Karanovic & Partners
Can anyone (including foreigners) own and occupy real estate in your jurisdiction (including shares in property owning companies)? Are there any restrictions?
Local companies and citizens may own and occupy real estate or shares in property owning companies without any limitations. Foreigners performing activities in Serbia may, under conditions of reciprocity, own property necessary for them to perform that activity except agricultural land, and foreign citizen may acquire ownership of an apartment or residential building as other citizens of Serbia. As for agricultural land, citizen of the EU member state can acquire it under special requirements. In practice, any restrictions have been surpassed by foreigners incorporating a company or acquiring shares in property owning company.
Are there restrictions on lending for the purchase of real estate by foreign companies? If so briefly give an outline?
Any cross-border loan must be in compliance with local fx regulations i.e. the resident can lend money to the non-resident if non-resident has its registered seat within the EU or, if its registered seat is not in the EU the resident must have majority ownership in such non-resident’s shares in order to be able to enter into the loan agreement. The adequate security must be provided for this loan, and the loan or any change thereto must be reported by the borrower to the National Bank of Serbia.
Buying
Please provide a short summary of the fees and costs (including tax) relating to buying real estate in your jurisdiction.
The purchase of real estate is subject to property transfer tax (PTT) at the rate of 2,5% based on the real estate market value at the time of acquisition, but only if VAT is not payable. The transfer of land is always subject to PTT.
The first transfer of real-estate is subject to VAT at rate of 20%, save for the first transfer of apartments that is subject to the VAT at rate of 10%.
The individual who is Serbian citizen, may ask for the exemption from payment from the PTT, or for the refund of paid VAT.
The notarial fee is payable for the execution of the transfer agreement in maximum amount of app. EUR 6,000. For registration of ownership transfer the fee in amount of app. EUR 50 is payable.
Owning
Are there taxes applicable to owning real estate and can the burden of the taxes be passed to someone else (e.g. a tenant or an occupier - not being the owner)?
The ownership of real estate in Serbia is taxable under Serbian Property Tax Law. The tax rate is 0.4%.
The tax base for the property owned by legal entities is fair market value, or market value assessed under criterions set by the law, or accounting value of the property. The tax base for the property owned by individuals is market value assessed under criterions set by the law.
Under the law, taxpayer is always owner of the property. Tax burden may be shifted to tenant / occupier under the lease agreement. Note that the tax shall be paid on such lease as well if lessor is natural person in the amount of 20 % of the tax base that is 75 % of the agreed rent.
Tax Breaks
Are there tax breaks or other incentives for foreigners to buy real estate in your jurisdiction? If so what are they?
There are no tax breaks or other incentives for foreigners to buy real estate in Serbia. However, there is a possibility, under certain conditions, to acquire public land free of charge for the purpose of investing and developing local economy. In addition, the taxpayer that is a legal entity, irrespectively whether its shareholder is local or foreign, may be exempted from real-estate tax if it holds the property for further sale. The exemption is granted for the year in which it acquired the real estate and the year following that year.
How is the ownership of Real Estate evidenced in your jurisdiction?
Ownership of Real Estate is evidenced by registration in Serbian Real Estate Cadastre. This is a public register which can be researched online via: http://katastar.rgz.gov.rs/KnWebPublic/PublicAccess.aspx.
Is it possible to keep the identity of owners of real estate confidential in your jurisdiction?
No. All data and information from the land registry is publicly available.