30 Reasons to invest in Serbia – part one – grant opportunities
From experience of many foreigners I have met, I realized that it is fairly easy to fall in love with Serbia. Serbian continental climate is good enough to spend time on fun outdoor activities during each of four seasons. Our culture, strongly influenced by Eastern Roman, Ottoman and Habsburg Empire in the past, as well as by Slavic origins, results in many historical and cultural attractions across the country, but also in hospitable people, delicious food and interesting night life. If you add to this that costs of living in Serbia are relatively low and that our country is fairly safe for foreigners, it is not strange that many people like to come many times to Serbia. However, Serbia does not provide only tourist opportunities: in a series of texts, we are going to provide you with 30 reasons to invest in Serbia. In this text, we will provide you with information on grant opportunities for both domestic and foreign investors.
Among grant opportunities, we name following reasons to invest in Serbia:
- Grants for investments in production and service centers
- Grants for investments in food processing
- Incentives for investments in tourism
- Incentives for investments in agriculture
- Incentives for investments in combined transport
- Subsidies and favorable loans from Development fund of Republic of Serbia
- Innovation incentives from Innovation fund of Republic of Serbia
Grants for investments in production and service centers
The Ministry of Economy provides grants for investment projects in production and service centers. The current decree which regulates those grants was published in January 2019. The Ministry of Economy usually makes some changes in decree each year, so amendments are expected in 2020. Until then, the current decree is active.
Grants are available for both domestic and foreign investors. Ministry provides grants for:
- Investments in tangible and intangible fixed assets in period of up to 3 years from the day of submitting grant application
- Total costs of salaries for newly permanently employed people in 2 year period after project implementation (after all employments are made). Salary of each employee needs to be higher than 120% of legal minimum
All investments and employments need to be implemented in period of up to 3 years from the day of submitting grant application.
In order to qualify for grants, investment project needs to be above regulated limits:
- For production: Regarding the municipality in which investment is made, minimum level of capital investments goes from 100.000 EUR to 500.000 EUR and minimum level of employees goes from 10 to 50
- For service centers: minimum level of capital investments is 150.000 EUR and minimum number of new employees is 15 for any municipality
Maximum possible level of grants (dependent on the municipality in which investment is made) is a sum of:
- 20% – 40% of total costs of salaries (or 3.000 EUR – 7.000 EUR per new employee)
- 10% – 30% of capital investments
Investor is obliged to keep level of investments and number of employees in period of 3 to 5 years after project implementation.
We would like to note that some production activities cannot be funded, e.g. steel production, military industry, mining, tobacco industry etc.
Grants for investments in food processing
Having in mind Serbia’s competitive advantage potentials in food production, the Ministry of Economy published a special decree on providing grants for investments in food processing. The decree defines food processing as ‘’processing of products of agriculture, forestry and fishing in order to produce groceries for consumption by people or by animals, as well as materials for groceries’’.
The decree on grants for investments in food processing has only a few differences in comparison with previously mentioned decree on grants for investments in production and service centers. Therefore, in following paragraphs we will only mention some distinctions for grants in food processing.
Investors can apply for grants only for investment projects with minimum 2.000.000 EUR of capital investments and minimum of 30 new employees.
Maximum possible level of grants (dependent on the municipality in which investment is made) is a sum of:
- 20% – 40% of total costs of salaries (or 3.000 EUR – 7.000 EUR per new employee)
- 20% of capital investments
Grants can be increased by:
- 10% of investments between 20.000.000 EUR and 40.000.000 EUR
- 5% of investments above 40.000.000 EUR
Incentives for investments in tourism
Having in mind Serbia’s competitive advantage potentials in spa city tourism, the Ministry of Economy published a special decree on providing grants for investments in hotels in spa cities. The Ministry of Economy prepared the list of 47 spa cities in Serbia in which investments eligible for grants can be made.
The decree on grants for investments in spa city hotels has only a few differences in comparison with previously mentioned decree on grants for investments in production and service centers. Therefore, in following paragraphs we will only mention some distinctions for grants in spa city hotels.
Grants are available for both domestic and foreign investors. Ministry provides grants for:
- Investments in tangible and intangible fixed assets in period of up to 3 years from the day of submitting grant application (except costs of acquiring property)
- Total costs of salaries for newly permanently employed people in 2 year period after project implementation (after all employments are made). Salary of each employee needs to be higher than 120% of legal minimum
Investors can apply for grants only for investment projects with minimum 2.000.000 EUR of capital investments and minimum of 70 new employees.
