Mistakes to Avoid When Starting a Business in Serbia

Published on January 14, 2026 and written by Cyril Jarnias

Serbia’s appeal to business creators has never been stronger: a strategic position between East and West, moderate taxation, relatively low setup costs, and preferential access to the European Union. However, behind this attractive image lies a legal, tax, and administrative environment that is significantly more complex than it appears. Many failures or unpleasant surprises stem not from a bad project, but from avoidable startup mistakes.

Poor choice of legal form: the first misstep

The first instinct of many founders is to choose the form that seems the simplest or the least expensive, without measuring the consequences for liability, taxation, and the project’s evolution. In Serbia, this mistake is frequent, especially between the status of Entrepreneur (Preduzetnik) and the limited liability company (DOO).

Confusing administrative simplicity and asset protection

The Preduzetnik status is attractive: quick procedure, low registration fees, simplified accounting obligations under the lump-sum regime. But it hides a major risk: the entrepreneur is a natural person, with no separation between personal and business assets. All business debts can be pursued against their personal property.

This dilemma can be summarized as follows:

Criterion	Entrepreneur (Preduzetnik)	DOO (Limited Liability Company)
Legal nature	Natural person	Legal entity
Liability	Unlimited on personal assets	Limited to contributions (except abuse)
Minimum capital	None	100 RSD (≈ €1), payable within 5 years
Accounting	Lump-sum possible, or bookkeeping	Mandatory double-entry
Creation cost	Very low	Higher (fees + lawyer + accountant)
Closure	Quick and simple	Lengthy liquidation procedure (4 to 7 months)

Many founders choose the Preduzetnik status to “test” the market, without anticipating growth, transactions with foreign entities, or partnerships with investors. However, a subsequent transformation into a DOO is possible but involves additional legal and tax procedures. Not thinking this choice through for three to five years is a classic error.

Ignoring other options or sector-specific constraints

For certain sectors or modes of establishment, other structures are more appropriate: branch of a foreign company, representative office, joint-stock company (AD) for raising significant capital, partnerships (OD, KD) if unlimited liability is acceptable.

Underestimating the bureaucracy and company formation timeline

The regulations suggest that everything is fast and digital: registration with the Business Registers Agency (APR/BRA), electronic certificate, opening a bank account, etc. In theory, the APR must make its registration decision within five business days of receiving a complete file. In practice, the entire process—drafting deeds, legalization, translations, obtaining the electronic certificate, registering beneficial owners, first tax filing, opening a bank account—takes between 10 and 30 days.

Neglecting formal requirements for documents

Many foreign founders fall into a very concrete trap here: forgetting the formalities of legalization and translation of their incorporation documents. Extracts from foreign registries, powers of attorney, parent company statutes often must be:

– Notarized in the country of origin,

– Provided with an apostille or consular legalization (unless a bilateral agreement exists),

– Then translated into Serbian by a sworn translator.

Believing a single “generalist” expert is enough

The temptation is great to entrust the entire process to “a lawyer who handles everything.” However, practice shows that relying on a single provider without ensuring they cover legal, tax, social, and banking aspects often leads to blind spots: lack of advice on legal form, forgetting to register beneficial owners, ignorance of tax deadlines, etc.

Serbian authorities heavily penalize certain omissions, notably:

Obligation	Deadline after registration	Penalty for non-compliance
Initial tax return (company)	15 days	Fine, surcharges, risk of enhanced audit
Beneficial owner (UBO) registration	15 days	Fine from 500,000 to 2,000,000 RSD for the legal entity
Submission of annual accounts	March 31 of the following year	Fine, even deregistration in case of repeat offense

Not integrating these deadlines into your project timeline, or assuming “we’ll see later,” means starting off in a state of non-compliance from the outset.

Misestimating tax obligations and key thresholds

Another major source of errors comes from an overly simplistic view of Serbian taxation: a corporate income tax rate of 15% and a personal income tax of 10% for entrepreneurs. In reality, the system relies on several thresholds and regimes that are crucial to monitor from the start.

Making a poor bet on the entrepreneur’s tax regime

For Preduzetniks, two main regimes exist:

– The lump-sum regime (paušalac), with a predetermined amount of tax and contributions set by the administration, independent of turnover,

– The real regime, with bookkeeping and taxation on profit (revenue – expenses).

– The entrepreneur must switch to double-entry bookkeeping,

– They must manage a transition that can prove abrupt, both in terms of costs and formal obligations.

Furthermore, exceeding the threshold of 8 million dinars in turnover over a rolling 12-month period triggers the obligation to register for VAT, with all the constraints that implies (invoicing, periodic returns, managing VAT credits).

