Key novelties on Terms and Conditions for Attracting Direct Investment in Serbia
What’s new in the process of allocation of incentives?
A new Regulation on Terms and Conditions for Attracting Direct Investment entered into force in mid-March (on 12 March 2016), providing for some important novelties.
The new Regulation omits primary agricultural production and fishing from the sectors not eligible to receive funding, and applications for incentives may be expected from these sectors in the future.
Another important change lies in the manner of measuring the level of (un)employment, because new jobs are defined as a net increase in the number of employees who are local nationals. There were no explicit provisions earlier that employees must be local nationals.
From the legal viewpoint, an important novelty is that the Regulation introduces the category of “period of guaranteed investment and employment” so far provided for only in the contract, however not in the Regulation. Now that it is incorporated into the Regulation, this period (normally spanning three or five years, depending on the contract) can no longer be a matter of negotiations. Please note that the “period of guaranteed investment and employment” covers the time after the implementation of the investment project, during which the beneficiary is bound by certain obligations.
The Regulation also introduces the term “investment of local importance” (only the “investment of special importance for the Republic of Serbia” was previously recognised) which allows for a local self-government to define, based on its programme of local economic development, the criteria by which an investment in its territory is the “investments of local interest” (such investment does not meet all the criteria of the Regulation in the first place).