Serbia Trade and Foreign Investment

By | July 24, 2022


  • Business Relationships
  • Foreign direct investment
  • FTAs ​​and Treaties
  • Development Cooperation
  • Prospective fields of study (MOP)

Business relations

Trade relations with the EU

Trade relations with the EU The European Union is a traditional trade partner of Serbia, the country has the second largest volume of trade with the EU among the candidate states after Turkey. In terms of the volume of trade in goods, Serbia is the 27th largest exporter and the 33rd most important importer to the EU. For Serbia, the European Union currently represents a market to which approx. 65% of its exports go and from which approx. 57% of imports come. Serbia has a trade deficit with the EU.

2017 2018 2019 2020 2021
Exports from the EU (million EUR) 13,225.3 14,528.8 15,154.3 14,600.0 18,304.0
Imports into the EU (million EUR) 9,731.0 10,736.9 11,283.2 10,725.6 13,997.5
Balance with the EU (million EUR) -3,494.3 -3,791.9 -3,871.1 -3,874.4 -4,306.5

Source: European Commission

Trade relations with the Czech Republic

Until 2009, mutual economic relations were characterized by a gradual increase in turnover, especially Czech exports, and the increased interest of the Czech business community in the territory was evident. In 2009, there was a temporary decline in trade. However, this trend was immediately reversed in 2010, and a record turnover of mutual trade was recorded in 2011, both for Czech exports and imports from Serbia. Due to the economic situation of both countries, mutual trade stagnated in 2012 and 2013. Since 2014, the turnover of mutual trade has grown significantly again. The Czech Republic is Serbia’s 18th most important trading partner in terms of turnover. From this point of view, Serbia is the 33rd most important partner for the Czech Republic. Since 2017, a significant upward trend in Czech exports to Serbia has been evident.

2017 2018 2019 2020 2021
Exports from the Czech Republic (billion CZK) 14.2 15.3 16.9 15.9 20.5
Imports to the Czech Republic (billion CZK) 8.7 12.6 13.9 15.2 19.9
Balance with the Czech Republic (billion CZK) -5.5 -2.7 -3.0 -0.6 -0.6


Trade relations with countries outside the EU

Outside the EU countries, the main destinations in foreign trade include the neighboring countries of the Western Balkans, i.e. Bosnia and Herzegovina, Montenegro and North Macedonia, as well as China, the Russian Federation and Turkey.

2017 2018 2019 2020 2021
Exports from countries outside the EU (million EUR) 7,293.6 8,699.6 10,203.7 9,463.4 12,262.9
Imports to countries outside the EU (million EUR) 5 106.7 5,371.4 6,174.8 5,984.3 7,679.4
Balance with non-EU countries (million EUR) – 2,186.9 -3,328.2 -4,028.9 – 3,479.1 – 4,583.5

Source: SSO

Foreign direct investment

In terms of support for foreign direct investment (FDI), Serbia is currently ranked among the top in the world. For example, according to the Financial Times, Serbia was ranked 1st in the world (Greenfield FDI Performance 2019) and 1st in Europe (Greenfield FDI Performance 2020). For the third year in a row, Serbia is also in 1st place in terms of the number of jobs created by FDI per million inhabitants (IBM Global Locations Trends). Among the significant positives when deciding to enter Serbia, foreign investors mention the growth trend of the national economy, stable currency development, business environment (e.g. 9th place in the world in terms of building permits), very competitive operating costs (cost of labor – monthly average gross salary 643 EUR, corporate profit tax 15%, price of office space – on average 6 m2 for EUR 100/month),

The Government Agency for Development (Development Agency of Serbia) lists the following among the main state benefits and investment incentives:

– For investment projects reaching EUR 8.3 million in fixed capital and employing 100 new workers, tax holidays are provided for a period of 10 years.

– The business entity does not pay double tax in Serbia and in the home country if the tax has already been paid.

– The tax loss shown in the tax return can be carried forward and offset against future profit for a period of up to 5 years.

– For taxation purposes, the company’s research and development costs are doubled, reducing the basis for calculating corporate income tax.

– Income from intellectual property developed in Serbia is taxed at only 3% instead of the generally applicable rate of 15%.

– Foreign nationals can get tax deductions if their salary income exceeds a certain threshold.

– Foreign investors in Serbia can take advantage of the duty-free import of raw materials and semi-finished products for export-oriented production.

– Foreign investors are exempt from paying customs duties on the import of equipment that represents a share in the capital of a company in Serbia.

– The National Labor Office provides various incentives for hiring and training new employees.

– Individual local municipalities also provide various investment incentives tailored according to the agreement with the foreign investor.

