If you’re planning to start your own business, forming a Limited Liability Company (LLC) is likely the first option you’ll consider. This type of legal entity offers flexibility, limited liability for founders, and broad applicability across nearly all industries.
On the other hand, if you already own a share in an LLC and wish to sell or transfer it, it’s essential to understand the legal and tax implications of such a transaction.
In this guide, we provide you with a comprehensive overview of how to establish an LLC and how share transfers are carried out, along with related topics and recommendations.
Please note: This guide does not constitute legal advice. Every situation is unique and requires a tailored approach. Consulting a lawyer and having professional guidance can save you time, reduce costs, and help you avoid potential legal complications.
Table of Contents
- Steps to Establish an LLC
- Required Documentation for Formation
- Share Transfer in an LLC – Key Concepts
- Share Transfer Procedure
- Legal Consequences of Share Transfer
- Tax Aspects of Ownership Changes
- Common Mistakes
- FAQ – Frequently Asked Questions
- Conclusion
Steps to Establish an LLC
Forming an LLC in Serbia is relatively straightforward and can typically be completed within a few days—usually about 5 business days.
The process includes the following steps:
- Choosing a company name and checking availability via the APR portal.
- Drafting the founding document – either a founding agreement (multiple founders) or a decision (single founder).
- Depositing the founding capital – minimum 100 RSD.
- Opening a bank account.
- Submitting a registration application through the Serbian Business Registers Agency (APR) online portal.
- Receiving a Tax Identification Number (PIB) and automatic registration with the Tax Administration.
Choosing a Company Name
Select a name that is not already taken and verify availability through the APR portal. The name must be unique, as APR will not approve names that are identical or could create confusion in the market.
Drafting the Founding Document
Prepare the founding document. If there are multiple founders, this is a founding agreement; if only one, a founding decision. This document defines the rights and obligations of the founders, business activities, and founding capital. Drafting it carefully is crucial, as it sets the rules for the company’s operations.
Depositing the Founding Capital
The minimum founding capital is only 100 RSD. The funds are deposited into a temporary account prior to registration, and the payment is confirmed during the registration process.
Opening a Bank Account
Once registered and upon receiving the official decision on formation, a dedicated business bank account must be opened for regular operations.
Registration Application
The application is submitted electronically through the APR’s one-stop online service. All required documents are uploaded online, significantly speeding up the process.
Assignment of Identification Numbers and Registration
After submission, the Republic Statistical Office issues a company ID number, the Tax Administration assigns a PIB, and APR registers the company in the relevant registers, granting it full legal identity.
Required Documentation for Formation
You will need:
- Founding document
- Signed single registration application (JRPPS), i.e., the electronic application for company formation
- Prescribed supporting documents (originals, certified copies, or notarized photocopies)
- Proof of paid-in founding capital
- Copy of the founder’s ID card or passport
- Proof of payment of the formation fee as prescribed by the APR
All documentation is submitted electronically.
When registering with APR, along with the founding decision, companies simultaneously receive:
- Company registration/ID number from the Statistical Office
- Tax Identification Number (PIB) from the Tax Administration
- VAT registration (if applicable)
- Form M-A, i.e., confirmation of submitted registration for mandatory social insurance for the founder (if also appointed as the legal representative)
The APR forwards relevant data to the Central Registry for Social Insurance.
🔗 More details: APR – Official Website
Share Transfer in an LLC – Key Concepts
A share in an LLC represents the ownership interest of a founder in the company. This share can be transferred, most commonly through a purchase agreement.
Transfers may occur between existing founders (internal transfer) or to third parties (external transfer).
Rights and restrictions regarding transfers are often regulated by the founding document.
🔗 Reference: Serbian Law on Companies
Share Transfer Procedure
The transfer of ownership is carried out through a Share Transfer Agreement.
Under Serbian law, this agreement must be concluded in written form and notarized by a public notary. Depending on the jurisdiction, international legalization may be required, along with certified translation into Serbian.
If the agreement is signed by proxy (e.g., an attorney), the power of attorney must also be notarized. In international cases, an apostille or full legalization may be required.
After notarization, the transfer procedure is finalized by submitting an electronic application to the APR.
🔗 Detailed guide: Share Transfer Agreement
The procedure consists of several phases:
- Drafting the Share Transfer Agreement
- Notarization of signatures
- Obtaining consent from other LLC members (if required by the founding document)
- Submitting the application to APR
- Registration of the new member in the official register
Legal Consequences of Share Transfer
By transferring a share:
- The company’s ownership structure changes
- The new member assumes the rights and obligations of the previous member
- Pre-emption rights of existing members may be triggered (unless otherwise regulated)
- The founding document must be updated accordingly
Tax Aspects of Ownership Changes
Share transfers are generally not tax-exempt. Most commonly, they are subject to:
- Capital gains tax (if the seller is a natural person)
- Tax filing obligation within 30 days
- Tax rate: 15% on the difference between purchase and sale price
🔗 More details: Serbian Tax Administration – Capital Gains
Common Mistakes
Typical errors during this process include:
- Failing to notarize the transfer agreement
- Forgetting to obtain required consents from other members
- Not updating the founding document
FAQ – Frequently Asked Questions
How long does it take to form an LLC?
On average, 5 business days.
Does every LLC need business premises?
No, but it must have a registered address, which is entered into the APR.
Does a Share Transfer Agreement have to be notarized?
Yes, notarization by a public notary is mandatory.
Do I have to pay tax on the sale of shares?
- If you are a natural person – yes, capital gains tax at 15%.
- If you are a legal entity – yes, corporate income tax at 15%.
- If you are a non-resident legal entity – tax rate is 20%.
Are there exemptions from capital gains tax?
Yes. No capital gains tax applies if the transfer is between spouses, first-degree heirs, or if the shares have been held for more than 10 years.
Conclusion
The process of establishing an LLC and transferring ownership shares is not overly complex but requires strict adherence to legal procedures. This text is for informational purposes only and does not represent legal advice. Given the complexity and potential consequences, engaging a lawyer to guide you through the process is strongly recommended.
