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Changing Business Landscape Shifts Roster of Foreigners with Companies in Serbia

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Although many would say that among foreign countries, Germany is the one with the most founders of companies in Serbia, considering that they employ more than 80,000 people here, the statistics tell a different story. Official data from the Business Registers Agency show that among the founders of foreign companies in Serbia at the moment, the majority are from Cyprus, with lower taxes and new companies coming from Russia in the last two years being among the reasons.

Among the top ten countries with the most registered companies founded by foreigners, Cyprus holds the first place with 649 business entities, members, or owners in domestic companies. Slovenia comes second with 566, while Germany has 540 companies in Serbia where its citizens are among the founders.”

Austria is in fourth place with 522 companies. Italy, the Netherlands, and Switzerland follow, and neighboring countries such as Croatia are also on the list of the top 10.

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Milan Kovačević, an economist and consultant for foreign investments, told NIN that it is not surprising that the statistics show Cyprus at the top but also notes that the positions of countries have changed, considering new circumstances both in offshore zones and in other countries affected by recent geopolitical events.

“On the British Isles, as an offshore zone, opportunities are gradually narrowing. This leads to the relocation of company headquarters to Cyprus, and in our registry, this means erasing investments from the British Isles, with Cyprus appearing as a foreign investor. Cyprus is the choice because there, as well as in several other countries, no capital gains tax is paid. This is significant, especially considering that many groups, subsidiary companies with a complex organization, find it more cost-effective to relocate their headquarters for various reasons,” says our interlocutor.

However, he also notes that, in this way, founders from Russia have also been coming to Serbia lately.

“By relocating the company headquarters to Serbia, significant Russian investments have come through Cyprus. They are rarely visible in the statistics, but they have been present since they mostly came through another country.”

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Many reasons have distinguished the Slovenes

It is not surprising that Slovenia is in second place,” says Kovačević.

“While the transition was ongoing, the Slovenes tried at all costs to keep their companies in Serbia. And then, when Croatia joined the European Union, Slovenia found additional reasons to move many businesses to our country. Some companies have the advantage of being in Serbia because they can trade more with Russia, China, and some countries with which it is more advantageous for them from our country, and in the current circumstances, it is more profitable,” says Kovačević.

Kovačević also points out that subsidies are one of the key factors that we have used in recent years to attract foreign investments.

“Another factor is cheap labor. We still are considered a country with inexpensive labor that is more favorable than in many other European countries. It is also significant that we are somewhat unusual, well-positioned. We have open doors to the EU, but also to China and Russia, and few countries are in that position,” concludes Kovačević.

Although China and Russia are often perceived in public as the countries from which we receive the most capital, data shows that for two decades Europe has been leading with 63% of all foreign direct investments.

In comparison with EU countries, Serbia stands out as favorable ground for business due to lower costs and simplified operations. Among the benefits, investors highlight free trade agreements, especially with the European Union and within CEFTA. Additionally, the Agreement with the Eurasian Economic Union (EAEU), led by the Russian Federation, was signed in October 2019. The list also includes numerous agreements facilitating business with Turkey, the United Kingdom, and countries from the European Free Trade Association (EFTA), including Iceland, Liechtenstein, Norway, and Switzerland.

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