Confusing lump-sum threshold and VAT threshold

Confusing these two levels is a classic:

Threshold	Amount (approx.)	Main Consequence
Preduzetnik lump-sum	6,000,000 RSD	Mandatory switch to real accounting
VAT threshold	8,000,000 RSD	Obligation to register as a VAT payer

An entrepreneur can very well lose the lump-sum regime while remaining, for a few months, outside of VAT, which complicates projections. Conversely, a DOO does not have access to the lump-sum and must immediately integrate VAT management if it exceeds the threshold.

Ignoring the Independent Contractor Test

A little-known but heavily consequential point is the independent contractor test applied by the tax administration to individual entrepreneurs, especially those working almost exclusively for a single client, often foreign.

This test is based on nine criteria (economic dependence, control over work organization), provision of equipment by the client, overly restrictive non-compete clauses, etc. If five or more criteria are met, the administration may reclassify the income as “other income,” taxed at 20%, and require pension and disability contributions at 24%.

Not structuring your contracts, invoicing, and business relationship with this test in mind is a critical mistake for foreign freelancers and consultants using an entrepreneur status in Serbia.

Neglecting licenses, permits, and activity codes

One of the most subtle traps in Serbia comes from the absence of a single, exhaustive list of regulated activities. Each field is governed by its own law, ministry, or even specialized agency. Imagining that registering the activity with the APR is enough to “authorize everything” is a dangerous misconception.

Choosing a poor activity code (NACE) or not checking specific requirements

At the time of creation, each company must declare a main activity using a code. This classification does not prohibit practicing other activities, but:

Above all, many activities require prior or concomitant licenses or authorizations. For example: employment agencies, currency exchange, banking, insurance, real estate brokerage, private security, pharmacy, gambling, certain educational or medical activities, import-export of sensitive products (weapons, pharmaceuticals, tobacco, etc.).

Not checking upfront whether your activity:

– Is permitted under the envisaged legal form (entrepreneur, DOO, branch),

– Requires a prior or subsequent license,

– Involves mandatory inspections (premises, equipment, qualified staff),

leads to a situation where the company is legally formed… but legally unable to operate its core business.

Underestimating the multiplicity of competent authorities

Permits and licenses may fall under the APR, the Ministry of Health, Justice, Interior, Economy, the National Bank of Serbia, the Gaming Administration, the Ministry of Transport, or even local authorities for activities like taxi services or restaurants.

This fragmentation generates:

– Parallel procedures, each with its own forms, fees, and deadlines,

– Cross-checking (health inspection, labor inspection, customs),

– Legal uncertainty if you don’t know exactly which body to contact.

Entering a regulated market without mapping all these requirements is one of the major mistakes of new entrants, especially foreigners.

Underpreparing the banking relationship and the professional account

Opening a professional bank account in Serbia is both mandatory and more delicate than one thinks, especially for companies controlled by foreigners. A significant portion of the blockages occurs not at the APR, but at the bank counters, due to compliance requirements (KYC, anti-money laundering, international sanctions).

Minimizing bank formalities and expectations of “substance”

Serbian banks have the right to refuse to open an account without having to justify their decision. Frequent errors are:

Banks examine in particular the profile of the beneficial owners: a natural person holding directly or indirectly at least 25% of shares or voting rights, or exercising dominant influence. Lack of transparency in this ownership chain is a frequent reason for refusal.

Underestimating the language barrier

Another pitfall is language. While branch advisors often speak English, compliance and risk departments work almost exclusively in Serbian. Poorly understood or filled-out forms, imprecise answers to questions about the origin of funds or the nature of transactions can be enough to block your application for weeks.

Neglecting banking costs and bank/business model fit

Not all Serbian banks are equal for a foreign entrepreneur. Some are very focused on local clients, others are more open to international structures and foreign currency flows. Choosing the wrong bank can lead to:

– High account maintenance and international transfer fees,

– Difficulties using certain services (English e-banking, multi-currency, corporate cards),

– Excessive delays for transfers, even repeated blocks for compliance reasons.

However, the differences can be significant:

Bank cost item	Indicative range in Serbia
Monthly professional account fees	≈ €5 to €30
Domestic transfer	≈ €0.40 to €2.50 per transaction
International transfer	≈ €15 to €35 per transaction
Currency exchange	≈ 0.5% to 1.5% of the amount

Not integrating these costs into the business plan, especially for a highly transactional or strongly internationalized model, can impact the real margin.

Poorly framing employment relationships and employee contracts

Serbia has detailed labor law, partly inspired by International Labour Organization standards. Thinking you can “manage” with a standard contract imported from another country is a mistake that proves costly during a labor inspection or employment tribunal dispute.

