Eligible investments

The new Decree on Attracting Investments* ("Incentives Decree") offers to green-field and brown-field investors a new set of incentives in the form of non-repayable grants. Incentives are available in support of investments in the production sector (with the exception of certain excluded industries) and in electronically provided, export-oriented services.

Investment in the production sector is eligible for incentives if the recognized investment cost is no less than EUR 150,000, EUR 300,000 or EUR 600,000, and if the project creates at least 20, 30, 40 or 50 new, full-time, indefinite-term, jobs in the recipient (employment of foreigners does not count towards this requirement). The actual thresholds depend on the location of the project. The host municipalities are divided into four categories. The lower is the development level of the host municipality, the lower are investment and new employment requirements. If incentives are granted, the investment must not be relocated from the host municipality, and the neto increase of jobs in the beneficiary must be maintained, for a period of three or, as the case may be, five years after the end of the investment period (three years for SMEs, five for large companies).

Investment into the services sector is eligible for incentives if the value of the recognized investment costs is no less than EUR 150,000 and the number of new jobs is at least 15.

'Recognized investment cost' is the cost of investment in tangible and intangible assets made over the relevant investment period, including the cost of financial leasing and the cost of operating lease of real estate, provided the real estate lease survives the end of the investment period for at least five ('strategic investment' and large companies) or three years (SMEs). In case of the acquisition of an existing entity, the acquisition cost is recognized as investment cost only if the acquisition was on market terms and the target was either in bankruptcy or would have gone bankrupt if it had not been acquired. In case of large companies, investment into intangible assets cannot exceed 50% of recognized investment cost.

Private funds must form at least 25% of the total recognized investment cost.

Investment of 'strategic importance'

Special provisions apply to investments of 'strategic importance', a category broadly and elusively defined to include:

  1. investment that significantly impacts development and competitiveness of Serbian economy;
  2. investment of more than EUR 20 million within three years, or resulting in 500 new jobs within five years, from the investment commencement;
  3. investment that "fosters joint development priorities of one or more municipalities in the function of increase of their competitiveness" and
  4. investment made on the basis of a bilateral treaty or a treaty on cross-border cooperation.

Investment in the form of public-private partnership is also eligible for incentives.

Investment period

Investment benefiting from the incentives must be completed, and the minimum number of new employees hired, within the period of three years from the conclusion of the agreement on incentives with the state. This period may be extended to no more than five years, subject to the approval of the Council for Economic Development (a Government-controlled body).

The deadline for completion of investment of 'strategic importance' is three years, that is, five years for investment that qualifies as 'strategic' based on the number of newly hired employees. This period may be prolonged to last for up to ten years from the signing of the agreement on incentives.

Non-repayable grants

The amount of non-repayable grants is capped at 50%, 60% or, as the case may be, 70% of recognized investment cost, depending on whether the beneficiary is classified as large, medium-sized or small company. In case of 'strategic investment' in excess of EUR 50 million, the grant cannot be higher than 25% of recognized investment costs, whereas if the amount of 'strategic investment' is in excess of EUR 100 million, the grant cannot be higher than 17% of recognized investment costs.

The recipient is also entitled to non-repayable grant equal to 20% to 40% of the cost of gross salaries of newly hired employees, incurred over the period of two years following the end of investment period. The total amount of grant per one newly hired employee is capped at EUR 3,000-7,000. The actual thresholds depend on the location of the investment. The Council for Economic Development may approve at its discretion the increase of these grants, for up to 10% to 30% of recognized cost of investment into fixed assets, depending on the location of the investment.

The rules on cummulation of state aid apply.

Investments creating more than 200 new jobs (full-time and for indefinite term) at the beneficiary are eligible for additional grants.

Waiver of customs duties

Importation of equipment representing contribution in kind is exempt from customs duties subject to the rules on compatible regional aid, if the beneficiary has received incentives under the Incentives Decree. In all other cases, such imports are exempted from customs duties only if the thresholds for de minimis aid are not exceeded. Equipment imported free of customs duties cannot be older than three years and cannot be resold for a period of three years. Exceptionally, equipment imported as contribution of kind by a large company which is at the same time recipient of non-repayable grants under the Investment Decree, can be exempted from customs duties only if it bought as new.

Eligible recipients

Only companies registered in Serbia are eligible to receive the incentives, irrespective of whether they have domestic or foreign capital.

The following entities are not eligible for incentives:

  1. companies in difficulties, within the meaning of the state aid regulations;
  2. companies in which the state or a local municipality have an ownership interest (unless the state or a municipality is the founder and the Government of Serbia specifically approves the investment);
  3. companies with outstanding debts to the state;
  4. companies which have reduced their work force for more than 10% in the period of 12 months preceding the deadline for the application for grants;
  5. companies that have already received state aid for the same investment;
  6. companies subject to the obligation to repay illegally received state aid.


Grants are offered from time to time, upon the issuance of a public invitation by the Ministry of Economy. The public invitation is supposed to outline the selection criteria. The Investment Decree itself contains a list of discretionary criteria for quality assessment of the projects.

Incentives for 'investments of strategic importance' can be granted in direct negotiations, without a public tender, and are treated as individual aid subject to the prior approval of the State aid Commission.

The selected recipients and the state sign the agreement on incentives, setting the investment milestones. The state can terminate the agreement if the beneficiary breaches any of the milestones. However, if upon the expiry of the investment period the investor has made the majority of the promised investment, but not all, the state can make a settlement agreement 'forgiving' the unperformed portion of the investor's obligations, if this is "in the interest of the Republic of Serbia".

Disbursement of incentives

Incentives are disbursed in three annual installments, proportionally to the investment realization rate in the period preceding the disbursement. Each disbursement has to be matched with a bank guarantee.


The Ministry of Economy supervises the implementation of the investment awarded with grants. Supervision is based on inspection of various investment-related documentation.