Category: Serbia

With the global pandemic, high inflation rates, and the war in Ukraine being the main drivers of work in Serbia, PR Legal’s Corporate and M&A practice has been quite busy, according to PR Legal Partner Milan Petrovic.

“The hottest practice for our office has been Corporate and M&A, in particular, if we look at the FMCG and IT sectors” Petrovic begins. “We’ve been heavily engaged in the last 12 months with working for Coca-Cola on its acquisition of a mineral water plant in central-eastern Serbia, in Neresnica.” According to him, this transaction was very important for the Serbian market as it impacted the FMCG water industry sector significantly, bringing benefits for both consumers and investors. According to Petrovic, the Serbian economy in general and the local community, in particular, are also positively impacted, with the PR Legal Partner reporting dozens of new employees at the Rosa Homolje plant and more than EUR 5 million invested into the production facility.

Furthermore, Petrovic indicates that “corporate and M&A work has been heavily related to the fact that a lot of Ukrainian and Russian businesses are relocating to Serbia, especially in the IT sector, which has impacted real estate as well. I expect this trend not only to hold but to shape the work of the practice in the following 12 months,” he says, also underscoring the effects of the global inflation trend as a major driver of work, due to the ongoing tendency of deposit withdrawals and relocation/investment of funds into different assets.

Another key driver of work, according to Petrovic, is the very positioning of Serbia. “There are commendable economic projections for investments into the Serbian market, with the main rationale being that the country is strategically well-positioned, both within the region as well as in terms of its auspicious bilateral agreements with both Russia and the EU,” he reports. “With the potential to join the EU, Serbia also benefits from legislative harmonization processes, which greatly appease potential investors.”

Looking ahead, Petrovic expects the practice to continue operating favorably. “Serbia has a qualified labor force, especially in the IT sector, that is comparatively cheaper than in most EU countries or the US. Many clients are attracted by this, which leads us to have favorable projections,” he explains. Additionally, he stresses that both the COVID-19 pandemic effects and the war in Ukraine are likely to continue dictating market initiatives. “The consequences of these global events and the ongoing inflation buzz is that people are moving away from banks and are trying to find assets in which to invest their money, especially with asset prices skyrocketing lately – in real estate in particular driven by the rising construction costs. I believe that investors will be more active, thus leading to more legal work,” Petrovic concludes.

PR Legal has advised Coca-Cola on its acquisition of the plant for bottling the Rosa Homolje natural mineral carbonated water in Neresnica, Serbia.

According to PR Legal, “Rosa Homolje, as a new member of Rosa family, completed the 24/7 portfolio of the Coca-Cola system as the first locally-bottled carbonated water. In addition to the recognizable natural spring still water Rosa Vlasina, Rosa Homolje will certainly refresh the market of bottled water in Serbia, with the expected expansion into foreign markets.”

PR Legal’s team included Managing Partners Ivana Ruzicic and Milan Petrovic and Senior Associates Sara Necic and Lara Maksimovic.

Pursuant to Article 7, paragraph 1, item 12) of the Law on Standardization (Official Gazette of RS no. 36/2009 and 46/2015) (“the Law”), the Institute for Standardization of Serbia (“the Institute”) published on April 12, 2022, the Rules for obtaining approval for the use of the National Mark of Conformity with Serbian standards (“the Rules”).

According to the notice published on the same day on the Institute’s website, the national mark of conformity with Serbian standards (“the National Mark of Conformity”) is awarded according to the rules and procedures established on the basis of the Law, founding act and the Statute of the Institute, whereas its application represents a message from manufacturers and service providers about a high degree of reliability, quality and care for consumers, as well as market competitiveness, thus the use of the respective mark will affect the acquisition and increase of consumer confidence and the recognition of manufacturers/service providers in the market.

What is the National Mark of Conformity?

The National Mark of Conformity is a mark which, under the rules of the national standardization body of the Republic of Serbia (the Institute), certifies the conformity of products, processes, and services with Serbian standard.

Subject and scope of application of the Rules

The Rules regulate the appearance of the National Mark of Conformity, conditions and procedure for obtaining the approval for its use, supervision over the use of the National Mark of Conformity, suspension of approval for its use before the expiry of the approved period, as well as a waiver from the use of the National Mark of Conformity.

