In this post, we will tell you how Serbia can be an attractive jurisdiction to register capital management instruments and create a family office with the help of Foundations and other non-profit organizations. Serbia offers a unique combination of information privacy with access to international banks.
Why Choose Serbia for Capital Management
Ask any entrepreneur or investor to name a country where an offshore structure can be created and they are unlikely to name Serbia: Nevis, Seychelles, or Belize will come to mind first.
And this is where the country’s advantage lies: an offshore jurisdiction that few people pay attention to is more profitable than the one which is visible and tightly controlled.
In general, Serbia serves as a bridge between the West and the East, and this is being actively used by Chinese companies seeking to enter Europe.
Belgrade, the capital of Serbia, is a regional business center. The city is chosen not only for business: Belgrade is selected by expats from all over the world thanks to the combination of a high standard of living and relatively low prices.
The peculiarity of Serbia also lies in the fact that it is relatively easy to open a bank account for local companies, branches, and charitable (non-profit) organizations. Local banks are mostly owned by international groups of banks: Austrian, German, Turkish, UAE, and Chinese ones. And they are all actively working with local companies.
Plus, despite the existence of an agreement on the automatic exchange of information, there are features in Serbian legislation that allow you to protect your data as a beneficiary, and they cover Serbian non-profit organizations only.
The Hidden Power of Non-Profit Organizations in Serbia
According to the existing legislation in Serbia, you can register 3 main types of non-profit organizations:
Other non-profit organization formats, such as political parties and trade unions, are also available.
Here we will briefly describe the regulatory framework governing the activities of non-profit organizations in the Republic of Serbia without providing legal advice.
In terms of taxation, non-profits are completely exempt from taxes paid for receipts (income tax and VAT):
- Membership dues
- Non-economic sources of income
Property tax is not charged on non-monetary gifts, but you will have to pay VAT in this case.
Profits from commercial activities up to 400,000 Serbian dinars (RSD) are also exempt from taxes.
Association in Serbia
An association in Serbia is a special form of relationship that acquires the status of a legal entity after and entry has been made in the Serbian register.
The purpose of any Association is to obtain “mutual benefit”, not profit. The Association may engage in any activity not expressly prohibited by law in Serbia.
Associations are used to obtain certain benefits, but it is easier to use Foundations, or rather Endowments, to manage personal capital.
on offshore structures and jurisdictions
that would best meet your
asset protection goals.
on offshore structures and jurisdictions that would best meet your asset protection goals.
Serbian Foundations and Endowments
Endowments and Foundations can be compared to common-law trusts, that’s why they are often colloquially referred to as trusts.
Both forms are governed by the same Law on Endowments and Foundations adopted in 2010. Neither form requires members, and they are both non-profit ones. Endowments and Foundations can be registered by natural and legal persons, residents or non-residents of Serbia. Beneficiaries can also be located anywhere.
- Foundations are defined as “not-for-profit, non-membership and non-governmental legal entities pursuing public interest objectives”.
- Endowments are defined as “not-for-profit, non-membership and non-governmental legal entities whose Founder designated specific property to support its public or private interest objectives”.
An ordinary Foundation does not require authorized capital, but it can only pursue public interests or philanthropic objectives. It offers much less flexibility compared to Associations (which allow “mutual benefit” goals and public benefit) and Endowments (where you can pursue Private Interest goals).
You may find certain similarities between the Public Foundation concept in civil law jurisdictions and the Serbian Foundation, but there is an important difference: you cannot establish a Private Interest Foundation in Serbia, while such countries as Liechtenstein and Panama provide this option. This is where Endowments should be used.
Endowments are compared to trusts. Their peculiarity is the ability to pursue private interests, and they are suitable for wealth management.
It is expressly permitted for a Serbian Endowment to be established for private interest purposes, such as family office, family succession planning management, even in the case of a commercial project (a commercial company in or outside Serbia may be owned by an Endowment).
The requirements for this form are higher in Serbia: a minimum capital amount starts from 30,000 euros (its equivalent in Serbian dinars), but the law allows for certain exceptions. Endowment assets cannot be transferred to Founders, members of the governing bodies, employees, or persons affiliated with them. However, the Founder’s family members may be named as the beneficiaries.
A Serbian Endowment can own assets of any type located anywhere in the world.
Founders, Control, and Beneficial Ownership of Non-Profit Organizations
The Founders of a non-profit organization may be residents and non-residents of Serbia, natural persons or legal entities. In the case of legal entities serving as Founders, it does not matter whether they are themselves non-profits or commercial companies.
Associations, Foundations and Endowments have no owners under Serbian law. Founders of Associations and Foundations are strictly prohibited from having any proprietary interests in the organization, and they cannot legally claim any part of the organization’s assets during its lifetime or upon its termination. And it is this particular rule that turns an Endowment in Serbia into a robust asset protection instrument that is interesting for international planning purposes. The rule applies in all cases except for the voluntary dissolution of an Endowment pursuing private interest goals.
Is There a Register of Beneficial Owners in Serbia and How does it Work?
Banks must meet several requirements to ensure anti-money laundering compliance. This includes identifying the Beneficial Owner of the company or non-profit organization.
The Law on the Central Register of Beneficial Owners (2019) imposes an obligation on legal entities (Associations, Foundations and Endowments included) to enter a beneficial owner into a new national registry, and this document is used by the banks for compliance with Serbian legislation.
Who gets into the registry? The beneficial owner must be a natural person who has primary influence over the organization’s operations and decision-making.
There is also a guidance (issued by the Ministry of Economy and the Serbian Business Registers Agency) showing how to identify the beneficial owners of Serbian companies and organizations. According to its provisions, when it comes to non-profits (Association, Foundation, or Endowment), their Managers or Trustees would be registered as Beneficial Owners.
It is specifically stated that neither the Founder nor the Beneficiaries are required to be entered into the register, so this information can be kept confidential.
It turns out that non-profit organizations make it possible to create an interesting structure for capital management and protect personal information.
You can use this solution not only for private assets (bank accounts, shares in different countries, real estate) but also for any commercial business managed by a non-profit organization.
Thus, a non-profit organization can bring tangible profit to the enterprise and help in pursuing personal goals. Of course, all that is subject to compliance with the law and careful preparation of documents: Articles of Association, agreements, and other memoranda.
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