Serbia has become a prime destination for manufacturing, attracting foreign investors with its strategic geographic location, extensive free trade agreements, competitive operating costs and robust government incentives. Here’s a detailed overview of why Serbia is an appealing choice for manufacturing investments:
1. Access to EU and third markets
- Duty-free access: Serbia’s comprehensive free trade agreements provide manufacturers the ability to export goods duty-free to various markets, including the EU, the European Free Trade Association (EFTA) and CEFTA (Central European Free Trade Agreement) countries, as well as Turkey and Russia. This creates a significant cost advantage and expands market reach.
- Customs-Free Exports: Many key industrial products manufactured in Serbia can be exported without customs duties. While most goods enjoy this benefit, certain sectors, particularly food and agriculture, may have specific regulations or annual export quotas.
2. Government incentives for manufacturing
- Corporate income tax holiday: Companies that hire over 100 employees and invest more than €8.5 million can benefit from a 10-year tax holiday. This exemption begins once the company starts generating profit, easing financial pressures during initial growth phases.
- Payroll tax incentives: Companies hiring individuals registered with the National Unemployment Agency can receive significant payroll tax reductions based on the number of new jobs created:
- 1-9 new jobs: 65% reduction
- 10-99 new jobs: 70% reduction
- 100+ new jobs: 75% reduction
- Cash grants for investments: The government offers cash grants for Greenfield and Brownfield projects, helping to offset initial capital investments in the manufacturing and service sectors engaged in international trade.
- Construction land transfer subsidy: Investors can acquire construction land at below-market prices if the investment is deemed of national importance, further reducing upfront costs for setting up manufacturing facilities.
3. Free zones and operational benefits
- Free zones: Operating within Serbia’s Free Zones offers multiple advantages, including VAT exemptions, customs duty relief on imported goods intended for export and streamlined administrative procedures. These zones are strategically located near major transport corridors, enhancing manufacturing and logistics operations.
- Competitive operating costs: Serbia provides a cost-effective environment with low utility costs and competitive wages. The country boasts a skilled labor force that supports high-quality manufacturing, particularly in sectors like automotive, machinery, and electronics.
- Double taxation treaties: With over 65 double taxation agreements with countries in Europe, Asia, and Africa, Serbia mitigates the risk of double taxation on income and property, creating a favorable investment climate.
4. Strategic location and infrastructure
Serbia’s central position in Southeast Europe allows easy access to key road, rail, and river routes, making it an ideal hub for manufacturing and distribution. Its proximity to EU markets and significant trading partners provides logistical advantages that support efficient supply chain management.
Conclusion
Serbia combines free trade agreements, government incentives, and strategic geographic advantages, making it a highly attractive destination for manufacturing investments. These policies not only reduce operational costs but also facilitate access to a broad network of markets, enhancing the profitability and sustainability of manufacturing businesses in the region.