Category: Serbia

In October 2020, the Ministry of Finance of the Republic of Serbia published the first draft of the Law on Digital Property (“Draft“) and put it for open discussion. Below we present you with a short overview of the proposed Draft:

Virtual Property and Virtual Currency

The virtual property represents a digital record of value that can be digitally bought, sold, exchanged, or transferred and that can be used as a medium of exchange or for investment purposes. On the other hand, the digital property does not include digital currency records that are legal means of payment and other financial assets that are regulated by other laws.

Virtual currency is defined as a type of digital property that was not issued and which value is not guaranteed by the central bank or other public authority, which is not necessarily tied to legal means of payment and does not have legal status as money or currency but is accepted by individuals or companies as a medium of exchange, so it can be bought, sold, exchanged, transmitted and saved electronically.

It is an interesting fact that virtual currencies cannot be recognized as a monetary share in a company. However, non-monetary shares in a company may be in digital tokens that are not related to providing services or execution of work. In the case of a general partnership and limited partnership, there is an exception when digital tokens can be used for providing services or in the execution of work.

Service Providers related to digital property

The Draft prescribes that the provider of services related to the digital property has to be a company registered in Serbia. These companies can perform services of purchasing and selling digital assets for cash and/or funds in the account and/or e-money, services of exchanging digital property for other digital property, managing the portfolio of digital assets, etc. In such a case, the legal companies must obtain the official license from the competent authority in order to provide these services.

On the other hand, the Draft defines that a counselor related to digital property can provide exclusively digital asset advisory services. This activity can be performed by companies, entrepreneurs, and individuals and they are not obligated to have an official license from the competent authority.

Institution of Whitepaper

The Draft regulates the institute of the whitepaper (“beli papir”) as a document that is published during the issuance of digital property, which contains data on the issuer of digital property, the digital property itself, and risks associated with digital property in order for investors to make decisions. Of course, all the information contained in the whitepaper must be true, complete, and clarified and it must not mislead to a wrong investment decision.

Pledge

The Draft specifically prescribes the possibility of conducting the right of pledge on the digital property, the mandatory elements of the pledge agreement, the necessary written or electronic form, but also the possibility of conclusion of the so-called “smart agreement“. The right of pledge is acquired by registration in a pledge register which is managed by a licensed provider of services related to digital property.

Supervision

The supervisory authorities are the National Bank of Serbia and the Securities Commission of Serbia. The Law on Digital Property is expected to enter into force 6 months after its adoption in order to allow sufficient time for digital property service providers to coordinate their business activities. Also, it is defined that bylaws will be adopted within 3 months from entering into force of the future law.

Serbia should become one of the few countries that cover this area with a special regulation. We can expect that the adoption of this law will allow business not only to enter the digital property market but also more easily finance innovative ideas and also improve liquidity. 

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

By Milos Velimirovic, Partner, and Katarina Askic, Junior Associate, Samardzic, Oreski & Grbovic

Jankovic Popovic Mitic has helped chemical company BASF implement GDPR best practices in Serbia.

According to JPM, “the decision to invest in business compliance to GDPR best practices is expected to result in an adjustment of processing activities to data protection principles, [which] will enable BASF employees to fully understand and implement them in real-time and further confirm BASF’s position as a reliable and trustworthy business partner in the chemicals market.”

JPM’s team included Partner Ivan Milosevic, Senior Associate Andrea Cvetanovic, and Risk Assessment Expert Gojko Grubor.

At the beginning of 2019, employers and employees disapprovingly accepted a new obligation to document the cost of transportation to and from work and the situation is no different today.

Without formal amendment of regulations, the Ministry of Finance issued opinion no. 011-00-12/2019-04 on 1 February 2019, stating its position on application of tax regulations that significantly departed from the previous multiannual practice.

