A Charitable Foundation in Serbia
Establishing a Foundation in Serbia will help you protect your assets and enhance your personal information confidentiality. Even though the Foundation assets are separated from the Founder’s assets, the founder maintains a high level of control over the Foundation.
A Charity Foundation in Serbia is an instrument that allows detaching you from your property, for purposes of philanthropy.
The unique characteristic of the Serbian Foundation is that it can be established by a person or persons who will not be regarded as the Foundation beneficiaries. This means that the Founders are not subject to the financial control and information exchange regulations.
In accordance with the Law on Endowments and Foundations adopted in 2010, a Foundation is a legal entity without members. The Founder supplies some funds or assets to the Foundation that are considered its core assets. The funds and assets shall be used for the purposes indicated in the Foundation By-Laws. Serbian laws allow using the funds for charitable purposes or for private purposes of certain individuals.
In case the Foundation is created to serve private purposes, then an Endowment may be more suitable. Both Serbian residents and non-residents can act as Founders. The Founders can be changed as easily as the shareholders in a joint – stock company can.
An important advantage that a Serbian non-profit has is favorable treatment it enjoys on the part of the banks. Banks will readily open accounts and they will regard the Managing Director as its beneficiary. For all other matters, the non-profit is just like any other local business company for the banks.
By transferring funds to the Foundation, the Founder separates him or herself from their property and thanks to this fact, legal risks that are normally involved in a divorce or in a creditor’s claims settlement virtually disappear. The commercial risks are limited to the actions of the Foundation Director as is the case with a commercial company.
If necessary, the managing director can be replaced and his or her activities can be monitored.
A Foundation as well as a Serbian Association, has the legal right to conduct commercial activities provided that they do not go against the law. In addition to that, a Charity Foundation can own other companies and legal entities thus serving as an alternative to a holding while simultaneously offering a higher level of the Founders’ financial information confidentiality.
The Serbian Foundation’s Founders can be the Supervisory Board members or the Foundation’s legal representatives. In any case, it is quite possible for the Founders to manage the Foundation indirectly. Legally, the Foundation assets are not the Founders’ assets but practically, they are protected by the charter controlled.
Legal entities including Associations can act as the Founders.
At the same time, the major task of an Endowment is asset protection. The minimum acceptable worth of the Endowment’s assets – money, stocks and bonds, real property, etc. shall constitute 30,000 EUR.
When assets are transferred to the legal entity, the Foundation is to pay the 2.5% gift tax.
The requirements for registering a Charitable Foundation in Serbia
Below please find a brief description of all the major requirements that need to be satisfied in order to establish a Foundation in Serbia.
- The Founders:
- They can be Serbian residents or foreigners;
- A single person or a group of people can act as Founders;
- A private individual or a legal entity can act as the Founder.
- The main document the Foundation must have are the Deed of Foundation and the By-Laws.
- The By-Laws shall specify the Foundation goals.
- The following entities shall be created for Foundation management:
- The Founder who has the right to be on the Board of Directors or member of any other Foundation body if the By-Laws permit it;
- Board of Directors – the principal Foundation management board that shall consist of minimum three members;
- The chairperson and the members of the Board of Directors are appointed by the Founder unless the By-Laws or the Deed of Foundation dictate otherwise;
- The Managing Director of the Charity Foundation in Serbia shall be a Serbian resident (a citizen of the country or a foreigner holding a residence permit).
The Director can be a person hired especially to this position or your family member or a trusted agent. The important thing is that the Director must have Serbian residence. Residency in Serbia is easy to acquire via investment into business or real estate.
Among other services, we offer a professional director service who is a Serbian resident and who can act as a nominee director of your Serbian Foundation. This service costs as little as 3,000 EUR per year plus taxes.
- CFPP assets, including core assets, can be comprised of money, stocks and bonds, company shares, copyrights, real estate and other property, and so on.
- The minimum cost of the CFPP core assets shall be 30,000 EUR in RSD (Serbian dinar) at the average National Bank of Serbia exchange rate effective on the date of the CFPP establishment.
- The Foundation has the right to receive funds in the form of gifts, contributions, donations, subsidies, interests on deposits, inheritance, royalties, rental payments, dividends, and so on. The Foundation can use these funds to purchase additional assets. However, the worth of the additional assets shall not exceed that of the core assets.
- The core assets contributed to the Foundation (from 30,000 EUR) are tax-free. Other contributions are taxed at 2.5%.
The CFPP assets are not the property of the Founders, nor the Board of Directors, nor any other beneficiaries. These assets cannot be used as a subject of consideration in a court of law such as in a divorce case, for example.
The right to participate in the Foundation management is not hereditary so it is important to ensure that the Founders’ family members/ loved ones take part in the Foundation management activities.
It is also good remembering that:
- A CFPP does not make profit and neither does it pay the profit tax. However, the Foundation shall keep financial accounts and the accountant shall file all the necessary reports in accordance with the rules.
- In case the assets are transferred to the CFPP by an individual or a legal entity that is not a VAT payer, the CFPP does not have to pay the VAT either.
Registration of a Charitable Foundation in Serbia: the required documents
To register a Charitable Foundation in Serbia you will have to supply the following documents:
- Founders’ personal data:
- The names of physical and legal persons establishing the foundation;
- Legalized passport copies for private individuals;
- Registration Certificates for legal entities;
- Description of the goals the Foundation is going to pursue to be found in the By-Laws;
- Names of the Board of Directors members:
- Legalized copies of their passports;
- Managing Director (Serbian resident) personal data:
- A legalized copy of his/ her passport;
- A Resolution on establishment in Serbia and appointment of the constitutive documents’ signatories;
- A notarized Memorandum or Resolution;
- Legalized By-Laws;
- Completed forms for registering the Foundation with the Trade Register in Serbia;
- Completed application forms for bank account opening (if applicable);
- Other forms may also be required.
We will gladly consult you on filling out all the forms. When necessary, we will provide completed drafts for your signature.
A Charitable Foundation in Serbia: registration costs
The price of the CFPP establishment service includes:
- Establishment of the Foundation;
- Appointment of Managing Director and Board of Directors members;
- Payment of state duties.
You will also have to supply the Foundation core assets that shall be worth not less than 30,000 euro. The core assets can come in the form of money, securities, or property.
Transfer of additional funds to the Foundation as well as withdrawal of funds from the Foundation is taxed at 2.5%.
The procedure of registering a Charitable Foundation in Serbia
- If you appreciate the opportunities that a Foundation in Serbia provides for, please write to us to [email protected] and inform us about your wish to establish such a Foundation.
- We will have to clarify with you the goals of your prospective Foundation and the statuses of the founders and the directors in order to ensure that establishment of a Foundation in Serbia is possible in your case.
- If it is, you will need to cover the costs of our services by transferring the money to our account. You can use any payment method that you prefer.
- Then you supply the complete package of documents to us.
- When the Foundation is registered, transfer at least 30,000 euros to it.
If you wish, we can set up a bank account in Serbia for your Charitable Foundation.
In case you need any additional consultations, please contact us via e-mail [email protected] and we will happily answer all your questions.