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. Under conditions of reciprocity, (i) foreign citizens and foreign companies performing activities in Serbia may own property necessary for them to perform that activity except agricultural land, and (ii) foreign citizen may acquire ownership of an apartment or residential building as Serbian citizens. 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 follow local foreign exchange (FX) regulations. A resident can lend money to the non-resident if (i) the non-resident and transaction participants are based in the EU, or (ii) if the non-resident is not based in the EU, the resident must have majority ownership in the non-resident’s shares to enter into the loan agreement. In both cases, the security for the potential claims of Serbian resident towards non-resident has to be obtained. The loan agreement or any modifications must be reported to the National Bank of Serbia within 10 days of signing. The National Bank of Serbia assesses the provided security and compliance with Serbian FX rules. Completing the reporting procedure is necessary before disbursing loan proceeds abroad. More strict regime applies to the state owned companies, companies in restructuring or reorganization and public enterprises.
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 property 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, including the identity of owners of real estate, is publicly available. A separate paid access to the Serbian Real Estate Cadastre includes additional information about the encumbrances and registered owners, such as their identification number and address of residence or business headquarters.