Namely, according to the opinion of the Ministry, in case of non-documenting the allowance for transportation to and from work by credible accounting document, the employee’s allowance on such basis shall be considered as undocumented expense by virtue of the Law on Corporate Profit Tax i.e. they shall not be acknowledged as expense in tax balance but rather included in profit tax base; it shall neither be subject to tax relief under Article 18 of the Law on Citizen Income Tax but rather to 10% salary tax.

According to general rule, opinions of administrative bodies are not binding (Article 80, para. 2 of the Law on Public Administration), however, provision of special regulation (Article 11, para. 3 of the Law on Tax Procedure and Tax Administration) stipulates that the acts on application of regulations from the responsibility of the Ministry of Finance (elaborations, opinions, instructions, guidelines etc.) shall be binding upon the actions of Tax Administration.

In practice, this means that Tax Administration inspectors shall diligently apply the opinion of the Ministry of Finance during tax control, and such opinion will thus become a binding rule without amendment of regulations. Considering that the complaints against the decisions of tax inspectors shall be resolved by the Ministry of Finance and that such complaints do not postpone the enforcement of decisions and that the legality of second instance decisions adopted by the Ministry shall be deliberated by the Administrative Court in administrative procedure that by default lasts several years, it is evident that employers needed to act quickly and to further regulate this issue by internal acts within their respective organisations.

Although the Ministry of Finance considered that the tax regulations may only interpreted and construed in the manner stated in their opinion, at the end of 2019 the Law on Citizen Income Tax was amended, among other in the part referring to tax reliefs, so as to specify that citizen’s income tax shall not be paid for reimbursement of documented costs of transportation to and from work.

After the initial opinion, the Ministry of Finance published several more opinions in the previous period that refer to the treatment of such payments. Here is what we have learned from these opinions:

• Employers need to adapt internal acts – general enactment (Work Rules/Collective Agreement) and Rulebook on accounting and accounting policies, in order to regulate reimbursement of transportation costs to employees and to stipulate appropriate accounting documents suitable for registration of business changes (Opinions of the Ministry of Finance no. 011-00-12/2019-04 of 1 February 2019, 011-00-528/2019 of 16 July 2019).
• Reimbursement of costs of transportation to and from work in line with the employer’s general enactment and employment agreement shall not be subject to payment of contributions for mandatory social insurance, regardless of the tax treatment of this reimbursement (Opinions of the Ministry of Finance no. 430-00-648/2019-04 of 17 January 2020, no. 011-00-141/2020-04 of 26 February 2020 and no. 011-00-391/2020-04 of 7 July 2020).
• If an employer does not possess relevant valid documents that support the costs of employees’ transportation, but instead calculates and pays salary tax against such payments, thus paid reimbursement shall nevertheless be acknowledged as expense in tax balance for the tax period when it was paid, for the purpose of establishing profit tax (Opinion of the Ministry of Finance no. 011-00-00040/2019-04 of 3 June 2020).
• Valid accounting documents shall be considered:

1. if provided by employer:

• In case of using personal vehicle (use of company coupons/vouchers/cards for gas purchase by employees at gas stations that employer is in contract with): single bill to the name of the employer, which would specify all individual gas amounts purchased by employees during one month, with accompanying list of employees who use personal vehicles for commuting to and from work (name and surname of employee, number of coupon/voucher/card for gas purchase);
• In case of using public transportation (employer’s purchase of monthly prepaid cards for employees’ public transportation): single bill to the name of the employer, which would specify all individual monthly prepaid cards purchased, with accompanying list of employees who use public transportation for commuting to and from work (name and surname of employee, number of monthly prepaid card);
• In case of using taxi (use of company vouchers/coupons/cards for using taxi services of taxi associations that the employer has a contract with): single bill to the name of the employer, which would specify all individual amounts of taxi fares used by employees during one month, with accompanying list of employees using taxi for commuting to and from work (name and surname of employee, number of coupon/voucher/card for taxi fares).