Appearance of the National Mark of Conformity

The subject mark comprises of two styled intertwined squares that connect to form a unity (the aforesaid graphic design is enclosed in Appendix 2 to the Rules).

Conditions for obtaining approval for the use of the National Mark of Conformity

The approval for the use of the National Mark of Conformity is issued for the product, process or service for which:

1. procedure of conformity assessment for placing and delivery in the market of the Republic of Serbia, under the Serbian standard, does not require the engagement of the third independent party;
2. conformity with Serbian standard, for the purpose of placing and delivery in the market of the Republic of Serbia, has been implemented and confirmed by the third independent party.

The right to obtain approval for the use of the National Mark of Conformity may be exercised by a manufacturer, representative or importer placing or delivering a product, process or service in the market of the Republic of Serbia.

Procedure for obtaining approval for the use of the National Mark of Conformity

This procedure is instituted by submitting of the request to the Institute, in electronic or written form, on the prescribed form. Documentation filed with the request is considered business secret and it is only accessible to individuals acting upon the request under the Rules.

Upon receipt of the request, the person responsible for the National Mark of Conformity examines whether the request was properly submitted and whether all prescribed documents have been filed. If the request is complete and product, process or service that is subject to the request meets the criteria for approval to use the National Mark of Conformity, the Commission for the use of the National Mark of Conformity (“the Commission”) shall be formed as a temporary working body that decides on each individual request.

The Commission subsequently prepares the Verification Program, which refers to a specific product, process or service or a group of products, processes or services and implements the verification of proofs of conformity.

The decision on approval/non-approval of the use of the National Mark of Conformity is passed by the Director of the Institute within 45 days upon filing of the request, pursuant to the Commission’s report on conducted verification. The Director will approve the use if the final assessment of the report proves that certain product, process or service is in conformity with the requests established by Serbian standard(s).

Having obtained positive decision approving the use of the National Mark of Conformity, the applicant and the Institute conclude the agreement on approval of the use of the National Mark of Conformity, for the period of three years. By concluding of this agreement, the client becomes the user of the National Mark of Conformity and in order to maintain approval for its use it shall be obliged to, once a year, submit signed and stamped statement in the prescribed form, whereby it warrants and acknowledges under material and moral responsibility to still meet the conditions for using of the National Mark of Conformity. The Institute also checks (at least) once a year the use of the National Mark of Conformity.

The use of the National Mark of Conformity ceases by expiration of three-year period, by its suspension by the Institute or waiver by the user.

Distinguishing between the National Mark of Conformity and Serbian conformity mark

Under the Law on Technical Requirements for Products and Conformity Assessment (Official Gazette of RS no. 49/2021), Serbian conformity mark is a mark that proves that the product placed in the market or put into use in the Republic of Serbia is in conformity with the requirements of Serbian technical regulation, given that such regulation prescribes its placing.

Therefore, Serbian conformity mark is used to verify conformity with domestic technical regulation, while the use of the National mark is voluntary, thus it cannot cover the products, processes and services already defined by legal regulations.

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, PR Legal

Serbian Personal Income Tax Law and Serbian Corporate Income Tax Law, as well as the Serbian Law on Mandatory Social Insurance Contributions, prescribe tax and social insurance contributions related reliefs for companies that conduct activities of research and development in the Republic of Serbia.

These tax and contributions related reliefs, pursuant to the above laws, encompass the following reliefs: (i) approval of research and development related costs in double amount as expenditure in tax balance, in accordance with the Corporate Income Tax Law; (ii) relief of payment of 70% of calculated and suspended amounts for personal income tax for salaries of employees, directly engaged on tasks of research and development which is to be paid by the company, for the portion of salary that corresponds to the amount of time spent on these tasks compared to full working hours, in accordance with the Personal Income Tax Law; and, (iii) relief of payment of 100% of contributions for mandatory pension and disability insurance, borne both by the company and its employee, payable for the same portion of the salary as in previous point, in accordance with the Law on Mandatory Social Insurance Contributions.

