The New Regulation on Amendments to the Regulation on Determining Criteria for Granting Incentives for Attracting Direct Investments brings several significant innovations:
The investment requirements have been raised, and the minimum investment in physical and intangible assets has now been raised from 100,000 euros to 300,000 euros.
Change in the regional division, which abolished the division of local self-government units by level of development. New division by regions is being introduced: Belgrade Region, Vojvodina Region, Šumadija and Western Serbia Region, Southern and Eastern Serbia Region, and Kosovo and Metohija Region.
With the abolition of the “Investment of Special Importance” institute, the previous decree prescribed a ten-year deadline for the realization of an investment project for investments of special importance. Now the term of ten years applies to investments that are greater than five million euros. Therefore, the audit of an investment project representing an investment of more than five million euros can only be performed by an audit company that employs at least four licensed authorized auditors full-time.
Also, the funds cannot be allocated for the realization of investment projects in certain sectors, such as transport, hospitality, games of chance, trade, production of synthetic fibers, coal and steel, mining, tobacco and tobacco products, weapons and ammunition, shipbuilding of maritime trade self-propelled vessels over 100 gross registered tons, airports, utilities, the energy sector, broadband networks, fisheries and aquaculture and software development unless they are in the function of improved products, production processes or the provision of service center services.
Special attention is paid to the introduction of technologies and investment projects with minimal impact on the environment, which represents an increased focus on ecology.
The amount of funds allocated is determined based on the justified costs of investment in tangible or intangible assets or on the justified costs of gross wages for new jobs. The minimum investment conditions for which the funds are allocated are determined by region, thus:
- For the Belgrade region, the required investment is at least 500,000 euros and the employment of at least 50 new employees for an indefinite period.
- For the Region of Vojvodina, the required investment is at least 400,000 euros and the employment of at least 40 new employees for an indefinite period.
- For the Region of Šumadija and Western Serbia, the Region of Southern and Eastern Serbia, and the Region of Kosovo and Metohija, the required investment is at least 300,000 euros and the employment of at least 30 new employees for an indefinite period.
- Investment projects related to the services of service centers whose minimum value is 150,000 euros and which ensure the employment of at least 15 new employees for an indefinite period connected with the investment project.
The user of the funds who implements the investment project can be granted an increase in the above-mentioned amounts of grants for justified costs of investment in tangible and intangible assets up to the maximum amount of state aid, if it meets the following conditions: improves the competitiveness of the Republic of Serbia by raising and technologically modernizing production capacities in the processing industry; the investment project envisages the use of production equipment and technologies with minimal impact on the environment or significantly improves sustainability and performance in the activity in question; contributes to the introduction of measures to attract, improve or retrain the workforce for the relevant activities or to use technology with minimal impact on the environment.
The next novelty refers to additional incentives for labor-intensive investment projects. It represents an investment project that employs at least 100 new employees within the time frame for the realization of that project. Depending on the number of new employees, the beneficiary is granted an increase in the amount of the grant. For example, over 100 new employees are granted an increase of 10% of the amount of justified gross salary costs for each increase in the number of new employees.
These novelties in the Decree on Attracting Direct Investments aim to encourage foreign investors to invest in Serbia and improve the country’s competitiveness. The regulation also places special emphasis on ecology and sustainable development. These changes could have a positive impact on attracting foreign investments and on the development of the Serbian economy.