Branch office registration in Serbia
Branch office in Serbia
A branch of a company is a separate organizational part of a company that is registered on the territory of the Republic of Serbia.
The company performs its activities through registered branch in accordance with the law.
According to the Law on Companies, a branch of a foreign company does not have the form of a legal entity. A branch acts in legal transactions in the name and on behalf of a foreign company.
The company is unlimitedly liable for obligations to third parties arising from the business of its branch.
The branch is formed by a decision made by the assembly, partners or general partners, unless otherwise determined by the founding act or by the statute.
There are two types of branches:
- Branch of a domestic legal entity
- Branch of a foreign legal entity
Branch office registration in Serbia
The branch is registered at the Business Registers Agency.
Required documentation for the establishment of a branch of a domestic legal entity:
- registration application for branch education
- decision on branch formation
- decision on the appointment of a branch representative, if the branch representative is different from the representative of the domestic legal entity forming the branch,
- proof of payment of the fee
Required documentation for establishing a branch of a foreign legal entity:
- registration application
- decision of the competent body of the foreign company on the formation of a branch
- excerpt from the register in which the foreign company is registered
- proof of account numbers through which the foreign company operates
- statement of the authorized person of the foreign company on taking responsibility of the company for all obligations of the branch
- proof of payment of the establishment registration fee
The branch choose its business activity as its predominant activity. In addition to the registered predominant activity, a foreign legal entity may also perform other activities that are not prohibited by law. The predominant activity of the branch may be different from the predominant activity of the founder.
The foreign branch is not obliged to define the other activities the branch will deal with in the statute, nor in the founding act. It is obligatory only in the case if the registration of such activity is conditioned by a law, or the approval or consent of the competent authority is required.
Finally, according to the Law on Value Added Tax (VAT), the branch of foreign companies is obliged to submit an application for VAT registration of the taxpayer to the competent tax authority if their turnover exceeds 8,000,000 dinars in the previous 12 months.
Opening a business account
According to the Law on Foreign Exchange Operations, branches of foreign companies operating in the Republic of Serbia are considered as residents. As such, they cannot operate through foreign bank accounts, but through resident bank accounts in Serbia.
Basic characteristics of foreign exchange operations of a branch of a foreign legal entity are:
- A branch of a foreign legal entity may take loans and borrowings from its non-resident founder.
- A branch of a foreign legal entity may transfer funds from a resident account abroad only under the condition that tax liabilities to the Republic of Serbia have been previously settled. The certificate is issued by the competent tax authority.
- A branch of a foreign legal entity may offset debts or receivables on the basis of foreign credit transactions in foreign currency with receivables or debts on the basis of these transactions, realized foreign trade of goods and services, as well as on direct investments and real estate investments, in the manner prescribed National Bank of Serbia.
Characteristics of a branch of a foreign legal entity in accordance with the Law on corporate income tax
- A branch of a foreign legal entity is a permanent business unit through which a non-resident taxpayer performs its activity
- A non-resident taxpayer who performs activity on the territory of the Republic of Serbia by operating through a branch determines taxable profit in accordance with the Law on corporate income tax
- A non-resident taxpayer operating through a branch in the territory of the Republic of Serbia is obliged to submit a tax balance and a tax return for the branch.
- A branch of a foreign legal entity does not calculate and pay withholding tax on income from the services of a non-resident legal entity:
- market research
- Accounting and auditing services
- services in the field of legal and business consulting
- If a non-resident legal entity realizes income from a branch on the basis of the fee paid for the lease, withholding tax is calculated on the income generated by the non-resident legal entity.
Branch and Transfer pricing
A branch of a foreign legal entity may meets the conditions to be considered as a related party of another legal entity.
If this is the case, transactions between the branch and its related parties are subject of examination in terms of transfer pricing regulation.
Virtual office of Branch
For your branch registration in Serbia could be also interesting the establishing of virtual office.
Virtual office represents efficient business concept for smaller and new companies or branches. Instead of renting the business premises, it is possible to rent the office and register the company’s main office, regardless of the place where the activities are performed. For the new companies could be better to rent the virtual office instead of business premises in an exclusive and expensive location.
The virtual office is also useful as a place where you can receive mail, administrative support, organize picking up the phone and do the accompanying work.
If you have additional questions related to this topic, please contact our consulting team.