All of the above laws prescribe same basic conditions for the relief prescribed under each particular law, which come down to the following:

• The company needs to conduct research and development activities on the territory of the Republic of Serbia;
• The reliefs related to personal income taxes and contributions apply only to employees directly engaged in the research and development tasks (as specified under the relevant laws), and the relief related to costs applies only to the costs directly related to research and development activities in the Republic of Serbia (as specified under the relevant law);
• The company applying for reliefs related to personal income taxes and contributions needs to conduct the research and development related activities for its own account, and it needs to remain the owner of non-material property that may be created through research and development;
• The reliefs do not apply to research activities conducted in order to find and develop oil, gas or mineral reserves in extractive industries; and
• In order to acquire relief related to personal income taxes and contributions in relation to specific employee, the company cannot use any other form of incentive based on the existence of employment relationship for such employee, safe for reliefs from point (i) to (iii) above.

Since some of the above conditions and the actual manner of exercising the right to relief required further specification, the relevant provisions of the above laws were left to be further specified through bylaws.

The first rulebook regulating the subject reliefs, particularly the one related to recognition of costs in double amount in tax balance, prescribed under the Corporate Income Tax Law – the Rulebook on the Conditions and Manner of Exercising of Right to Recognition of Costs Directly Connected to Research and Development in Double Amount in Tax Balance , was rendered by the Ministry of Finance in the year 2019.

Now, the Ministry of Finance rendered a second rulebook – the Rulebook on the Conditions and Manner of Exercising the Right to Tax Relief based on the Salaries of Employees Engaged in Research and Development , that came into force on 16 April 2022.

This latest rulebook aims to further specify the conditions for relief prescribed by the Personal Income Tax Law – the relief that consists of exclusion of the companies (and other legal persons) which employ persons on tasks of research and development from obligation of payment of 70% of calculated and suspended amounts for personal income tax for relevant portion of salaries (that correspond to the amount of time spent on the tasks of research and development) of such employees.

The most relevant specifications of conditions initially prescribed by the Personal Income Tax Law, and further conditions, i.e. requirements for exercising of the right to relief – deduction of 70% of calculated and suspended amounts for personal income tax are presented below:

Requirement – the Personal Income Tax Law / Specification of Requirement – the Rulebook

1.What is considered as the project conducted on the territory of the Republic of Serbia?

– Project in which minimum 90% of all employees engaged on research and development tasks conduct their project related activities on the territory of the Republic of Serbia, with minimal exemptions to this rule.

2. What is considered as direct engagement of an employee on research and development tasks, i.e. who is considered as an employee who is engaged in conducting of a project in a manner that involves his/her direct engagement in identification and finding solutions to procedural or technical problems or tasks connected to the particular project?

– The rulebook provides two answers to this question:

(i) Positive approach – who is considered as an employee that meets this condition – e.g. employee engaged on tasks of development of new or improvement of existing production system/products, computer circuits, solutions for reducing pollution of soil and environment, invention of formulas for new chemical, development of software solutions, etc.

(ii) Negative approach – who is not considered as an employee that meets this condition – e.g. an employee engaged in: (i) tasks connected with direct or indirect supervision of the project, such as attendance of meetings regarding the project, project planning, assessment of suggested solutions in terms of designs and processes, etc; (ii) tasks connected to project support, in terms of activities that directly support employees engaged directly in conducting the project or engaged in project supervision.

3. What is considered as the time spent on research and development tasks?

– The rulebook takes a negative approach on this matter stating what is not considered as the time spent on research and development tasks as time spent on vacation, or any other type of absence from work pursuant to the labor regulations (sick leave, military practice, etc.)

4. Who is considered as an employee for the purposes of above definition?

– Employees are only persons employed with the company – legal person, i.e. persons that executed employment agreement (for definite/indefinite period of time; as part time/full time working hours)

5. What is considered as the salary that is taken into account for the purpose of tax relief?

This is an employees’ salary pursuant to the labor laws, whereby the taxable part of salary from Art. 18 of the Personal Income Tax are not included.

In addition to specifying the conditions that were initially prescribed by the Personal Income Tax Law, the Rulebook on the Conditions and Manner of Exercising the Right to Tax Relief based on the Salaries of Employees Engaged in Research and Development, introduces additional obligations of companies, that are of rather technical nature, and are necessary to properly monitor due fulfillment of conditions for tax relief.

Additional Requirements/Limitations Prescribed Under the Rulebook

1. What legal entities – employers are not considered to be eligible for this relief?

– In addition to the legal persons that do not conduct research and development activities for their own account and/or do not remain the owners of the non-material property created thereof, the rulebook explicitly indicates foreign legal entities – i.e. foreign companies, or Serbian branch offices or representative offices of foreign companies as non-eligible for this relief.

