 4 new rulebooks for this purpose, namely: The Rulebook on Granting Permanent Residence (which entered into force on 05.02.2024), as well as the Rulebook on Granting Temporary Residence, the Rulebook on Issuing a Single Permit for Temporary Residence and Work of Foreigners, and the Rulebook on Submitting Applications for Permanent Residence Electronically, which entered into force on 01.02.2024.

Rulebook on Granting Permanent Residence

Key contributions of this rulebook are regulating the new categories of foreigners who can be granted permanent residence, namely:

Foreigner on the basis of long-term stay in the Republic of Serbia

Unlike previous provisions of the Law on Foreigners where a foreigner had to reside for 5 years on the basis of temporary residence to apply for permanent residence approval, now a foreigner only needs to reside continuously for 3 years on the basis of temporary residence or a single permit to be able to submit such a request. The foreigner must submit the request for permanent residence approval at the earliest 60 days before the expiry of the 3-year period and at the latest by the expiry of their temporary residence. In addition to meeting the residence duration in Serbia, the foreigner must submit evidence based on which their previous temporary residence or single permit was issued.

Special categories of foreigners who can be granted residence regardless of meeting the duration of stay requirement:

1. Minor foreigner if one of the parents is a citizen of the Republic of Serbia or a foreigner granted permanent residence.

With the latest amendment to the Law on Foreigners and the new rulebook, a minor foreigner whose one parent is a citizen of the Republic of Serbia or a foreigner granted permanent residence can now be granted permanent residence. 

For minors, it is required to obtain a birth certificate proving kinship with the person who is a citizen of the Republic of Serbia or a foreigner granted permanent residence. When submitting the request, the presence of both parents or certified consent of the other parent is needed if they cannot be present, except in exceptionally justified situations stipulated by the rulebook (e.g. by a final court decision, the child is entrusted to the care of the parent submitting the request for permanent residence approval for the minor, or the other parent is deprived of legal capacity). In such cases, the consent of the other parent is not required.

2. Foreigner originating from the Republic of Serbia and a foreigner of Serbian origin.

A foreigner of Serbian origin, when submitting the request, provides a domestic or foreign public document having the force of a domestic public document, or a baptismal certificate from the Serbian Orthodox Church, proving their Serbian origin. A foreigner originating from the Republic of Serbia proves the justification of their request with their own birth certificate or the birth certificate of one of their parents.

Foreigner continuously residing in the territory of Serbia for more than 3 years on the basis of granted asylum

The rulebook also provides facilitations for foreigners granted asylum rights regarding the submission of requests for permanent residence approval. Specifically, in order to facilitate their path to obtaining permits given their life situations, the rulebook stipulates that a foreigner granted asylum rights does not need to submit a copy of their ID card and passport, in case they were unable to obtain them for justified reasons (e.g. war in the foreigner’s country of origin). Thus, a foreigner granted asylum rights only needs to submit the decision granting them asylum and a copy of their ID card when applying for permanent residence approval.

Rulebook on Approving Temporary Residence

Introduction

The new Rulebook on Approving Temporary Residence further regulates the latest amendments to the Law on Foreigners, primarily regarding the submission of requests for issuing temporary residence permits and obtaining these permits electronically. Namely, from 01.02.2024, all requests for temporary residence, as well as requests for obtaining a single permit for temporary residence and work by a foreigner, will now be submitted exclusively through the internet platform – Portal for Foreigners (portal link: livinginserbia.gov.rs ). If all necessary conditions are met, the temporary residence permit is issued for a period of up to 3 years, with the possibility of extension for another 3 years.

Additionally, it is noteworthy that foreigners are now allowed to submit when applying from abroad, either a real estate lease agreement or a statement of intended residence address as proof of having a residence address.

Grounds for Submitting the Request

The mentioned rulebook stipulates that a foreigner submits a request for temporary residence approval in accordance with the provisions of the Law on Foreigners, on the following grounds:

• Special forms of employment;
• Education or learning the Serbian language;
• Studying;
• Participating in international student exchange programs;
• Scientific research or other scientific educational activities;
• Family reunification;
• Performing religious service;
• Medical treatment or care;
• Real estate ownership;
• Humanitarian residence.

With the adoption of the new Rulebook on Issuing a Single Permit for Temporary Residence and Work of Foreigners, in case employment is the basis for issuing a temporary residence permit, a single permit for both temporary residence and work of the foreigner is now issued.

Furthermore, the rulebook stipulates the conditions, or evidence, that must be obtained for a foreigner to be issued a temporary residence permit on the mentioned grounds envisaged by this rulebook.

Novelties Regarding Special Forms of Employment

The mentioned rulebook also importantly regulates in more detail which forms of employment are considered special forms of employment. The rulebook stipulates that special forms of employment are:

• Performing duties of an accredited foreign journalist;
• Volunteering;
• Expert on a project in cooperation with state authorities of the Republic of Serbia;
• Realization of an audiovisual work, i.e. a foreigner engaged in the realization of an audiovisual work;
• Performing seasonal jobs.

