Serbia’s Government Strategy for the Startup Ecosystem Development showcases the nation’s commitment to nurturing innovation and fostering a thriving startup scene.
Serbia is fostering a vibrant startup ecosystem and promoting innovation is exemplified by the government’s comprehensive strategy for the period 2021-2025. Through a range of incentives and tax reliefs, Serbia aims to accelerate the growth of its startup scene and attract both domestic and foreign investments. The remarkable performance of Belgrade and Novi Sad in the 2022 Global Startup Ecosystem Report highlights the effectiveness of these initiatives.
Tax Incentives for Startup Founders: To encourage entrepreneurship, startup founders in Serbia gain significant tax benefits. During the first three years after establishing a business, founders are exempt from paying taxes on their salaries. Starting in 2022, a new incentive reduces tax by 70% and eliminates mandatory contributions for salaries related to research and development (R&D) projects. Employers engaged in R&D activities are relieved of the obligation to pay 70% of calculated and withheld taxes and 100% of the contribution for mandatory pension and disability insurance for employees directly involved in R&D projects, proportionate to their time commitment.
Capital Gains Tax Exemptions and Investment Tax Credits: Serbia recognizes the importance of intellectual property (IP) rights in startups and provides favorable taxation policies in this regard. When IP rights are contributed as non-pecuniary capital to a company, they are exempt from capital gains tax upon transfer. Additionally, companies that invest in innovative startups receive a tax credit of 30% of their investment, effectively reducing their tax liability. The Serbia Ventures program further supports the ecosystem by offering a fund-of-funds mechanism, providing €5 million ($5.5 million) in matching funds to every new venture capitalist firm incorporating in Serbia in 2022.
Tax Relief for Intellectual Property Income: The Law on Copyright and Related Rights in Serbia introduces an Intellectual Property (IP) Box regime, offering attractive tax incentives for holders of registered IP rights. Under this regime, 80% of qualified income derived from copyright or related rights is excluded from the tax base, significantly reducing overall tax liability. Qualified income refers to earnings derived from copyright-protected works, patents, trademarks, and other IP rights registered with the Intellectual Property Office (IP Office). To qualify for the IP Box relief, the income must arise from licensing agreements, while sales or transfers of IP rights are not eligible for the tax relief. It is crucial for taxpayers, including startups, to maintain accurate records of relevant income and expenses, with qualified income being separately stated in the tax balance sheet for efficient tax planning.
Serbia’s Government Strategy for the Startup Ecosystem Development showcases the nation’s commitment to nurturing innovation and fostering a thriving startup scene. Through a range of tax incentives and reliefs, including tax exemptions for founders, investment tax credits, and intellectual property tax relief, Serbia is creating an enabling environment for startups to flourish. These initiatives not only drive the growth of the startup ecosystem but also contribute to the overall economic development of Serbia, making it an attractive destination for entrepreneurs and investors alike. By leveraging these opportunities, startups can position themselves for success and contribute to the country’s ongoing journey towards becoming a global hub for innovation.
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