2. Obligation of keeping records on employees

The rulebook introduces the obligation of companies to keep records on each employee engaged on research and development tasks, for which the tax relief is used. These records contain relevant information for determining whether the conditions for tax relief are met in each particular case, whereby the mandatory data of these records are enumerated in the rulebook.

3. Obligation of keeping project related records

The rulebook introduces the obligation of companies to keep records for each particular research and development project in regard to which the tax relief is used. The mandatory data of these records are enumerated in the rulebook.

*The Personal Income Tax Law (“Official Gazette of the Republic of Serbia”, no. 24/2001, 80/2002, 80/2002 – other law, 135/2004, 62/2006, 65/2006 – correction, 31/2009, 44/2009, 18/2010, 50/2011, 91/2011 – Constitutional Court Decision, 7/2012 – adjusted RSD amounts, 93/2012, 114/2012 – Constitutional Court Decision, 8/2013 – adjusted RSD amounts, 47/2013, 48/2013 – correction, 108/2013, 6/2014 – adjusted RSD amounts, 57/2014, 68/2014 – other law, 5/2015 – adjusted RSD amounts, 112/2015, 5/2016 – adjusted RSD amounts, 7/2017 – adjusted RSD amounts, 113/2017, 7/2018 – adjusted RSD amounts, 95/2018, 4/2019 – adjusted RSD amounts, 86/2019, 5/2020 – adjusted RSD amounts, 153/2020, 156/2020 – adjusted RSD amounts, 6/2021 – adjusted RSD amounts, 44/2021, 118/2021, 132/2021 – adjusted RSD amounts and 10/2022 – adjusted RSD amounts);

*The Corporate Income Tax Law (“Official Gazette of the Republic of Serbia”, no. 25/2001, 80/2002, 80/2002 – other law, 43/2003, 84/2004, 18/2010, 101/2011, 119/2012, 47/2013, 108/2013, 68/2014 – other law, 142/2014, 91/2015 – authentic interpretation, 112/2015, 113/2017, 95/2018, 86/2019, 153/2020 and 118/2021)

*The Law on Mandatory Social Insurance Contributions (“Official Gazette of the Republic of Serbia”, no. 84/2004, 61/2005, 62/2006, 5/2009, 52/2011, 101/2011, 7/2012 – adjusted RSD amounts, 8/2013 – adjusted RSD amounts, 47/2013, 108/2013, 6/2014 – adjusted RSD amounts, 57/2014, 68/2014 – other law, 5/2015 – adjusted RSD amounts, 112/2015, 5/2016 – adjusted RSD amounts, 7/2017 – adjusted RSD amounts, 113/2017, 7/2018 – adjusted RSD amounts, 95/2018, 4/2019 – adjusted RSD amounts, 86/2019, 5/2020 – adjusted RSD amounts, 153/2020, 6/2021 – adjusted RSD amounts, 44/2021, 118/2021 and 10/2022 – adjusted RSD amounts)

By Nikola Djordjevic, Partner, and Marija Vukcevic, Senior Associate, JPM Jankovic Popovic Mitic

More countries, that have, until recently, been considered the pandemic’s epicenter, are easing COVID restrictions. Serbia takes the same direction and cancels majority of COVID-19 related restrictive measures.

Countries worldwide have taken steps to end their COVID-19 restrictions, resulting into “Now is the time to take back our everyday life”. Travelers arriving at the borders no longer will be required to take a coronavirus test before entry, people can sit elbow-to-elbow again at events with fixed seating, and sports events can take place as they did in pre-pandemic times.

Taking similar steps in loosening restrictions responsibly, the Government of the Republic of Serbia has passed the Decree on amendments of the Decree on measures for prevention and suppression of the infectious disease COVID-19 (“Official Gazette of the Republic of Serbia”, nos. 33/2022, 48/2022 and 53/2022), which entered into force on 2 May 2022.

Additionally, on the same day, the Ministry of Health of the Republic of Serbia issued the Instructions on termination of application of the Instructions on the manner of application of restrictions on entry into the Republic of Serbia, regarding persons coming from countries with special risk of infectious disease COVID-19 and, regarding persons coming from countries affected by the epidemic of infectious disease COVID-19.

By these bylaws and instructions, the Republic of Serbia abolished the majority of COVID-19-related restrictive measures for entering the Republic of Serbia.

