Serbia

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Return to homepage  |  Last updated: 2 December, 2020

• Due to the “first wave” of COVID, State of Emergency has been initiated in Serbia and lasted from 15 March 2020 until 06 May 2020. Throughout the State of Emergency, Government has issued numerous Decrees regulating measures aiming to support the economy throughout and after the State of Emergency.
• At initial stages of the “second wave” Government has extended part of measures for another two months, but long-term measures have not been announced.
• Foreign citizens can enter Serbia freely, except when entering from Bulgaria, Romania and Croatia, when PCR test is required.
• In general, businesses are not prevented from operations if prevention measures are respected. No more than 5 individuals can attend events in open or closed spaces.

Click here to see a comprehensive summary of jurisdictional tax measures and government reliefs in response to COVID-19.

• Initial set of tax measures prescribed in Decree on Fiscal Benefits and Direct Aid to Private Sector and Citizens due to COVID-19 included direct aid in the form of financing of employee's salaries for up to 3 months.
• Qualifying businesses were entitled to 50% of minimum wage in March or minimum wage in March (depending on the size) for each qualifying employee.
• In July, second set of fiscal measures is introduced, providing additional salary financing, with amounts varying depending on the size of business and the fact whether it received initial financing prescribed in the initial set of measures.
• Entities which opted for both sets of measures can not decrease number of full time employed for more than 10% before expiry of the period of three months from the last payment of direct benefits (no later than 31 December 2020), and can not pay out any form of dividend until 31 December 2020, or will have to return received funds increased for a late payment interest.
• As a part of the "My First Salary" Program, the Government will fund part of salary for up to 10,000 people younger than 30 years, without previous working experience. In line with this, for the high school graduates the Government will provide RSD 20,000 (approx. EUR 170), and for the University graduates the Government will provide RSD 24,000 (approx. EUR 205) during the nine months period. Funds will be paid directly to program participants by the National Employment Service.
• In addition, Minister of Finance has announced that the Government will allocate approx. EUR 10.2 million for the program of professional retraininand skills development through educational vouchers.

• On April 10, Government has issued Program of Financial Support regulating conditions for approval of loans for business entities aimed at maintenance of liquidity and working capital in the total amount of EUR 200 million.
• Loans will be provided to entrepreneurs, cooperatives, micro, small and medium businesses which apply by 10 December and satisfy conditions, with grace period of 12 months, repayment period of 36 months and 1% interest rate.
• On April 16, Government has issued Decree on establishing a guarantee scheme for loans in total amount of EUR 2 billion.
• Guarantees will be issued for the benefit of banks which will provide entrepreneurs, agricultural households, micro, small and medium entities which satisfy conditions with loans for liquidity financing and working capital
• The Regulation on the Procedure for Issuing Debt Securities was published on 10 April 2020. It laid down a simplified procedure for issuing corporate debt securities. The period of application of the measures was until 7 November 2020.
• During October 2020, hotels and accommodation providers which applied to the public call for subsidies received a payment of a one-off subsidy of EUR 350 per bed and EUR 150 per accommodation unit. 312 hotels applied, receiving around EUR 11 million.
• On 19 November, Ministry of trade tourism and telecommunications has published call for submission of subsidies application for tour operators and agencies. Eligible agencies will receive up to EUR 5,000, for insurance policy premiums, depending on the type of license they hold. Total allocated amount is approx. EUR 1.28 million.

• For the previous period the National Bank of Serbia (‘NBS’) lowered the key reference rate three times. First time, by 0.50 bp, from 2.25% to 1.75% for the period between 11 March and 8 April, second time by 0.25 bp, to 1.50% for the period between 9 April and 10 June, and third time, by 0.25 bp, to 1.25% for the period from 11 June, in line with the activities taken by other central banks worldwide.
• On 18 March, the NBS adopted decision imposing first moratorium on debt payments. Moratorium applied to liabilities based on loans, loan products (e.g. overdraft or credit card debt) and related products (e.g. interest rate risk instruments related to loans), as well as on the obligations under the financial lease contract, postponing liability payment for 90 days.
• On 27 July, the NBS adopted decision imposing second moratorium on debt payments. Payment of eligible liabilities which were due in July but were not paid, as well as payment of liabilities due in the period from 1 August to 30 September 2020 are postponed until the end of moratorium.

• Previous prohibitions of export of essential medical goods and suspension of technical requirements and standards for the medical equipment is out of force as of 6 May.

