Category: Serbia

High levels of migration from Russia and Ukraine have been causing a boom in the real estate sector in Serbia, in a period of overall legislative slowdown, according to Zivkovic Samardzic Partner Branislav Zivkovic.

Following the elections that took place this spring, no government was formed yet, Zivkovic begins. “The process is still within its legal deadlines, but longer – a technical government is still in session. So, no new laws, no new pieces of legislation, other than urgent decrees,” he reports. “Since early spring, legislative activity essentially stopped.”

However, the major topic that impacts Serbia is the war in Ukraine. “We also feel the repercussions and consequences of it,” Zivkovic says. This is something he believes is ushering in new market challenges. “Serbia is in a very delicate position, in so far as it has not yet joined with the EU sanctions against Russia, but it did condemn the war,” he explains. “We support independent Ukraine, but on the other hand – because of the sentiment among the general population, as well as strong economic ties, especially in the energy sector – no sanctions have occurred yet.”

Tens of thousands of Russian citizens now seek to emigrate to Serbia – both individuals and legal entities – as well as a smaller number of Ukrainian nationals, because of this peculiar status. “This has generated huge amounts of work, with many family businesses, tech company employees, and the like. Freelances that worked for international companies have begun relocating to Serbia – as there are strong levels of support for the IT sector and tech companies here,” Zivkovic explains.

Furthermore, this situation has impacted the local real estate market. “There have been many, many acquisitions and leases that took place in the past few months, and the already-booming real estate sector has only continued trending upwards,” Zivkovic stresses.

Additionally, the energy sector is seeing interesting levels of activity on account of investor interest in alternative energy sources, such as solar and wind. “This has accelerated up to the point that we need new legislation to cater for these upticks and stronger investor interest, mostly when it comes to making grid connections easier,” Zivkovic says. “Clearly, this is a trend, with mostly local companies as first-phase investors, and foreign investors stepping in afterward.” He reports that, even though there is no one single huge project in the market, “investors think that this course of investment is safe, and it is only a matter of time until such larger undertakings will occur.”

Finally, Zivkovic reports that Serbia is “soon to finalize” a free trade agreement with China. “This will impact the market for sure, seeing as how tariffs will go down, and we might see an introduction of preferred rates or cancellation of customs duties to agricultural and other exports. Levels of mutual investments are likely to go up, even with Chinese investors having been strongly present in Serbia’s infrastructure projects for a while now,” he explains.

“Either way, all business sectors are coming along nicely, and we’re even getting some previously unseen client inquiries related to cryptocurrency regulation and autonomous driving vehicles.” Whatsmore, the market appears to be adjusting to the overall global instability as well, with “many law firms introducing inflation adjustment clauses when contracting client work. The overall market outlook continues to look promising,” Zivkovic concludes.

High levels of migration from Russia and Ukraine have been causing a boom in the real estate sector in Serbia, in a period of overall legislative slowdown, according to Zivkovic Samardzic Partner Branislav Zivkovic.

Following the elections that took place this spring, no government was formed yet, Zivkovic begins. “The process is still within its legal deadlines, but longer – a technical government is still in session. So, no new laws, no new pieces of legislation, other than urgent decrees,” he reports. “Since early spring, legislative activity essentially stopped.”

However, the major topic that impacts Serbia is the war in Ukraine. “We also feel the repercussions and consequences of it,” Zivkovic says. This is something he believes is ushering in new market challenges. “Serbia is in a very delicate position, in so far as it has not yet joined with the EU sanctions against Russia, but it did condemn the war,” he explains. “We support independent Ukraine, but on the other hand – because of the sentiment among the general population, as well as strong economic ties, especially in the energy sector – no sanctions have occurred yet.”

Tens of thousands of Russian citizens now seek to emigrate to Serbia – both individuals and legal entities – as well as a smaller number of Ukrainian nationals, because of this peculiar status. “This has generated huge amounts of work, with many family businesses, tech company employees, and the like. Freelances that worked for international companies have begun relocating to Serbia – as there are strong levels of support for the IT sector and tech companies here,” Zivkovic explains.

Furthermore, this situation has impacted the local real estate market. “There have been many, many acquisitions and leases that took place in the past few months, and the already-booming real estate sector has only continued trending upwards,” Zivkovic stresses.