  2. if provided by employees:

• In case of using personal vehicle: fiscal bill(s) for purchased gas, along with statement of employee that such bill(s) refers to the gas purchased by such employee for covering the costs of his/her commuting to and from work;
• In case of using public transportation: fiscal bill(s) for purchased monthly/daily prepaid card(s), along with statement of employee that such bill(s) refers to the monthly/daily card(s) purchased by such employee for covering the costs of his/her commuting to and from work;
• In case of using taxi: taxi bills along with statement of employee that the bills concerned refer to taxi fares used by such employee for covering his/her commuting to and from work.

(Opinions of the Ministry of Finance no. 401-00-02148/2019-16 of 5 June 2019 and no. 011-00-544/2019 of 16 July 2019)

Although a false interpretation of one opinion of the Ministry caused media to announce in mid-2020 that the obligation for cost documenting was abolished, such obligation is nevertheless still in force. Having in mind the amendment of the Law on Citizen Income Tax that stipulates that in order to exercise the right to tax relief it is necessary to document the costs of transportation, this obligation will remain in force until possible future amendment of 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 Ivana Ruzicic, Managing Partner, PR Legal

BDK Advokati has launched a Human Rights Protection & Litigation practice, led by Attorney-at-Law Relja Radovic.

According to BDK Advokati, “respect for human rights remains a pressing issue in the Western Balkans.” According to the firm, “new challenges our societies face, such as the increasing executive powers and the Covid-19 pandemic, keep human rights at the forefront of the public concern. The legal profession bears a special responsibility in securing the protection of the individual, fighting systemic issues and injustices, and restoring the rule of law.”

Within its Human Rights practice, the firm reported, it will work with individuals, groups, businesses, and the civil society on the protection of human rights at national and international levels, and represent parties in judicial and non-judicial processes.

“This is an important new chapter in the development of our firm,” commented BDK Advokati Managing Partner Tijana Kojovic. “We are glad to be in a position to devote our legal skill, expertise, and organizational capacities to assist vulnerable clients and help improve respect for human rights in our societies. Protection of human rights is primarily the responsibility of the state but businesses have an increasing role as well. We see the new Human Rights Protection & Litigation practice as perfectly compatible with our profile of a corporate and commercial law firm.”

Karanovic & Partners has helped set-up Ventu.rs, the first Serbian crowd-investing platform. 

The platform is a joint project of BDO Business Advisory from Belgrade and CONDA from Austria, supported by USAID’s Economic Development Cooperation Project and the Austrian Development Agency. 

According to Karanovic & Partners, “Ventu.rs is a group lending platform designed as a meeting place of local SMEs and start-ups with growth potential and local investors. The creation of Ventu.rs is a significant step forward on the local alternative financial services market as it purports to create an investment tool commonly used on the developed markets. The platform is also a powerful marketing and market research instrument.”

Karanovic & Partners’ team was led by Partner Katarina Guduric.

Harrisons has advised the EBRD on an EUR 25 million loan, which will be matched by Raiffeisen Banka Beograd, to Sojaprotein. AP Legal reportedly advised Raiffeisen Banka on the deal.  

Sojaprotein is a soybean concentrates producer that operates a soybean-processing factory in Serbia. The company is a subsidiary of the Serbian agribusiness company Victoria Group, which was recently acquired by the MK Group (as reported by CEE Legal Matters on June 23, 2020). 

According to Harrisons, “the loan shall be used to expand Sojaprotein’s production to meet increasing demand from their international customers.” 

Harrisons’s team consisted of Consultant Ines Matijevic-Papulin, Senior Associate Jovan Cirkovic, and Associate Mina Markovic.

By the Regulation amending the Regulation on measures for prevention and suppression of infectious disease COVID-19, which was published in the Official Gazette of RS no. 126/2020 dated October 23, 2020, the Government of the Republic of Serbia introduced the mandatory appointment of person – corona controller by certain legal entities and entrepreneurs.

To whom does the obligation apply?