Serbia is currently often referred to as a “world rising star” in terms of foreign direct investment. This is evidenced not only by published data (FDI in 2019 reached 82% of GDP, with an almost 4-fold increase over the past seven years), but above all by the brands of global manufacturers that have already entered this Balkan country. These are, for example, Microsoft, Continental, Bosch, Dr. Oetker, Siemens, Heineken, Michelin, Nestle, Swarovski, Fiat Chrysler Automobiles, Panasonic, Bosch, etc.

The Czech Republic is one of the ten largest foreign investors in Serbia. The portfolio of Czech investment activities in Serbia is very broad and is therefore not limited to just a few economic sectors. For example, SEBRE’s acquisition of the film studios Avala Studios Beograd and the acquisition of the Marina Dorćol development project, the investment entry of the PPF group into the telecommunications company Telenor and into Serbian mobile banking, the entry of the PENTA group (Dr. MAX) into the pharmacy network Farmanea, and the acquisition of the Karlovy Vary company Mattoni to the company Knjaz Miloš, the acquisition of the JAT-Tehnika aircraft repair shop by the Prague company Avia Prime, the entry into the chemical conglomerate Beohemija (CE Industries), the greenfield investment of the company IMG Bohemia within the automotive industry, etc. Czech investors appreciate the dynamic economic development, macroeconomic stability, sufficient labor force, relatively low level of labor and operating costs and the lowest corporate income tax in Europe. The above-standard relations between the Czech Republic and the Republic of Serbia also play a significant role, both on the political and economic levels.

FTAs and treaties

Treaties with the EU

Serbia is a candidate country for joining the EU. It negotiates the terms of its membership and gradually adapts its internal legislation and administrative capacity to the EU acquis as part of the accession process. Serbia’s accession to the EU is not expected before 2025. Mutual trade between Serbia and EU member states is almost completely open, based on the Stabilization and Association Agreement. The exception is some special items such as wine, young beef or fish, for which quotas are introduced in the direction to the EU, in the opposite direction you may encounter certification requirements, etc.

Contracts with the Czech Republic

The intergovernmental agreement on economic cooperation, which was signed in Prague on July 20, 2005, is a basic contractual document that enables the support of mutual trade and economic relations. Among other things, he establishes the Mixed Czech-Serbian Committee, whose XIII. the meeting took place in September 2021 in Prague. The next meeting is expected in the fall of 2022 in Belgrade.

The agreement between the Government of the Czech Republic and the Federal Government of the Federal Republic of Yugoslavia on mutual support and protection of investments entered into force on January 29, 2001. The amendment to the agreement, necessary with regard to the entry of the Czech Republic into the EU and the division of the states of Serbia and Montenegro, was signed in Belgrade on June 4 2010 and entered into force on March 16, 2011.

The agreement on the avoidance of double taxation was signed in Prague on November 11, 2004. The additional protocol to this agreement was signed in September 2009 on the occasion of the visit of the Minister of Finance of Serbia, Diana Dragutinović, to the Czech Republic and entered into force on February 28, 2011.

On May 14, 2010, a departmental Memorandum of Understanding on cooperation in the field of agriculture was signed. Mutual cooperation is envisaged especially in the following areas: water management, veterinary medicine, plant production, animal production, breeding programs, forestry, feed industry, agricultural research, rural development and food safety.

On April 1, 2014, a Memorandum of Understanding on cooperation in the field of energy was signed in Belgrade. It determines the most important areas of cooperation between the responsible ministries and also prioritizes joint projects in the given sector.

Developmental cooperation

Serbia was one of the biggest beneficiaries of the government program of Czech foreign development cooperation (ZRS).

From 2010 to the end of 2017, Serbia belonged to the so-called project states in terms of the concept of development aid, which corresponded to both the overall development of Serbia and its gradual approach to the EU. The activities of the ZRS CR were directed mainly to the sectors of healthcare, state administration and civil society, support of small and medium-sized enterprises, supply of drinking water and sanitation, and energy. The projects were focused on the transfer of know-how, EU standards and appropriate technologies. Greater emphasis is now placed on commercial continuity of previously implemented projects and on a broader approach of Czech entities to projects financed by the EU. In the mentioned period, all projects were completed despite some complications and delays on the Serbian side. There was an intensification of coordination with other donors active in Serbia (not only within the EU, but also other groups – e.g. “Friends of Sandžak” and “Friends of South Serbia”). In total, the Czech Republic provided assistance to Serbia in the period 2002-2021 in the amount of approximately 570,000,000 CZK.

In addition to bilateral ZRS projects (they account for approximately 70% of the total amount of ZRS funds), other forms of ZRS also include transformation cooperation projects of the Ministry of Foreign Affairs of the Czech Republic.

