If you decide to immigrate to Serbia and purchase real estate in Serbia, you must know that this procedure is subject to specific legal rules that only concern foreign citizens and foreign companies, as explained below. Can foreigners buy real estate in Serbia? Can Serbian citizens living abroad live in Serbia without buying property in Serbia?
- The right to purchase real estate
Domestic natural persons and legal entities registered in the Republic of Serbia can purchase real estate without restrictions, while foreign natural persons and foreign companies can purchase real estate under certain conditions.
Foreign natural person
Serbian law allows a foreign natural person doing business in Serbia to purchase any real estate, provided that the person must engage in his activities within the scope of his business and in the presence of reciprocity. On the contrary, foreign natural persons who do not engage in any business can also purchase real estate, but in the case of a reciprocal relationship, they are limited to apartments, houses or apartments.
In addition, foreign natural persons can inherit real estate in the Republic of Serbia under conditions of mutual benefit. The term reciprocity is explained in the text below.
Foreign companies can also purchase real estate needed for business in the Republic of Serbia on a reciprocal basis or when establishing a company in the Republic of Serbia.
It is important to point out that foreign natural persons and foreign companies cannot be the owners of agricultural land, with the exception of EU citizens and legal entities that have the right to obtain agricultural land, but must be under the strict conditions stipulated in this law. Are there other legal ways to purchase real estate? right here!
Foreign citizens can use the following alternative methods to purchase agricultural land:
a) Establish a company in Serbia
If a foreign natural person or a foreign company establishes a company in Serbia, the company can be used to purchase any type of land, including agricultural land, because the company will be treated like any other domestic company established in Serbia.
b) Acquisition of domestic companies
The purchase of domestic legal entities by foreign citizens or foreign companies will make them the owners of all property including agricultural land.
What is reciprocity?
Reciprocity refers to the right of foreign citizens or companies to purchase real estate in the Republic of Serbia under the same conditions required by citizens of the Republic of Serbia when purchasing real estate in their country. Reciprocity can be diplomatic, legal or factual.
Foreign reciprocity means that Serbia and another country have concluded a bilateral agreement to manage the issue of foreigners’ access to real estate. So far, the Republic of Serbia has concluded about 70 such bilateral agreements.
On the other hand, in the absence of diplomatic or legal equivalence, factual equivalence can be adopted. Factual reciprocity means that the laws of the country concerned allow citizens of the Republic of Serbia to purchase real estate under the same conditions as allowing citizens of that country to obtain real estate in Serbia. This is necessary when acquiring real estate in the form of a sale and purchase agreement or a gift contract (in vivo), which means that it is necessary to obtain a legal opinion on reciprocity from the Serbian Ministry of Justice. In the case of inheritance, it is assumed that the facts are reciprocal, so you do not need to obtain legal advice from the Ministry of Justice.
What do you need to know when buying an apartment or other real estate?
Before purchasing real estate, you should check whether there is any encumbrance or mortgage related to the real estate. Practice shows that the analysis of real estate requires expertise in the real estate law field. The purchase of apartments under construction, the use of loans to purchase real estate, and the purchase of mortgage real estate are particularly sensitive and legally demanding issues. Therefore, lawyers usually make such purchases to avoid long-term negative effects on customers.
- Purchase and sale agreement, contract
Since foreign citizens or foreign companies are interested in buying property in the Republic of Serbia, the best solution is to hire a lawyer who specializes in real estate law and related transactions. In order to protect the interests of both parties, it is usually agreed that advance payment, advance payment, installment payment, agreement to real estate registration and other forms of contract terms, and the lawyer can correctly understand.
After the two parties have reached an agreement on all the terms of the agreement, it is necessary to authenticate the agreement in front of a notary.
- Do I have to be in Serbia when establishing a company or signing a contract? How to use the power of attorney?
No, you don’t have to be there at all. Foreign citizens or foreign companies, as well as Serbian citizens residing abroad, can perform all activities related to the establishment of the company using the authorization letter normally issued to a lawyer. The power of attorney may include the right to authorize a lawyer to establish a company, conduct negotiations, sign pre-contracts and contracts, make or receive payments, report taxes, and conduct other activities. Therefore, you do not need to live in Serbia to complete the process of company formation or purchase of real estate.
Absolute rights transfer tax and value-added tax
The subject of taxation is the transfer of ownership from seller to buyer. The tax rate is 2.5% of the market value and only needs to be paid once. If the sales price is higher than the market price of the real estate, the tax is calculated based on the sales price.
However, in some cases, value-added tax should be paid instead of absolute rights transfer tax. If it is sold by a VAT taxpayer, VAT will always be payable when the new real estate is transferred for the first time. The value-added tax for the purchase of apartments and buildings is 10%, and the value-added tax for the purchase of non-residential buildings is 20%.
It is paid quarterly at a low tax rate.
Capital gains tax
Capital gains tax is paid at a rate of 15%, which is applied to the tax base representing the difference between the purchase and sale price. The tax is paid by the seller.
Notary public and real estate registration fee
The cost of certification and registration of the agreement by the notary office depends on the market value of the property.
In addition, it is necessary to ensure that there are no debts related to real estate for electricity, water supply, etc.
The real estate market is expanding, and Serbia is known for its low real estate prices and very simple ownership transfer procedures. This fact makes it attractive to foreign investors to purchase real estate in Serbia. We hope this article will help you decide to buy real estate in the Republic of Serbia.