The Government preserved the measure that, when there is a justified suspicion that the infectious disease COVID-19 may occur, citizens of the Republic of Serbia and foreign citizens coming from countries with special risk, may be ordered to have documents confirming that they are not positive for SARS-CoV-2. Also, they may be put under the measure of home quarantine for up to 14 days, with the obligation to test for the presence of the SARS-CoV-2 virus in the laboratory of the health institution of the Republic of Serbia.

Until recently, foreign citizens had to possess a negative Real-Time PCR test or some other prescribed document related to the protection against the infectious disease COVID-19 to enter the Republic of Serbia, while a mandatory quarantine was prescribed for domestic citizens who do not possess the relevant documents.

By Marko Ilic, Senior Associate, JPM Jankovic Popovic Mitic

Several amendments to the by-laws passed to the Law on Electronic Invoicing (“the Law”) are published in the Official Gazette of the Republic of Serbia no. 46 dated 8 April 2022, i.e.:

• Regulation on Conditions and Manner of Using the Invoice Management System;
• Regulation on Conditions and Manner of Keeping and Making Available Electronic Invoices and Manner of Ensuring the Authenticity and Integrity of the Contents of Paper Form Invoices;
• Rulebook on Elements of Electronic Invoice, Form and Manner of Delivery of Accompanying and Other Documentation through the System of Electronic Invoices, Manner and Procedure of Electronic Recording of Value Added Tax Calculation in the System of Electronic Invoices and Manner of Application of Electronic Invoicing Standards; and
• Rulebook on Manner and Procedure of Registration for Access to the Electronic Invoice System, Manner of Access and Use of the Electronic Invoice System and Manner of Using the Data Available in the Electronic Invoice System.

Amendments to the Regulation on Conditions and Manner of Using the Invoice Management System

Pursuant to the amendment introduced in Article 6, paragraph 2. of this Regulation, a public sector entity that has several levels of consent and does not have its own system or part of an invoice management system, may receive electronic invoices through the invoice management system prior to 1 May 2022, and at the earliest from 11 April 2022.

Amendments to the Regulation on Conditions and Manner of Keeping and Making Available Electronic Invoices and Manner of Ensuring the Authenticity and Integrity of the Contents of Paper Form Invoices

A similar change was made in the second above-mentioned Regulation, which in its Article 6, paragraph 2. now prescribes that public sector entities and private sector entities from Article 2 of the Law (value added tax payer, except public sector entities), as well as voluntary users of the electronic invoice system referred to in Article 2 of the Law (taxpayer of the self-employment tax and taxpayer of the corporate income tax, except for public and private sector entities that have applied for the use of electronic invoice system in accordance with the Law and to which provisions of the Law applicable to private sector entities are applied accordingly) may use the system of electronic invoices in accordance with the Law before 1 May 2022, and no earlier than 11 April 2022.

Amendments to the Rulebook on Elements of Electronic Invoice, Form and Manner of Delivery of Accompanying and Other Documentation through the System of Electronic Invoices, Manner and Procedure of Electronic Recording of Value Added Tax Calculation in the System of Electronic Invoices and Manner of Application of Electronic Invoicing Standards

As regards the amendments to this Rulebook, the following novelties have been introduced thereto:

• Article 2a has been added, according to which the electronic invoice system processes the electronic invoice which is final, advance, document on fee increase or document on fee reduction, whereby the final invoice is issued on the basis of performed turnover of goods and services, and advance invoice is issued based on received advance payment for future supply of goods and services;
• Article 5 has been added to stipulate that the issuer in the electronic invoice system cancels an electronic invoice that should not have been issued or was issued incorrectly; and
• Article 8a has been added, according to which the calculation of value added tax from Article 4, paragraph 2. of the Law is corrected by the taxpayer in the electronic invoice system in case the VAT calculation is incorrectly recorded, while the taxpayer will cancel the respective calculation in the electronic invoice system in case it should not have been recorded.

Amendments to the Rulebook on Manner and Procedure of Registration for Access to the Electronic Invoice System, Manner of Access and Use of the Electronic Invoice System and Manner of Using the Data Available in the Electronic Invoice System

Pursuant to the amendments to the subject Rulebook, made by adding paragraphs 4. and 5. to Article 11 thereof, public sector entities and private sector entities, as well as voluntary users of the electronic invoice system (as defined by the Law), may use the respective system in accordance with the Law before 1 May 2022, and no earlier than 11 April 2022, whereby the use of data from the electronic invoice system referred to in Article 10 of this Rulebook will be enabled before 1 May 2022, and no earlier than 11 April 2022.