Additionally, the energy sector is seeing interesting levels of activity on account of investor interest in alternative energy sources, such as solar and wind. “This has accelerated up to the point that we need new legislation to cater for these upticks and stronger investor interest, mostly when it comes to making grid connections easier,” Zivkovic says. “Clearly, this is a trend, with mostly local companies as first-phase investors, and foreign investors stepping in afterward.” He reports that, even though there is no one single huge project in the market, “investors think that this course of investment is safe, and it is only a matter of time until such larger undertakings will occur.”

Finally, Zivkovic reports that Serbia is “soon to finalize” a free trade agreement with China. “This will impact the market for sure, seeing as how tariffs will go down, and we might see an introduction of preferred rates or cancellation of customs duties to agricultural and other exports. Levels of mutual investments are likely to go up, even with Chinese investors having been strongly present in Serbia’s infrastructure projects for a while now,” he explains.

“Either way, all business sectors are coming along nicely, and we’re even getting some previously unseen client inquiries related to cryptocurrency regulation and autonomous driving vehicles.” Whatsmore, the market appears to be adjusting to the overall global instability as well, with “many law firms introducing inflation adjustment clauses when contracting client work. The overall market outlook continues to look promising,” Zivkovic concludes.

The new repatriation program – Carta Serbica – has been recently introduced allowing people with Serbian roots to obtain temporary residence and possible citizenship in the land of their ancestors.

Carta Serbica program was established on the basis of amendments to the Regulation on the criteria for determining the categories of foreigners who can be granted temporary residence in the Republic of Serbia, regardless of the general grounds for granting temporary residence.

Like other European countries, Serbia faces a labor shortage which surely motivated the Serbian government to proceed with this initiative.

Under the new Carta Serbica program, foreign nationals with Serbian roots who were born abroad or have left Serbia due to certain circumstances and renounced Serbian citizenship can obtain a one-year residence permit in Serbia. Furthermore, they can apply for citizenship, meaning that they can live, work and retire in Serbia.

A simplified procedure for temporary residence can be applied to the following categories of foreign citizens:

– persons of Serbian origin born in the former Yugoslav federal republics;

– persons of Serbian origin born in the diaspora;

– persons of Serbian origin who cannot acquire Serbian citizenship by other means.

Furthermore, new incentives are also introduced, such as tax and customs facilities and the possibility of providing housing loans to non-residents in collaboration with the state-owned Postanska stedionica bank.

It is considered that many of these repatriates will bust the economy by investing, starting a new business, or by introducing advanced know-how.

Carta Serbica was modeled by the similar program earlier introduced in Poland achieving exceptional results.

By Nenad Cvjeticanin, Cvjeticanin & Partners

Cvjeticanin & Partners has advised Lenovo on the implementation of GDPR rules for its OhrabreNA educational program in Serbia.

According to Cvjeticanin & Partners, the program is aimed at capacity-building for female entrepreneurs. “The educational program OhrabreNA is designed to support women, owners of small businesses, who want to explore ways to improve their business and acquire the necessary knowledge for the digital promotion and marketing of their products or services.”

Karanovic & Partners, working with McDermott Will & Emery, has advised Hidden Harbor Capital Partners on its acquisition of Dayco.

Hidden Harbor Capital Partners is a private equity firm. Dayco is an engine product and drive systems supplier for the automotive and aftermarket industries.

Karanovic & Partners’ team included Partner Ivan Nonkovic and Senior Associate Sava Draca.

Karanovic & Partners could not provide additional information on the deal.

Recently, non-fungible tokens (“NFTs”) have become the subject of significant public attention, primarily due to the high amounts of money allocated for their purchase. For example, it is estimated that the worth of the global NFT market in 2021 was about 41 billion dollars, which is more than the value of the market of classical works of art. For the sake of comparison, that is approximately twice the amount of the budget of the Republic of Serbia for 2022. Bearing in mind the nature and manner of functioning of NFTs, the nature of things raises the question of their relationship with intellectual property law, and above all, the relationship with trademark law​.

What is Indeed NFT? 

NFT stands for “non-fungible token.” An NFT is a digital asset that can be used to represent unique, one-of-a-kind assets – usually crypto-properties. An NFT can technically contain anything digital, including drawings, animated GIFs, songs, or video game items. NFTs can also represent a wide range of property assets that exist in the real world, such as a piece of art, a song, videos, collectables, and even real estate. 

What’s the Purpose of NFTs? 

NFTs allow the purchase and sale of ownership of unique digital and physical items, as well as keeping track of who owns them using the blockchain technology. Blockchain records cannot be manipulated because they are maintained by thousands of computers worldwide.