Maximum possible level of grants (dependent on the municipality in which investment is made) is a sum of:
- 20% – 40% of total costs of salaries (or 3.000 EUR – 7.000 EUR per new employee)
- 20% of capital investments
Grants can be increased by:
- 10% of investments between 10.000.000 EUR and 20.000.000 EUR
- 5% of investments above 20.000.000 EUR
Along with the Ministry of Economy grants, the Ministry of Tourism provides incentives for investments in this sector each year, such as loans under preferable conditions. The Ministry of Tourism is currently preparing programme of incentives for 2020.
Incentives for investments in agriculture
According to the Law on agriculture and rural development incentives, there are several types of incentives:
- Direct payments, such as incentives for produced agricultural products and biological assets and refund for purchasing inputs for production
- Incentives for rural development, i.e. for investments in less developed Serbian municipalities
- Special incentives, e.g. for marketing activities
- Credit support, through loans provided by the Ministry of agriculture
Incentives and terms of acquiring them are regulated each year in the Ministry’s budget.
Incentives for investments in combined transport
The Ministry of construction, transport and infrastructure provided grants for investments in combined transport in last two years. The Ministry publishes an official call on which following companies may apply:
- Companies who own and/or manage combined transport terminals
- Railway and road transport operators
- Combined transport operators
- Companies who manage railway infrastructure and freight operators
Investments eligible for grants are:
- Construction and rebuilding of combined transport terminal
- Investments in combined transport equipment
- Investments in ICT systems
- Investments in railway vehicles
On the last official call, the maximum of possible grants for a participant was 20.000.000 RSD (approximately 170.000 EUR).
Subsidies and favorable loans from Development fund of Republic of Serbia
The Development fund of Republic of Serbia provides different types of incentive programmes, either through loans or through a combination of grants and loans. The Fund publishes public calls for several programmes at the beginning of each year. However, we will provide information on two programmes which are active during whole year. Those are the programmes of Investment loans (loans for investing in fixed assets) and Working capital investment loans (investments in inventory, receivables, payments to suppliers etc.).
Eligible companies for both programmes are companies registered in Serbia who ended profitably two previous fiscal years. Projects in gambling industry and oil trade cannot be financed through these loans. Total loans provided by Fund cannot be higher than 250.000.000 RSD (approximately 2.110.000 EUR) during one calendar year.
Investment loans are granted under following conditions:
- Repayment period of up to 10 years (maximum 1 year grace period)
- Annual interest rate of 1% – 1,8%, depending on the type of collateral
Working capital investment loans are granted under following conditions:
- Repayment period of up to 4 years (maximum 6 months grace period)
- Annual interest rate of 1% – 1,8%, depending on the type of collateral
Innovation incentives from Innovation fund of Republic of Serbia
The Innovation fund of Republic of Serbia provides grants to micro, small and medium sized enterprises who are trying to commercialize their research and development projects. We will present two programmes for which public calls have been published during 2019.
The Mini grants programme is made for young enterprises engaged in the development of technological innovations with market potential. Eligible participants are micro and small enterprises, privately owned and with Serbian citizens’ ownership of at least 51%. Interested participants prepare business plan along with the project budget. The Fund provides up to 80.000 EUR of grants, i.e. up to 70% of project budget. The rest of the budget must be financed from other private sources, independent from the Fund.
The Matching grants programme is designed for micro, small and medium sized enterprises looking for significant financial resources for the commercialization of research and development. Eligible participants are micro, small and medium enterprises with majority private ownership. Interested companies prepare business plan along with the project budget. The Fund provides up to 300.000 EUR of grants, i.e. up to 70% of project budget for micro and small enterprises, i.e. up to 60% of project budget for medium sized enterprises.
Final remarks
In this text we provided 7 reasons to invest in Serbia. In following texts on our blog, we will provide you with other 23 reasons.
Texts on our blog are of indicative character and they are based on information available at the very moment of preparing text.
Our company provides support in acquiring investment grants. WTS Serbia looks for new grant opportunities and we present them to our existing and potential clients, both domestic and foreign, large and small. We have experience in preparing business plans and other documentation for many domestic and international clients. Our clients have got more than 7 million EUR of grants approved with our support.
If you are a domestic or foreign investor interested in starting or expanding your operations in Serbia, please contact our consulting team.
