This document provides an overview of the Serbian market, including its EU membership negotiations, attractiveness for foreign direct investment, trade agreements, tax rates, export opportunities, leading foreign investors such as FIAT and Coca-Cola, growing trade with Italy represented by vehicles and raw materials, and the privatization process in Serbia in which several Italian companies have invested in sectors like pharmaceuticals, textiles, and sugar processing.

1. JELENA CORSOVIC
FOCUS SUL MERCATO SERBO
12-12-14

2. SERBIAN MARKET OVERVIEW:
 In January 2014 Serbia started the EU membership negotiations.
 Back in 2008 Serbia was foreseen to make the largest improvement in the
business environment in the region of Eastern Europe between 2009 and
2013. It is an on-going process and the country is set to pass a package of
as many as 20 reform laws by end-2014.
 In 2011, Serbia was the leader in CEE in attracting FDI with € 2.2 billion of
inbound investments.
 Starting a business in Serbia provides for an opportunity for customs-free
export to a market of 1 billion people.
 Serbia is the only country outside of the Commonwealth of Independent
States that enjoys a free trade agreement with Russia, but also with Turkey,
EFTA, Belarus and Kazakhstan. It is also a member of the CEFTA with 29
million people and one of the biggest markets in the region.
 Serbia's labor force offers a unique combination of high quality, wide
availability and cost effectiveness.
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3. FINANCIAL INCENTIVES
 The amount of funds which can be awarded to large enterprises is
determined up to 50% of the eligible costs for the implementation of the
investment project.
 The amount of funds may be increased by up to 20 percentage points for
small-sized companies and up to 10 percentage points for medium-sized
companies.
 Serbia`s favorable business environment features:
- highly competitive tax rates
- and low operating costs.
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4. TAX RATES IN SERBIA
20%
Value Added Tax (VAT)
Social Security Contributions
TAX RATES:
Standard rate 20%
Reduced rate 10%
Pension and disability insurance -14%
Health insurance - 5.5%
Unemployment insurance - 0.75%
For legal entities
Corporate profit tax
15%
Taxes on dividents, shares in profits, royalties, interest and capital gains
Personal income taxes
10%
15%
Salary tax and income from self-employment
Capital incomes and capital gains
Copyright, property, profits from gambling and other types of income 20%
Annual income tax 10/15%
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5. LIBERALIZED TRADE
 Serbia can serve as a manufacturing hub for duty-free exports to a market of 1 billion
people that includes the European Union, the Russian Federation, Kazakhstan, Belarus,
Turkey, South -East (CEFTA),EFTA
 Upon the completion of negotiations with Egypt, the territory with duty-free access for
Serbian products will expand by an additional 77 million people.
Serbia's Preferential Trade Agreements
Market Trade regime Number of inhabitants
EU Preferential Trade Regime 494.070,000
Generalized system of
302.558.000
USA
preferences
Russia, Belarus, and Kazakhstan Free Trade Agreement 168.640.600
Free Trade Agreement
Free Trade Agreement
Free Trade Agreement
29.990.542
13.000.000
75.000.000
Total Market Size 1.083.259.142
CEFTA
EFTA
Turkey
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6. Exports to and from EU
 Exports to the European Union market are free-of-customs according to the
Stabilization and Association Agreement.
 For several food products (baby beef, sugar, and wine) export quantities are
limited by annual quotas.
 Imports from the E.U. are pursued based on the Interim Trade Agreement,
as part of the Stabilization and Association Agreement, providing for
progressive abolishment of import customs duties for industrial and certain
agricultural products from E.U. countries by 2014.
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7. FDI facts and figures
 Since 2000. Serbia has attracted more than €22.4 billion of inward foreign
direct investment.
 A list of leading foreign investors that have already invested consists of:
FIAT, Telenor, Microsoft, Coca-Cola, Delhaize, Michelin, Gazprom, Bosch,
Siemens, Banca Intesa Sanpaolo, UniCredit and many others
FDI BY COUNTRIES
 Currently leading spot on the country list is held by Netherlands, followed by
Austria, Greece, Norway and Luxembourg, while major investor countries
also include Germany, Italy, Slovenia, and the Russian Federation. (USA
usually invests through its European affiliates)
FDI BY INDUSTRIES
 Service sectors have proven to be the most attractive to international
investors. Banking and insurance recorded the largest FDI inflow of €5
billion. Manufacturing industries € 4.8 billion, followed by wholesale, retail
and repair of motor vehicles and real estate activities.
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8. SERBO ITALIAN COOPERATION OVERVIEW:
 Serbian Chamber of Commerce announced that in 2014 the positive trends
of the cooperation beetwen the two countries continued
 Trade volume increased by 15% compared to the same period last year
 Export structure is dominated by the finished vehicles (almost half of the
entire export to Italian market), finishing jobs in the garment and footwear
industry, nonferrous metals…
 Italian import is characterized by: parts and components for the automotive
industry, raw materials for the garment and footwear industry, household
appliances
 In financial sector Italian banks hold up to 25% of the banking market and in
insurance Asicurazioni Generali took over Delta Insurance company while
DDOR Novi Sad became the part of Fondiaria Group (almost 50% of
Serbian insurance market)
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9. PRIVATIZATION PROCESS IN SERBIA AND ITALIAN
COMPANIES:
So far in the Privatization process the Italian firms invested in:
• Bitumen Adige -- Kijevo Strazevica
• Piero Zanella – Zlatibor Mermer (the first privatizations by the foreign buyers)
• Alcalinea – Gradjevinar Kraljevo
• SFIR Vicenza -- Sugar factory in Senta and Nova Crnja
• Zanini – Hemofarm – Bertele – Lamp East (pharmaceutical industry)
• Fantoni – Spik Ivanjica
• Fibeks – Ateks (textile industry)
• Benetton – Niteks
• Goldoni – 21. maj fabrika Beograd
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10. PRIVATIZATION PROCESS IN SERBIA AND ITALIAN COMPANIES:
 Italian Goverment approved as an incentive for private sector in Serbia a
credit line for purchase of italian equipment in ammount of 33,5 million of
EUR for SME’s back in 2005 (all the resources were entirely deployed)
 The second credit line in the almost the same amount was approved in
February 2008 and it is beeing used since March 20012 (apart the SME’s
priority will also be on infrastructure projects, ecology and comunal services)
 According to the report by the Serbian Agency for Privatization in
September 2014 there were no privatization purchases. Call for privatization
of 502 companies in the process of restructuring received 1732 offers for
403 companies, while 99 of them remained without an offer. According to
first estimates there are serious offers for 50-60 companies. The greatest
interest attracted agro-food sector companies such are Agricultural
Corporation ‘Beograd’ and Agro-Industrial Conglomerate ’Becej’
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