All the aforesaid changes became effective on the day following their publication, i.e., on 9 April 2022.

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 Andrea Arsic, Associate, PR Legal

With the war in Ukraine affecting a number of business sectors, Serbia still manages to have a very vibrant market with a number of important projects being developed primarily in the infrastructure and energy sectors, according to Karanovic & Partners Managing Partner Darko Jovanovic.

“With the escalation of the war in Ukraine, the country finds itself in a somewhat challenging position,” Jovanovic begins. Serbia has traditionally tried to maintain a position between the east and the west — something which will be very demanding to maintain. “It is difficult to predict exactly what the effects of the war will be for the Serbian market, as is for any other market in Europe,” Jovanovic says.  “We have also seen a round of presidential and general elections this April,” Jovanovic continues. “The outcomes were anticipated and not much changed business-wise.” The new government is expected to be formed by the fall of 2022, Jovanovic reports. 

Still, on the other hand, the business landscape in Serbia appears to be thriving, Jovanovic reports. “There are quite a few renewables and green energy projects in the works or in the pipeline – primarily driven by wind and solar. But also hydropower, as Jovanovic reports that a massive pumped-storage hydropower plant is planned for construction on the Danube with “huge capacities of up to 2.4 gigawatts.”

Additionally, Jovanovic reports that there are “a lot of new highways and roads being built and contracted – these are very important elements for better connectivity and the overall economy. Especially so, given the international aspect of some of these projects, like the Belgrade-Sarajevo highway or the Belgrade-Budapest fast railway.” Jovanovic also expects there to be “activity on the river transportation” which could result in concessions for river ports, and also mentions public utility infrastructure development (waste treatment and wastewater treatment facilities).

Furthermore, Jovanovic reports that Stellantis announced the development of an electric car production facility in Serbia. “This is a major green tech move for the country. The proposed facility is slotted to start producing the new model in 2024,” Jovanovic says, indicating that this could have a positive ripple effect on the Serbian economy.

Finally, Jovanovic reports on an active IT sector. “As a result of the situation in Ukraine, we are seeing interest in business relocation – from Russia and Belarus – towards Serbia, primarily in the IT sector. The local IT community can absorb this influx, with the market experiencing more and more VC fund attention,” he indicates. “The IT sector, in general, is very vibrant and innovative as we see increased activity in certain specific areas, such as mobile gaming, blockchain-based software developments, and web3 projects” he concludes.

Energy has been Jankovic Popovic Mitic’s busiest practice, according to Senior Partner Jelena Gazivoda, mainly driven by Serbia’s long-standing aspiration to achieve energy stability and security of supply and bolstered by recent legislative amendments and the expected energy crisis caused by the war in Ukraine.

“At the moment, when it comes to the stability of the energy sector and security of supply, Serbia is completely dependent on one supplier, Russia,” Gazivoda begins. Still, work is being done to change that, with the firm providing regulatory, commercial, and construction advice on a number of “big energy projects that have been implemented since 2018,” she says, highlighting “one of the biggest energy projects being implemented in Serbia, related to the construction of the Serbian section of Turkish Stream, ensuring Serbia’s interconnection with the adjoining natural gas transmission system operators from Bulgaria and Hungary.”

“In addition to the natural gas projects, there is substantial interest from clients and operators with regard to solar and wind powerplant-related projects,” Gazivoda notes. According to her, some of these projects were launched even earlier than 2017-2018 but were later put on hold, due to very unfavorable legislation. “However, last year’s amendments of the Energy Law, as well as the adoption of new legislation governing the utilization of renewable resources, enhanced the implementation of green energy projects, which changed the scene a lot,” she says.

The updated legislative framework, according to Gazivoda, contributed to accelerated activity in the energy sector. “Serbia has accepted to align with the EU green agenda, through a set of multilateral agreements, all aimed to switch to green energy and decrease the consumption of coal, foster decarbonization and the use of renewable or less carbon-intensive fuels,” she says. “To support the overall process, Serbia has been improving the legislative framework to follow the best practices adopted by the EU. We have implemented a number of different initiatives and obligations deriving from multinational treaties.”