Border crossing

• Closure of the all border crossing for passenger's entrance intro RS which has been in force since March 20, and closure of the specific border crossings which has been in force since 12 March are repealed as of 23 May.
• Foreign citizens can enter Serbia freely, except when entering from Bulgaria, Romania and Croatia, when PCR test is required.
• Transiting travelers who enter from Bulgaria, Romania and Croatia are not required to have PCR if leaving Serbia within 12 hours.
• When entering from Montenegro and Bosnia & Herzegovina, foreign citizens have to report to the Institute of Public Health within 24 hours.

• Serbian Government has not announced comprehensive plan for long term economy recovery.
• Based on the public announcement of proposed State Budget for 2021 by the Minister of Finance, there is no indication that such plan is part of the budget.
• Minister has emphasized that majority of the budget will be allocated to capital infrastructural projects and construction of medical facilities.
• However, there are mid term measures currently in in place, such as subsidies to affected industries, and Guarantee Schemes and Loans for liquidity.

• Serbian Government has not announced comprehensive plan for long term economy recovery. Based on the public announcement of proposed State Budget for 2021 by the Minister of Finance, there is no  indication that such plan is part of the budget. Minister has emphasized that majority of the budget will be allocated to capital infrastructural projects and construction of medical facilities. However, there are mid term measures currently in in place.

1. Subsidies for Hotels
   1. Due to the size of impact of COVID on accommodation industry, Government has implemented support package consisted of almost EUR 11 million in subsidies. Payment of subsidies to 312 hotels which have applied has been initiated in October, and consists of EUR 350 per bed and EUR 150 per accommodation unit..
2. Subsidies for Tour operators and touristic agencies
   1. On 19 November, Ministry of trade tourism and telecommunications has published call for submission of subsidies application for tour operators and agencies. Eligible agencies will receive up to EUR 5,000, for insurance policy premiums, depending on the type of license they hold. Total allocated amount is approx. EUR 1.28 million.
3. Liquidity Guarantee Scheme
   1. Guarantee scheme for liquidity financing and working capital loans, defines framework for Republic of Serbia to issue unconditional and payable on first demand guarantee for the benefit of Serbian banks which provide loans for liquidity financing and working capital to businesses.
   2. Total amount of loans provided by banks which will be subject to guarantee is EUR 2 billion, while the total amount of provided guarantee is EUR 480 million. Guarantees will be issued for the benefit of banks.
   3. Borrowers who are eligible under the Guarantee scheme are entrepreneurs, agricultural households, micro, small and medium entities based in the Republic of Serbia and subjects who have been approved with new or renewed of existing loan for liquidity financing and working capital.
   4. Guarantee Scheme can be used for all eligible Loans for which Loan Agreement is signed by 31 December 2020, and Loan is disbursed by 31 January 2021.
4. Liquidity and Working Capital Loans
   1. Program of Financial Support for Businesses Aiming to Improve Liquidity and Working Capital Throughout Economic Difficulties Induced by the COVID-19 Pandemic Caused by the SARS-CoV-2 Virus regulates conditions for approval of loans for business entities aimed at maintenance of liquidity and working capital throughout conditions caused by COVID 19.
   2. For implementation of this program, which will be implemented through the Development Fund of the Republic of Serbia, EUR 200 million have been allocated.
   3. Eligible applicants are entrepreneurs, cooperatives, micro, small and medium-sized companies, in predominantly private or cooperative ownership, and who perform production, services, trade or agricultural activity.
   4. Minimum loan amount per applicant with related entities is RSD 1 million (business entities), RSD 200 thousand (entrepreneurs and cooperatives).
   5. Maximum loan amount per applicant with related entities is RSD 10 million (for entrepreneurs and micro enterprises), RSD 40 million (small enterprises), and RSD 120 million (for medium sized enterprises).
   6. Deadline for the applications for the abovementioned is no later than 10 December 2020.
5. New basis for State Incentives
   1. In October, the Government of the Republic of Serbia adopted two Decrees extending methods for granting State Incentives. First Decree focuses on possibility for the Government to finance eligible companies through temporary purchase of ownership and non ownership shares. Second Decree allows Government to finance part of Fixed expenses of companies which have decreased or ceased activities due to COVID-19.
   2. However, Decrees do not represent enforceable measures, just a legal ground for possible State Aid programs which are planned.  No official comment on such activities is yet available.

Main Sources of information

• Initial Tax, economic relief measures:
• Extension of Tax, economic measures
• Moja prva plata” program
• Program of Financial Support through the Development Fund
  
• Border crossing
• Debt securities
• Hotel subsidies
  Ministry of finance
• Tour operator subsidies

Restructuring: Uros Acanski – uacanski@kpmg.com / Nikola Djenic – ndjenic@kpmg.com
Legal: Igor Loncarevic – iloncarevic@kpmg.com