The obligation applies to legal entities and entrepreneurs who perform retail trade, i.e. who sell goods or provide services in shopping centers or similar facilities in which retail trade activities are performed, and which includes the sale of goods and services in stores where is entered from a larger enclosed space.

What is the obligation consisted of?

The mentioned legal entities are obliged to place a notice in a visible place, that entry or stay of persons without personal protective masks is not allowed and to ensure that persons who do not wear personal protective masks do not enter or stay in the facilities where retail trade takes place.

In that regard, legal entities and entrepreneurs are also obliged to аppoint a person who is responsible for compliance with the measures of wearing a personal protective mask, the so-called corona controller. The Regulation, however, does not regulate the duties and powers of these persons.

The obligation to appoint the corona controller does not apply to legal entities and entrepreneurs who have up to three employees.

This measure for the prevention and suppression of the infectious disease COVID-19 has been in force since October 24, 2020.

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 Jovana Milic, Senior Associate, and Natalija Dukic, Associate, PR Legal

NKO Partners has helped Belgrade Waterfront open the Galerija Belgrade shopping center by assisting Belgrade Waterfront in drafting and negotiating all lease agreements for the shopping mall, including those with anchor tenants.

NKO Partners describes Galerija Belgrade, which opened for business on October 30, 2020, as “the biggest shopping, entertainment, and gourmet destination in the region, welcomed its first visitors on 30 October 2020. According to the firm, “the mall boasts 300,000 square meters in total, 93,000 square meters of leasable area, and 3,600 parking spaces, as well as [the] presence of more than 300 local and international brands.”

NKO’s team was led by Partners Djordje Nikolic and Danica Milic.

The Government of the Republic of Serbia has adopted a new Decree on the conditions and criteria for compliance of state aid through a recapitalization of market participants, to eliminate disturbances in the economy caused by the epidemic of COVID-19 on 23 October 2020.

This measure is primarily intended to raise the liquidity of market participants through recapitalization, as one of the instruments of state aid. The Decree prescribes that all market participants, except for participants in the financial services market, can count on state aid in the coming period through recapitalization. However, it is not known which companies exactly can count on this type of assistance.

Ministry of Labor, Employment, Veterans and Social Affairs („the Ministry“) on October 15, 2020 published a notice for employers regarding the duration of annual leave, in order to eliminate doubts that some employers have when employee is on paid leave during the calendar year or is temporarily unable for work in the terms of health insurance regulations.

Entitlement to annual leave

Article 68 of the Labor Law prescribes that an employee is entitled to use annual leave in a calendar year after one month of continuous work from the day of employment with the employer.

It is deemed that continuous work also includes a period of temporary inability for work, pursuant to health insurance regulations, and absence from work with compensated salary.

Holidays that are non-working days in accordance with the law, absence from work with compensated salary, and temporary inability for work in accordance with the health insurance regulations, shall not be counted as annual leave days.

Moreover, if the employee is temporarily unable to work during the use of annual leave in terms of health insurance regulations – he has the right to continue using the annual leave after the expiration of such inability for work.

Paid leave and temporary inability for work

The Ministry pointed out that employees who during the calendar year for which they are entitled to annual leave:

• are on paid leave, with salary compensation, in accordance with the Article 116 of the Labor Law or
• is absent from work on the basis of temporary inability for work in terms of health insurance regulations,

has the right to the corresponding annual leave, determined by the decision on the use of annual leave.

As a reminder, the Article 116 of the Labor Law prescribes that an employee is entitled to salary compensation in the amount of at least 60% of the average salary in the previous 12 months, provided that it cannot be less than the minimum salary determined in accordance with the law, during the cease of work, i.e. reduction of the volume of work which occurred without employee’s fault.

Finally, the Ministry concluded that leave from work due to temporary inability for work in the terms of health insurance regulations and paid leave, with salary compensation in accordance with Article 116 of the Labor Law, do not affect the duration of annual leave determined by the decision on the use of annual leave.

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 Sara Necic, Senior Associate, and Natalija Dukic, Associate, PR Legal