While the first three grounds were envisaged by the previous rulebook, now foreigners participating in the realization of audiovisual work in the territory of the Republic of Serbia, i.e. members of acting and creative teams, as well as persons performing seasonal jobs, must obtain temporary residence approval on this basis.

• Foreigner participating in the realization of an audiovisual work

In order for a foreigner to obtain a temporary residence permit on this basis, in addition to the general conditions for obtaining a residence permit, they need to provide additional evidence in the form of:

1. A business cooperation agreement concluded between a domestic and a foreign business entity;
2. A confirmation issued by a business entity from the Republic of Serbia;
3. A confirmation of engagement of the foreigner, issued by the foreign business entity, stating the period of engagement.
4. Foreigner performing seasonal jobs

For a foreigner to be able to perform seasonal jobs, they need to submit an offer that must contain information about the employer, information about the type of work the foreigner will perform, and information about the working conditions (this includes: wage amount, duration of daily and weekly rest, accommodation and food conditions). If all necessary conditions are met, the temporary residence is issued for a period that cannot exceed 120 days in one calendar year.

Rulebook on Issuing a Single Permit for Temporary Residence and Work of Foreigners

Introduction

The essence of the new Rulebook on Issuing a Single Permit for Temporary Residence and Work of Foreigners is to facilitate an easier and faster procedure for obtaining a single permit. Namely, the provisions of this rulebook further regulate the conditions that a foreigner must meet, as well as the stages of the procedure for the person to obtain a single permit. If all necessary conditions are met, the single permit is issued for a period of up to 3 years, with the possibility of extension for another 3 years.

Novelties Regarding the Method of Collecting Required Documentation, as well as Submitting the Request for Conducting the Labor Market Test and the Decision Deadline

The mentioned rulebook introduces novelties regarding the conducting of the labor market test, as well as the method of submitting evidence for issuing a single permit. Specifically, now the employer or a legal or natural person authorized by them submits the request to the National Employment Service for conducting the labor market test in electronic form either within the Portal for Foreigners or within the E-Government portal. Unlike before, when the request was submitted to the National Employment Service, now the request, with all necessary documents, is submitted electronically, which greatly facilitates the process.

The request for conducting the labor market test can be submitted no earlier than 60 days before submitting the request, and no later than the day of submitting the request for issuing a single permit. Unlike before, when the National Employment Service had a deadline of 10 days from the initiation of the procedure for conducting the labor market test to prepare a report on the realization of the employment need, this deadline has now been reduced to 4 days for preparing the said report. After deciding on the request, the National Employment Service provides an ID number that is later entered in the corresponding field on the request for issuing a single permit.

Method of Submitting the Request for Obtaining a Single Permit and Deadline for Decision on the Request

The novelty of this rulebook is that the request for obtaining and extending the single permit will be submitted exclusively electronically through the internet platform Portal for Foreigners (portal link: livinginserbia.gov.rs). The request for issuing or extending the single permit can be submitted by the foreigner, the employer on behalf of the foreigner, or a person authorized by them. It should be emphasized that if the foreigner independently submits the request for issuing a single permit, they would have to obtain the ID number from their employer, which the employer obtained based on the conducted labor market test procedure since the foreigner cannot independently conduct this procedure.

Upon submitting the request, the Foreigners Administration decides on it within 15 days from the date of submission.

One of the key advantages of this method of submitting the request is that the foreigner can now submit the request for issuing a single permit from abroad.

Grounds for Submitting the Request

The Law on Employment of Foreigners and this rulebook stipulate the grounds for employment of a foreigner. While employment based on an employment contract or another contract realizing labor rights is the primary ground for employment, the special grounds for employment in accordance with the Law on Employment of Foreigners and this rulebook are:

• Posted worker;
• Intra-corporate transfer;
• Independent professional;
• Training and professional development;
• Self-employment.

It should be noted that regarding most of these grounds, there has been no change in terms of the evidence to be submitted, except for the intra-corporate transfer ground, where it is stipulated what else needs to be submitted in addition.

The rulebook for this ground provides a novelty regarding the evidence that must be submitted. In addition to the previously required conditions:

• An act of the employer and the foreign employer on assigning the foreigner to the Republic of Serbia;
• An act of the foreign employer or a certificate of employment, i.e. work engagement of the foreigner in positions of manager, specialist or trainee;
• A statement from the employer and the foreign employer that the foreigner will return to work for the foreign employer after the assignment period;

It is now also required to provide proof that the employer is registered in the Republic of Serbia as a dependent company of a business entity registered abroad, i.e. evidence of the connection between the employer and the foreign employer from which the foreigner is being assigned.

By Marko Mrdja, Senior Associate, and Dimitrije Stepanovic, Associate, JPM & Partners