The legal framework for regulating the conditions, manner and procedure of exemption from customs and other duties on the import of equipment, which is the investor’s role, is represented by the following regulations:
- Customs Law (“Official Gazette of RS”, No. 95/2018, 91/2019 – other law, 144/2020 and 118/2021)
- Law on Investments (“Official Gazette of RS”, No. 89/2015 and 95/2018) and
- Decree on the conditions, manner and procedure of exemption from customs and other duties on the import of equipment (“Official Gazette of RS”, No. 34/2019).
The provisions of Article 14 of the Law on Investments (“Official Gazette of RS”, No. 89/2015 and 95/2018 – from now on: the Law on Investments) stipulate that the import of equipment that represents the stake of an investor who is a foreign or domestic legal or natural person is free and relieved of the payment of tariff and other import duties, except for passenger motor vehicles and entertainment and gaming machines, under the condition that the equipment imported by the investor is in accordance with the regulations that govern the health and security of citizens and protection of the environment.
Import duties are customs duties and other duties, except VAT, which have the same effect and are paid when importing goods.
Decree on conditions, manner and procedure of exemption from customs and other duties on import of equipment (“Official Gazette of RS”, No. 34/2019 – from now on: Decree), regulates the procedure, amount and time limit for the realization of incentives and relief of tariff and other import duties regarding the equipment of the foreign investor as well as the limitations concerning the right of disposal and the restriction of use for other purposes of such imported equipment.
Conditions for exercising customs privilege
Customs privileges on the import of equipment can be used up to the amount of the registered non-monetary contribution to the company, i.e. the customs value of the equipment may not exceed the amount of the registered non-monetary assistance.
According to the Decree, equipment means new production plants, machines and equipment that are procured and maintained for the production of products, for the import of which a customs privilege is granted, and which the investor imports and invests as a non-monetary investment in the company, procures, and registers as an investment in the form of a note to perform activities for which the granting of incentives is allowed following the regulations governing the criteria, conditions and manner of attracting direct investment.
The beneficiary of customs privilege is a company registered in the Republic of Serbia for performing activities for which incentives are allowed following regulations governing the criteria, conditions and manner of attracting direct investment, and an importer of equipment for which customs privileges are granted.
Exercising the right to customs privilege on the import of equipment, the company exercises following the rules for granting state aid, as follows:
- following the rules for the allocation of regional investment state aid, for economic entities that are beneficiaries of incentive funds under the contract on the allocation of incentive funds
- following the rules for allocating de minimis state aid for economic entities that are not beneficiaries of funds under the contract on the allocation of incentive funds.
The right to customs privilege cannot be exercised for the purchase of equipment in the transport sectors software development unless they are in the function of product improvement, production process or service centre services, catering, gambling, trade, production of synthetic fibres, coal and steel, mining, tobacco and tobacco products, weapons and ammunition, self-propelled maritime merchant ships, over 100 gross registered tons, airports, utilities, energy sector, broadband, fisheries and aquaculture.
Deadline for exercising the right to exemption and recording of investments
The deadline for importing equipment based on investor deposits is two years from the date of registration of the record of the company’s decision on investment or registration of the capital increase, following the Law on Registration Procedure with the Business Registers Agency.
Exceptionally, if the contract on delivery of equipment provides for a more extended delivery period of two years or the delay of the supplier of equipment has occurred, the investor can exercise the right to customs privileges within six months from the occurrence of these circumstances.
The company is obliged to enter a record of investment procurement of equipment imported as an investor’s deposit in the Register of Business Entities to exercise the right to customs benefits following the Decree. The note shall contain the investment contract or decision of the company that includes the specification of the equipment as an integral part of the decision, the code and name of the activity for which the equipment is procured, and information on the equipment supplier.
The specified equipment specification must contain the name of the equipment, the name of the manufacturer, and the equipment’s value.
Procedure for obtaining customs privilege
The importer is obliged, within 30 days from the date of registration of share capital increase, to submit to Customs Administration headquarters a decision on the capital increase and an extract from the Register Business Entities to exercise the right to an exemption based on a decision on increase capital for the purpose to keep records on the import of equipment based on contribution, as well as control the use of this privilege.
To exercise the right to exemption, based on the note of the Agreement on non-monetary investment in the company or the note of investment based on the Agreement on the allocation of incentives, after entering the note of investment in the Register of Business Entities, the Business Registers Agency submits data on the recorded notes of investment to the Customs Administration through the information system.
Until the establishment of electronic communication, the data on the documented notes of investments shall be submitted to the Customs Administration by the company requesting customs privileges.
Based on the above data, the Customs Administration assigns a registration number to the user of the customs privilege, which must be entered in box 39 of the customs declaration.
In order to exercise the right to exemption from customs and other import duties on the import of equipment based on investor contribution, the beneficiary of the customs privilege shall submit to the customs authority where the customs clearance procedure is conducted:
- decision on the capital increase and assessment of the value of the non-monetary contribution
- warranty card, other appropriate documentation from which it can be determined that the equipment being imported is new
- agreement on the allocation of incentive funds, if the beneficiary is also a beneficiary of funds under the agreement on the distribution of incentive funds
- a statement that he is not a beneficiary of de minimis state aid, i.e. a report on the realized amount of de minimis state aid in the current fiscal year and the previous two consecutive fiscal years if he is not a beneficiary of the incentive agreement
- a statement that the imported equipment shall be used to perform the activities of the beneficiary of the customs privilege
- a statement on all other granted state aid for the exact eligible costs.
In addition to the above pieces of evidence, the beneficiary of the customs privilege shall enclose an excerpt on the registered data on the company entered in the Register of Business Entities on the amount of the registered non-monetary contribution of the investor in the company’s capital or an excerpt on the registration of the investment note, which the customs authority obtains ex officio.
Based on the submitted request and the attached evidence, the customs authority shall issue a decision on exemption from payment of import duties on imported equipment.
The customs authority shall submit a copy of the decision on exemption from import duties on the import of equipment to the Ministry of Economy and the Commission for State Aid Control without delay, no later than 30 days from the date of the decision, and at the end of each six months shall submit a report on companies that have exercised the right to customs privilege to the Development Agencies of Serbia.
Prohibition of alienation and customs supervision
Equipment may not be alienated, given to another for use or used for other purposes within three years from the date of release of goods for free circulation following customs regulations.
If the equipment is alienated, used for another or used for other purposes before the expiration of the specified period of three years, import duties will be paid on that equipment.
The amount of import duties are calculated according to the condition of goods and according to the regulations valid on the day of submitting the request for calculation and payment of import duties, i.e. on the day of deciding on the collection of import duties if no request for calculation and payment of import duties is submitted.
Equipment exempt from import duties based on investor contribution released for free circulation following the Decree provisions shall remain under customs control.
Customs supervision ceases:
1. when the conditions due to which the equipment was released for free circulation without paying import duties no longer exist;
2. when equipment is exported or destroyed;
3. when the use of equipment for purposes other than those prescribed by Decree is permitted and when import duties have been paid.
The purpose of prescribing the ban on alienation is to prevent using this equipment by persons who have not been granted this customs privilege in Serbia.
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Customs representation »
Measures of protection from unfair competiton according to Foreign Trade Act »
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