Gazivoda says that the overall developments related to the war in Ukraine also had an impact on Serbian firms’ activities since they significantly affected the delivery of energy, both in terms of boosting prices and a significant extension of deadlines in supply. “Our Energy practice has been very busy for a long time, but the past few months accelerated the activities in that field, both in terms of finalization of previously commenced projects and thinking about the projects on alternative sources of energy, mainly those related to renewable resources,” she says.

As for the future, Gazivoda notes that “it is difficult to predict, as the situation is quite complicated considering the context in the last two months. The energy sector has been directly affected, as a result of increasing energy prices, which have been mirrored in every aspect of our lives. The implementation of some energy projects has been paused. For now, all we know is that these projects are delayed, they are not yet canceled.”

Finally, one of the interesting developments in the energy sector, according to Gazivoda, could be nuclear energy, still considered only an idea. “While there are nuclear plants in the region, there is hesitancy in Serbia to invest in nuclear energy. However, as the country is becoming oriented toward energy independence, we expect developments in this sector, as well, in the upcoming period,” she concludes.

Jankovic Popovic Mitic has successfully represented FCC Kikinda before a Serbian court of first instance in a criminal case concerning environmental charges.

According to JPM, “FCC Kikinda and its management were all acquitted of two environmental offense charges – the introduction of hazardous materials into Serbia and the illegal processing, disposal, and storage of hazardous materials and environmental pollution.”

According to the firm, “it has been proven that the regional landfill in Kikinda, operated by FCC Kikinda (owned by FCC Eco from Belgrade, The City of Kikinda, and Austrian company FCC Environment CEE), did not commit the crimes that the public prosecutor’s office charged them with, but to the contrary have established that the regional landfill in Kikinda, during its 11 years of existence, never stored, processed, or disposed hazardous waste contrary to environmental regulations and that the entire Kikinda Regional Landfill Project … did not endanger the environment in any way.”

JPM’s team included Partner Jelena Milinovic and Senior Partner Milos Mitic.

Amendments to the Law on Pension and Disability Insurance (“the Law”) from 2019, notably Article 11 thereof, have eradicated the practical issues that used to exist in relation to the mandatory social insurance of persons working for foreign employers in Serbia.

Amendments to the Law from 2019

Namely, the Law on Amendments to the Law, published in the Official Gazette of RS no. 86/2019 from December 6, 2019, changed the scope of the term, i.e., prescribed categories of insured employees, by deletion of provision of Article 11, paragraph 1, item 7) of the Law, which reads “Serbian nationals employed abroad, who are not subject to mandatory insurance during such period of working for a foreign insurance holder, or who cannot exercise or use the rights from pension and disability insurance under the regulations of such state outside its territory.”

The reason for this is the fact that, under the previously mentioned provision, such persons were subject to the mandatory insurance only if they applied thereto and submitted appropriate documentation, i.e., evidence of their work abroad, thus it was possible to avoid the subject obligation.

At the same time, Article 3 of the abovesaid Law on Amendments to the Law introduced item 3a) to Article 12, paragraph 1 of the said regulation, establishing thereby the categories of insured persons performing independent activities, under which the status of insured employees shall also be applied to “the persons working on the territory of the Republic of Serbia for foreign employers who do not have registered their representative offices in the Republic of Serbia, and which earn salary for the performed work, while they are not insured on other grounds.”

Practical implications of the respective amendments

The scope of the insured persons who perform independent activities is thus expanded by inclusion of persons working in Serbia for foreign employers, provided that such employers do not have registered representative offices in Serbia, as well as that the said persons earn salary for their work, if they are not insured on other grounds.

In relation thereto, Article 36 of the Law on Amendments to the Law, i.e., Article 191a of the Law, prescribes that the obligation to pay contributions for pension and disability insurance, as well as deadlines and obligations to submit applications for this category of insured persons, shall be subject to the regulations on tax procedure and tax administration, personal income tax, contributions for mandatory social insurance, and other regulations within the scope of competence of the Ministry of Finance.

Such specification of the rights and obligations of the respective category of insured persons significantly reduces the possibility of different misconducts in this regard and aligns the Law with provisions of regulations on personal income tax and contributions for mandatory social insurance.

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, PR Legal