NFTs can have only one owner at a time, and blockchain technology secures their ownership information. This prevents easy copying of digital assets, and also ensures the authenticity of unique properties.

Increased Interest in Trademark Applications Related to NFTs

Trademark is a right that protects a sign which is used in trade for the distinguishing of goods and services of one natural or legal person from the goods or services of another natural or legal person.

Trademarks prevent consumer confusion by ensuring that competitors cannot use the same or similar name or symbol. This exclusivity is particularly valuable when it comes to NFTs because their value is based on authenticity and trust. Bearing this in mind, not surprisingly, there is great interest in applying for trademarks in connection with products related to NFTs and NFTs individually.

For reference, there was a total of 0 trademark applications for NFTs in the US in 2020. However, this number has exponentially grown to 20 in 2021 and 2,023 in the first month of 2022. There is an obvious explanation for this rapid growth which can be found in the fact that it was not until the second half of 2021 that NFT-related items were added to the USPTO list of accepted goods and services. Even though there are few different views on the matter of categorization of NFTs, USPTO took a stand that NFT-related marks should be classified into three different classes:

• Class 9: Downloadable music files authenticated by non-fungible tokens (NFTs)
• Class 35: Provision of an online marketplace for buyers and sellers of downloadable digital art images authenticated by non-fungible tokens (NFTs)
• Class 42: Creation of online retail stores for others in the nature of web-based service that allows users to create hosted crypto collectible and blockchain-based non-fungible token stores.

The Uncertain Outcome of Ongoing Cases Regarding NFTs and Trademark Infringement

One of the trademark infringement ongoing cases before the District Court in New York may become the basis for further action in NFT-related cases. In early 2022, one of the largest sports equipment companies filed a lawsuit in the United States against a platform used to resell and buy sneakers, claiming that their trademarks were infringed. Namely, as stated in the lawsuit, the trademarks are used without approval and with the provision of NFT mining services (the service of placing NFT on the blockchain network) and to be further sold to customers who are misled that these NFTs are related to the sports producer equipment. The lawsuit was further expanded with claims related to counterfeiting and false advertising.

This whole case indicates the existence of uncertainty regarding the connection between NFT and physical products, i.e. the metaverse and the real world. The decision in this case will be very interesting and of great importance for further similar disputes in the future, which number will certainly be increasing. 

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 Milan Samardzic, Partner, and Nikola Dragic, Junior Associate, Samardzic, Oreski & Grbovic

Former Partner and Co-Head of the Real Estate and Construction practice Ksenija Golubovic Filipovic has left Zivkovic Samardzic, as of August 1, 2022, to establish her own practice. She will continue to cooperate with the firm as a Consultant. Partner Uros Djordjevic will continue to lead the firm’s Real Estate and Construction practice.

Specializing in corporate and M&A and real estate, Golubovic Filipovic has been with Zivkovic Samardzic since 2005. She was promoted to Associate Partner in 2010, and to a Partner in 2013. She graduated from the University of Belgrade Faculty of Law in 2004.

“Ksenija and Zivkovic Samardzic are bound not only by almost two decades of successful collaboration but also by a true and meaningful friendship,” Zivkovic Samardzic Managing Partner Branislav Zivkovic commented. “We are grateful for her immense contribution to the firm’s growth – Zivkovic Samardzic would not be what it is without her hard work, dedication, and leadership. Although sad that she is leaving, we are truly happy that she will continue to cooperate with the firm as a Consultant.”

“The last 18 years at Zivkovic Samardzic have defined me both as a person and as a lawyer,” Golubovic Filipovic added. “I am grateful for the support the firm provided me with from day one, and for the opportunity to grow and improve. The friendships and trust created shall not erode, they are here to stay. I am fully confident that the Zivkovic Samardzic Real Estate and Construction practice, a strong team we have created together, shall continue to thrive under Uros’s leadership. I am happy that we will continue to cooperate in the future.”

NKO Partners has advised CTP on yet another acquisition of land in Novi Sad, this time from the City of Novi Sad itself.

“Around 20 hectares of land were acquired from the City of Novi Sad and are intended for industrial development,” NKO informed.

This marks NKO advising on CTP’s fourth land acquisition in Novi Sad in a little over a year. Their previous deals included an acquisition in July 2021 (as reported by CEE Legal Matters on July 7, 2021), one last December (as reported on December 20, 2021), and another one, a month ago (as reported on July 7, 2022).