In addition, projects were implemented under the subsidy title “Support for development activities of regions and municipalities in priority countries”, projects of the “Aid for Trade” program and many others.

Since 2013, projects have been running within the Development-Economic Partnership Program of the Ministry of Foreign Affairs of the Czech Republic, whose immediate goal is to support the cooperation of Czech business entities with local partners in developing countries using the transfer of knowledge and technology.

A separate category are the so-called small local projects (MLP). In total, in the period 2006–2021, aid in the total amount of approx. 13 million CZK was provided in this way.

More detailed information about the projects can be found on the website of the Ministry of Foreign Affairs of the Czech Republic, further details about the principles of implementing foreign development cooperation are published by the Czech Development Agency (ČRA).

Prospective fields of study (MOP)

Perspective field 1 – Transport industry and infrastructure

In Serbia, there is currently an extraordinary boom in terms of building transport infrastructure. Major projects are mainly in the area of ​​railway infrastructure, where Serbia intends to invest more than CZK 150 billion (or EUR 6 billion) in the coming years in the complete modernization and reconstruction of railway lines. In 2022, the modernization of approx. 300 km of railway lines is planned. Although the main projects are mostly agreed with important foreign suppliers, there is an extensive possibility of subcontracting, in which Czech companies can also participate, and in this direction some Czech companies are already achieving very interesting prestigious contracts.

In the field of road transport, over 1,200 km of highways are currently under construction across the country in Serbia, and rehabilitation work is also underway on almost 17,000 km of trunk, regional and local roads in addition to the main corridors. In the field of road transport, a number of important infrastructure projects are currently being implemented in Serbia. By 2023, the construction of 90% of highways is expected to be completed.

Prospective branch 2 – Railway and rail transport

The modernization of the carriers’ fleet is directly related to the need to modernize the transport infrastructure in Serbia. For the most part, the existing vehicle fleet has long outlived its standard technical and moral lifespan, and purchases of new means of transport can therefore be expected. Projects for the capital of Serbia are undoubtedly among the most interesting public contracts. The municipality of Belgrade intends to invest more than CZK 300 billion (approx. EUR 12 billion) in its transport infrastructure within 10 years. Tenders are underway for the supply of electric buses, trams and trolleybuses. Opportunities for subcontracting for public transport could also be in connection with the start of construction of the subway. Important orders are also being prepared for public transport in other larger Serbian cities – Novi Sad, Niš, etc.

Perspective field 3 – Construction industry

In the years 2015-2021, the Serbian construction industry swung into one of the strongest growth cycles in recent history. The post-recession recovery gradually transformed into a full-fledged construction boom that more than doubled Serbia’s construction output, from CZK 50 billion (EUR 2 billion) in 2015 to CZK 100 billion (EUR 4 billion) in 2015. 2021.

In Serbia, further continuity of the boom in the construction industry can be expected in the near future. Development projects in residential construction appear to be the most important segment. The demand for new apartments is growing very significantly, as well as the modernization of existing apartment buildings and their energy efficiency. Related to this is technology for monitoring energy and water consumption and equipment for their more efficient use. Due to the extensive demand for residential space, there has even been a notable increase in condominium construction led by Israeli and UAE investors and Serbian private investors. The commercial and industrial market has seen the delivery of a significant number of new build premises and this trend is expected to continue in 2022.

Perspective field 4 – Water management and waste industry

In the years 2021 – 2026, the Serbian government is implementing the “Clean Serbia” project, which, among other things, envisages investments of CZK 100 billion in municipal infrastructure and wastewater treatment plants. During the resolution of the epidemiological crisis, the need for maximum hygiene, clean water, and waste treatment also increased significantly, not only in cities, but also in small villages and remote municipalities.

Serbia basically lacks comprehensive ecological infrastructure, such as wastewater treatment plants and functional sewers. Also, the drinking water supply system is at a level that does not even come close to meeting EU requirements. Therefore, there is a growing interest in the supply of technologies and solutions in this area, and as the use of EU pre-accession aid expands, the volume of funds that the Serbian state administration will be forced to invest in this area will also increase. The total value of the investments is estimated at CZK 120.4 billion (i.e. EUR billion) over the next 25 years.

Perspective field 5 – Agricultural and food industry

Serbia considers the agricultural sector to be the main pillar of the economy. Agricultural production is gradually increasing and contributing to GDP growth. In terms of sectors, processed products (health food, powdered milk, beer, etc.), pet food and feed, equipment for cattle breeding and animal production, building storage capacities, products of plant genetics, breeding, seed breeding, etc.

Serbia Trade