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Karanović & Nikolić

RESAVSKA 23, 11000 BELGRADE, SERBIA
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Work +381 11 30 94 200
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The Serbian Law on Foreign Exchange Amended

May 2018

On 20 April 2018, the amendments to the Law on Foreign Exchange (the “Law”) were adopted and will enter into force on 28 April 2018. Exceptionally, the application of certain provisions related to the assuming of competencies over foreign exchange control by the National Bank of Serbia is delayed until 1 January 2019.

The main reasons behind the amendments to the Law are the harmonisation of the obligations that the Republic of Serbia undertook under the Stabilisation and Association Agreement and an alignment with international standards in the area of the prevention of money laundering and terrorism financing. These amendments contribute to the further evolution of the digital and IT sector in Serbia - in accordance with the activities that the Serbian Government directed towards the development of this field.

The main amendments to the Law are the following:

  • The list of issuers of long-term securities in which the residents may freely invest has been expanded – residents may now invest in long-term securities issued by the European Union and in legal entities registered within EU territory. Banks remain free to invest in long-term securities;
  • The capital flow based on short-term portfolio investments is liberalised –residents and banks may perform the sale and purchase of short-term securities of certain issuers, while non-residents from the EU may sell and purchase short-term securities in the Republic of Serbia in accordance with the law regulating the capital market;
  • It is clarified that the creditor’s consent is required in cases of permitted debt assignment, which is a correction stipulated for the purposes of harmonisation with the general rules on obligations;
  • Entering into certain cross-border credit transactions in electronic form has been enabled;
  • Short-term borrowing by natural persons and branches is enabled – the resident natural persons may take loans/credits from non-residents from the EU with a repayment term of up to one year, while branches may take a loan/credit from a non-resident founder from the EU under the same conditions;
  • The approval of financial loans by a resident legal entity to a non-resident is liberalised, as well as the granting of sureties and other security instruments under credit transactions between non-residents – the National Bank of Serbia is expected to adopt a bylaw which will prescribe the conditions and the manner under which these transactions will be carried out, whereby the restrictions prescribed by this bylaw will be exclusively for the purposes of preserving public interest and financial stability. The same bylaw should further regulate the conditions under which a resident legal entity will grant sureties and other security instruments under credit transactions between residents and non-residents;
  • The scope of transactions based on which a resident legal entity may obtain a guarantee and surety from a non-resident has been extended – the resident legal entities now may obtain guarantees and sureties from non-residents also for transactions concerning the import of goods and services, as well as for investment works by non-residents in Serbia;
  • All residents (as opposed to natural persons only) may execute cross-border payment transactions via payment institutions and public postal operators;
  • Charity organisations may receive charity donations from abroad through electronic money issuers as well;
  • The sale and purchase of digital products in foreign currencies in Serbia is permitted under certain conditions - (i) that the payment is made using a payment card or electronic money through a local payment service provider, and (ii) that these products are delivered exclusively through telecommunications, digital or IT devices;
  • The National Bank of Serbia assumes the competencies over foreign exchange control from the Tax Administration as of 1 January 2019 - The National Bank of Serbia will assume the competencies of the Ministry of Finance, Tax Administration over the issuance and revocation of authorisations and certificates for the conduction of currency exchange operations and the supervision over currency exchange operations and the foreign exchange operations of residents and non-residents.

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    - Karanovic & Nikolic

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  • Interview with Patricia Gannon: The Importance of Female Leadership in Law Today

    Patricia Gannon, founding partner at Karanović & Nikolić, was recently appointed Chair of the European Forum at the International Bar Association . In this interview, she discusses her role at the helm of the largest global gathering of legal professionals and tackles the important topic of diversity in law, as well as female leadership from her unique perspective as female co-founder of a leading law firm from Southeast Europe.
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    The Serbian Competition Commission (the " Commission ") recently finished sector inquiries concerning quite distinct industries – raspberries and the public procurement for software and hardware. The aim behind the inquiries was to perform extensive market research and analysis in order to acquire a clearer picture of the possible antitrust issues and risks in two sectors widely perceived as strategic for the development of the Serbian economy.
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    The Serbian Competition Commission (the " Commission ") continues its diligent examination of the Serbian competitive landscape in specific industries, this time with inquiries in two more industries – sportswear (including footwear and sporting equipment) and oil (petroleum products). Once again, the aim behind the market test was to identify potential issues on the relevant markets and provide broader insight into the functioning of the relevant markets.
  • New Amendments to Serbian Tax Laws

    At the end of 2017, the Serbian Parliament passed amendments to Serbian tax laws, including the Law on Personal Income Tax (PIT Law), the Law on Contributions on Mandatory Social Insurance (CMSI Law), the Law on Corporate Income Tax (CIT Law), and the Law on Value Added Tax (VAT Law).
  • Permit-free Regime for Construction in Montenegro

    The new Construction Law entered into force in Montenegro and it is meant to unify construction, zoning regulations and deal with illegal objects. However, some provisions of the old Construction Law still remain in force, until the adoption of the General Regulation Plan.
  • Amendments To The Slovenian Construction Law

    With the aim of breathing a bit of fresh air into the construction legislation, three new laws have been adopted recently and will be applied with effect from 1 July 2018. The current Construction Act will be replaced with both the new Building Act and the Architectural and Civil Engineering Activities Act, while the current Spatial Management Act will also be subject to certain amendments.
  • Expedited Procedure Rules part of the new ICC Rules

    On March 1, 2017, the amendments to the ICC Rules entered into force. Among different changes, maybe the most noticeable ones relate to the introduction of the Expedited Procedure Rules (hereinafter: the Rules), now contained in the new Article 30 of the ICC Rules and the new Appendix VI.
  • New tax rulebooks in Serbia - trend of increased taxation of foreign legal entities

    Upon recent amendments of the Law on Value Added Tax in Serbia (the “VAT Law ”), the Ministry of Finance adopted several accompanying secondary pieces of legislation:
  • Serbia: Regulation on the Terms and Conditions for Attracting Direct Investments

    The Regulation on Terms and Conditions for Attracting Direct Investments (“Official Gazette of the Republic of Serbia”, no. 110/2016) has come into force on 1 January 2017. The Regulation introduces certain changes in regards to public invitation, grounds and conditions for the allocation of funds in respect of the investment projects.
  • Changes in tax laws in Serbia - New duties for foreign legal entities

    The Law on Amendments to the Law on Value Added Tax (hereinafter: Law on VAT), the Law on Amendments to the Law on Tax Procedure and Tax Administration (hereinafter: Law on Tax Procedure), and the Law on amendments to the Law on Excise Duties (hereinafter: Law on Excise Duties) were published in the Official Gazette of the Republic of Serbia no. 108/2016 of 29 December 2016. All laws came into force on 1 January 2017, however, certain provisions will begin to apply at a later date, as outlined below, for every law individually.