The NKO team was led by Senior Associate Luka Aleksic.

Zivkovic Samardzic has advised Serbia’s commercial broadcasters Prva, B92, and Play Radio on obtaining national broadcasting licenses from Serbia’s regulatory authority for electronic media.

“National broadcast licenses are issued for a period of eight years,” the firm informed. “At its meeting held on July 29, 2022, the Council of the Regulatory Authority for Electronic Media made a decision on issuing national broadcasting licenses for the provision of media services for television broadcasting via digital terrestrial transmission for the territory of the Republic of Serbia. Prva TV and B92 are among the four TV stations that have been awarded the license. At the same meeting, the Council issued licenses for the provision of radio media services via analog terrestrial transmission for the territory of the Republic of Serbia as well, awarding Play Radio among four other radio stations.”

Launched in 2006, Prva TV is a Serbian commercial television network with national coverage. Established in 1989, B92 operates a national radio and television network and websites. Play Radio is a Belgrade radio station with a national frequency.

Zivkovic Samardzic has previously advised B92 on its transformation from a joint-stock company into a limited liability company (as reported by CEE Legal Matters on March 2, 2020).

The Zivkovic Samardzic team included Partners Slobodan Kremenjak and Igor Zivkovski.

Despite being already recognized as one of the leading European countries regarding foreign investments, the Republic of Serbia continues its active policy of attracting foreign investors. The direct consequence of the substantial increasement in investments in a plethora of different fields is the fact that there are even more and more foreign natural and legal persons willing to invest in producing audiovisual works on the territory of the Republic of Serbia. The Republic of Serbia recognized this trend and took measures to improve the environment for investing in audiovisual works within the so-called creative industries (e.g. films, short films, TV shows, documentaries, animated films, etc. ‘’Industry’’).

The first step forward was made when Serbian Government adopted Regulation on incentives to investors to produce audiovisual works in the Republic of Serbia (‘’Audiovisual Regulation’’) in 2015 providing the whole legal background for granting and allocating the incentives for producers of audiovisual works. This legal framework included required conditions, procedures, entities/persons entitled to request incentives, etc. Audiovisual Regulation is subject to amendments annually and the one adopted in 2022 is currently in force – Audiovisual Regulation “Official Gazette of RS”, no. 132/2021 and 57/2022, and it prescribes conditions for realizing right to be granted with incentives before commission compiled of experts appointed by the Government of Republic of Serbia (‘’Commission’’). Required conditions are differentiated based upon the category of respective Industry’s part. General rule is that the incentives are granted in amount of 25% of qualified costs accepted on auditors’ report and if investment is above EUR 5.000.000,00, the amount of incentives for granting is 30% of qualified costs.

Specific conditions are set within each category, and for feature film and TV film to be granted with incentives, qualified costs under the budget need to be above EUR 300.000,00, and, as an example, for the TV Show amount of EUR 150,000.00 of qualified costs per episode needs to be surpassed within the budget. Other rules are provided under Audiovisual Regulation, and in particular, such as that production needs to be carried out under the schedule defined (production calendar) and if any deviations arise, the Commission needs to be notified in 7 following days. Any request not meeting the requirements of public funds shall be deemed as granted in following budgetary year whereas the Republic of Serbia serves as a guarantor for incentives’ funding. Audiovisual Regulation provides detailed procedure which is commenced with a request for granting incentives submitted before the Commission through Centar Film Serbia on ground of previous public announcement (public call) carried out by the Ministry of Culture and Information (‘’Ministry’’). Upon the request, the Commission is issuing decision on granting incentives, proposing the conclusion of the agreement to Ministry whereafter the agreement between the submitter and Ministry is concluded. Article 13 of Audiovisual Regulation regulates the agreement and by Paragraph 2 of said Article is prescribed that the deadlines, rights and obligations are regulated in more detail under the agreement. Upon the conclusion of the agreement the submitter requests payment of granted incentives and Commission is issuing decision if conditions are met for payment and thereafter the incentive funds are paid to the special-purpose account held at Treasury Administration on grounds of Ministry’s decision. The submitter who holds the account may transfer the received incentive funds to investor in following 10 business days.

