I&L Investment Incentives in CEE-17

In this chapter, CMS and Sorainen have provided a country-by-country guide to understanding and comparing what incentives are potentially available to Industrial & Logistics investors seeking to start operations in one or more the CEE countries covered in the report. Investment incentives are a key element of the decision-making process when investors are selecting countries and locations. Therefore, we look at some of the more frequently asked questions and provide an overview of the general conditions that were applicable at the time of preparation.

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Serbia

Legal incentives for investments specifically in the Industrial & Logistics sector in CEE-17

There are currently no legal incentives specifically for investments in the Industrial & Logistics sector in Serbia. However, it is likely that investments in these subsectors would qualify as investments of special interest to the Republic of Serbia, for which grants would be more favourable. Incentives include non-refundable grants and fiscal benefits, as well as state guarantees, the sale or lease of state-owned property under favourable conditions to investors, the purchase of the products of the investor for a price higher than the market price, amongst others.

In each specific case, grants are approved based on a particular investment, given the number of jobs created and the investment in material (fixed) and non-material assets, including leases and financial leases.

General incentives, from which investors in the I&L sector in CEE-17 can benefit, if no specific ones are available

There are currently 15 free trade zones in Serbia to which the following incentives apply: no customs or other import duties on the sale of goods intended for business operations and the construction of facilities in a free trade zone; no custom guarantee is required for foreign goods intended for manufacturing operations in a free trade zone; VAT exemption on entry of goods into a free trade zone, as well as on transport and other services related to the entry of goods; VAT exemption on trade in goods and services in a free trade zone; VAT exemption on trade in goods between the users of two free trade zones; andVAT exemption on energy consumption for users located in a free trade zone that conduct production activities.

In addition, local government units can enjoy further benefits such as exemption from local fees, taxes and charges.

Available tax exemptions or preferences for investors specifically in the I&L sector in CEE-17

There is currently no Industrial & Logistics specific corporate income tax and development tax relief, nor any Industrial & Logistics specific tax deductions.

However, regarding VAT and customs, the Serbian legal system provides for two concepts that allow VAT and customs exempt supplies under certain conditions: customs warehouses and free trade zones.

Regarding customs warehouses, a VAT and customs exemption is provided for placing goods in a customs warehouse. To benefit from these exemptions, it is important that the warehouse is under the direct control of the Serbian customs authorities. The supply of goods from a customs warehouse is subject to general VAT and customs rules.

General tax exemptions or preferences for investors in CEE-17 that would apply to the I&L sector

Serbian corporate income tax law provides for a ten-year tax holiday for investors that invest at least one billion RSD (approximately EUR 8,500,000) in fixed assets and employ, during the investment period, an additional 100 workers for an indefinite period of time. In each specific case, grants are approved based on a particular investment, given the number of jobs created and investment in material (fixed) and non-material assets, including leases and financial leases.