Omitting mandatory elements in employment contracts

An employment contract must be written, signed before work begins, and contain mandatory clauses: identity and address of the employer, identity and residence of the employee, job title, job description, workplace, type and duration of contract, start date, work schedule, gross salary, etc.

Frequent errors are:

An employee who starts work without a written contract before the first day is deemed to have an indefinite-term contract. This simple omission turns an informal trial into a permanent hire, with all the protections that entails.

Misusing fixed-term contracts or false independent contractors

Another classic trap: multiplying fixed-term contracts without a legal basis, or using “freelancers” who, in practice, work like employees. Serbian law is very clear:

– The maximum duration of a fixed-term contract is in principle 24 months (with some exceptions),

– A fixed-term contract that extends 5 business days beyond its term, without a new contract, is automatically converted to an indefinite-term contract,

– Abusive use of independent contractors for permanent positions exposes the company to reclassification and back payments of contributions.

Ignoring rules on working time and overtime

The working hour regime in Serbia is strict: standard 40 hours per week, maximum 60 hours per week and 12 hours per day (including overtime), daily rest of at least 12 consecutive hours, minimum legal paid leave (20 working days per year).

Overtime must be paid with a surcharge of at least 26%, and cannot be “paid” exclusively with compensatory time off. As for night work or public holidays, they are also subject to minimum premiums.

Not precisely recording this data, not respecting limits, and not paying surcharges exposes the employer to significant fines, in a range that can reach several hundred thousand dinars for a legal entity.

Disregarding intellectual property from the start

For many founders, especially in digital, consulting, or technology, most of the value lies in intangible assets: brand, software, know-how, database, design, patents, trade secrets. Neglecting these aspects at startup is a mistake often paid for several years later.

Not registering your trademark or protecting your intangible assets

In Serbia, the protection of trademarks, patents, designs and models falls under the Intellectual Property Office. Copyright arises automatically with the creation of the work, but trademarks and patents require registration.

– Using a trade name without registering the trademark, risking being outpaced by a faster third party,

– Ignoring that software protection primarily relies on copyright and contracts, not patents,

– Not drafting assignment of rights clauses in employment or service contracts, leaving copyright in the hands of individuals rather than the company.

Underestimating the formalities for updating registers

For trademarks and patents, assignments and licenses must be recorded in the national registers to be enforceable against third parties. Not registering these operations does not cancel the contract between parties, but complicates proof against competitors, banks, or investors.

Similarly, the absence of an internal trade secret management policy (access controls, NDAs, IT procedures) makes any subsequent legal action for misappropriation or unfair competition difficult.

Believing “informality” is an acceptable way of operating

Serbia carries a heavy tradition of informal economy. It is tempting, for some new entrants, to accept certain local practices: oral contracts, unlicensed software, partial under-declaration of salaries, approximate invoicing, or undeclared use of labor.

Minimizing risks related to the shadow economy

Even if the informal sector still represents a significant part of the economy, Serbian authorities have strengthened their arsenal:

A foreign company, especially if it targets international markets or institutional investors, cannot afford to operate in a grey area. Bypassing software licenses, social security declarations, or robust accounting documentation compromises not only compliance but also future access to financing and partnerships.

Neglecting the cultural and relational dimension in business

Finally, a less legal but equally strategic error is to approach the Serbian market as a mere technical execution ground, without considering its cultural codes.

Underestimating the importance of trust-based relationships

In Serbia, business is still largely based on personal relationships and trust, more than on contract clauses alone. Decisions are often concentrated at the top of the hierarchy and are made after several meetings, often punctuated by coffee, meals, or informal exchanges.

Neglecting the Serbian language in key documents

Even though English is common in business circles, Serbian remains the official language for dealings with the administration and, very often, with banks and some partners. Indefinitely delaying the translation of your contracts, T&Cs, HR documents, or marketing materials is a source of misunderstandings and disputes.

For major contracts (partnerships, IP licenses, distribution agreements), preferring bilingual versions with equal validity secures interpretation and avoids a unilingual English version being rejected or misunderstood by a judge or administration.

In conclusion: structure rather than improvise

Creating a company in Serbia offers real opportunities: competitive taxation, access to multiple markets thanks to trade agreements, lower labor and operating costs than in Western Europe, a growing IT and industrial ecosystem.

But these advantages materialize only if you avoid a series of recurring errors:

The safest approach is to combine three levers: serious prior analysis (market, regulation, taxation), a multidisciplinary advisory team (lawyer, tax specialist, accountant, sometimes IP specialist), and genuine curiosity about how the country functions, beyond just the regulations.