When addressing the request for granting the incentives, submitter must take into account provisions set under the Rulebook on types and content of explanation of qualified and non-qualified costs and form of request for allocation and payment of incentive funds to the investor to produce audiovisual works in the republic of Serbia (‘’Audiovisual Rulebook’’). In order to determine whether the submitter is authorized to request incentives, one must assess the provisions regarding qualified costs. Qualified costs, pursuant to Audiovisual Rulebook, are costs accepted as eligible costs for production of the audiovisual work, incurred and paid in republic of Serbia, formed on basis of authorized auditors’ statement. When compiling the proper budget for production of the audiovisual work in Serbia, it is required to take into consideration the very purpose and meaning of qualified costs. Audiovisual Rulebook stipulates that following costs would be considered as qualified:

• costs related to the production of audiovisual works incurred and paid to legal or natural persons in the territory of the Republic of Serbia, which are related to the purchased goods and services, use of locations, payment of fees to members of the author’s, acting and technical team who are citizens of the Republic of Serbia or foreigners who have a stay of at least one year in the territory of the Republic of Serbia, in accordance with the applicable regulation;
• costs incurred in connection with the use of goods, i.e. renting movable and immovable property may be recognized only if the goods (or movable and immovable property), owned by legal or natural personsfrom the territory of the Republic of Serbia.

Furthermore, Article 3 of Audiovisual Rulebook stipulates that the qualified costs are, in particular: i) fees and salaries for team (and accompanied tax); ii) costs related to renting apartments or hotels for foreign team members during their stay in the Republic of Serbia (and accompanied tax); iii) per diems or allowances for expenses for food, accommodation and work and stay in the field or unforeseen expenses paid to local team members, as well as foreigners – team members during their work in the Republic of Serbia, up to a maximum of 100 euros per day, provided that their per diems and allowances were paid in the Republic of Serbia with all related taxes; iv) costs of purchasing copyrights from residents or legal entities from the Republic of Serbia, provided that the request confirming the purchase of rights is attached to the request; v) costs of procurement of goods (Audiovisual Rulebook regulates in details); vi) all insurance premiums if provided by a Serbian legal entity-insurer; general operating costs incurred during the realization of the audiovisual work in the Republic of Serbia, in accordance with the production calendar and recording plan; vii) business expenses of a Serbian producer or co-producer, if invoiced for production for specific purposes, provided that they are in the function of audiovisual work production, and at market prices.

On the other hand, Audiovisual Rulebook under the Article 6 defines ‘’partially qualified costs’’ and provides in detail what costs shall not be considered as qualified (such as interest and commission financing costs; fees of foreign producers; deferred payments, profit sharing, remaining payments; etc).

This means that when drafting the budget prior to commencing production of the audiovisual work, the producer(s) need to assess both legally and economically the issue of qualified costs, since the very detailed definitions provided under the Audiovisual Regulation and Audiovisual Rulebook shall determine the amount of incentives which should be granted, or, whether the incentives will be granted at all. Therefore, it is of great importance that producers enter into projects well prepared and with duly professional, both legal and accounting support of engaged persons in order to realize their rights and accomplish goals in a best way possible.

It was certainly a clear intention of the Serbian legislation to provide more suitable environment for producers of audiovisual work especially having in mind the provisions set by Audiovisual Regulation and Rulebook, but also with the provisions of the Law on Investments which created starting point when it comes to state-aid and incentives. Moreover, the affection of the Serbian law towards the foreign investments and audiovisual production may come at sight when assessing the provisions of Law on employment of foreign citizens (‘’LEFC’’). In particular, LEFC regulate the conditions and procedures for the employment of foreign citizens in the Republic of Serbia and other issues of concern to the employment of foreign citizens thereto. However, under the Article 3 paragraph 2 item 9) of LEFC is stipulated that the conditions for the employment of a foreign citizen established by this Law shall not apply to the employment of a foreign citizen who is a member of a crew of authors or actors that are producing an audiovisual work in the territory of the republic of Serbia, in compliance with law. Therefore, these provisions serve the purpose of allowing far better and efficient surroundings for foreign producers to come to Serbia and produce audiovisual works with all accompanied stimulation and improvements with the state as a guarantor. Provisions as these very much facilitate otherwise hard and comprehensive process of production which, apart from existing stages in Industry (such as concept and idea generation, budgeting, idea development, screenwriting & scriptwriting, hiring, recruiting cast and crew, scouting locations & production design etc.) includes many different aspects of creative, management, accounting and legal issues which needs to be dealt with when pursuing the creative goals within the Industry.

By Aleksandar Popovic, Partner, and Milos Maksimovic, Senior Associate, JPM Jankovic Popovic Mitic