What are differences between representative office of foreign legal entity in Serbia, branch of foreign legal entity in Serbia and limited liability company in Serbia?
Representative office of foreign legal entity (company) in Serbia
It is registered based on decision of the competent authority of a foreign company
Representative office doesn’t have status of legal entity, but represents a separate organizational unit of a foreign legal entity (company). It may provide only preliminary and preparatory actions in order to conclude a legal transaction of foreign legal entity (mainly marketing activities, preparation of contracts for foreign company etc). While a representative office may only perform tasks related to its current operations, foreign company is responsible for obligations to third parties which originates from representative office operations. Representative office has a registered representative person and address.
Representative office can not perform activity, neither to receive its own revenues.
Representative office has Tax ID number (PIB – poreski identifikacioni broj on Serbian), because when paying salaries to employees, tax forms must be filled and Tax ID number is necessary.
Regarding VAT (PDV on Serbian), representative office is not VAT taxpayer. Having in mind representative office activity – preparatory and previous actions, representative office for its work use goods and services that are produced in Serbia, as end-user, and pays VAT through those purchases basicaly.
Our short conclusion:
Activities that representative office has a right to perform are statutory quite closely placed. Preparatory works that representative office performs doesn’t involve the conclusion of the business, but contractor would always be a foreign company. Responsbility is also on foreign company.
Branch of a foreign legal entity (company) in Serbia
Branck of a foreign legal entity (company) is also a separate organizational unit of a foreign company, through which the foreign legal entity performs the activity in Republic of Serbia. Branch in terms of tax has a resident status, and in legal terms it acts in the name and on behalf of the legal entity (company). A company has unlimited liability for the obligations to the third parties, which occurs as result of activities of its branch.
Branch has a main activity which performs in Republic of Serbia (as opposed to representative office), and branch can perform any other activity which are not prohibited.
Regarding VAT, branch is considered a VAT taxpayer and has an obligation to be recorded in the VAT system.
Our short conclusion:
Foreign legal entity (company) has unlimited liability for the obligations which occurs as result of branch activities. Also, contractor of all jobs in Republic of Serbia would be foreign legal entity (company).
Limited liability company (LLC) in Serbia
1. performs on the market as resident legal entity
2. you limits your responsibility as the founder
3. you can as the founder, using corporate guarantees from the banks as a related entity, help your Serbian LLC to obtain loans, leases etc
4. you can register yourself as director, and to organize LLC in Serbia as you like, to set person just as legal representative, proxy or authorized representative.
5. Tax status is similar to the branch tax status
The list of the documents necessary for the registration and decisions are different depending from the form of the legal entity.