South East Legal Alliance – SELA Regional News Q1 2018

Law on Prevention of Money Laundering and Financing of Terrorism

The main reasons for adoption of the new Law on Prevention of Money Laundering and Financing of Terrorism, which will enter into force on 1 April 2018, are improvement of the existing system and harmonization with international standards. This law prescribes the following novelties:

• relevant person’s duty to conduct the risk assessment in relation to the entire business, in order to determine the level of
• vulnerability to money laundering and terrorist financing misuse;
  
• streamlined procedure for identifying and verifying identity;
  
• duty of publishing each decision which imposes a penalty or other measure of the supervisory authorities;
  
• introduction of the term “trust”;
  
• lower limits of the pecuniary penalties have been increased for certain misdemeanors; and
  
• relevant persons will primarily have the following obligations with respect to harmonization with this new law:
  
  • to perform the respective actions and measures for the purpose of prevention of money laundering in relation to the entities with which business cooperation was established before entry into force of the new law and to conduct risk assessment. The deadline for the fulfilment of this obligation is 25 December 2018; and
  • to harmonize their internal acts with the new law until 25 March 2018.

Law on Value-Added Tax and Law on Companies Income Tax

The amendments to the Law on Value-Added Tax and Law on Companies Income Tax, which entered into force on 1 January 2018, prescribe certain novelties such as:

• new supply where the supply of goods and services is not subject to VAT computation;
  
• amendments regarding the right to deduct the input VAT;
  
• right to deduct the computed VAT in case of incorrect application of the reverse charge mechanism;
  
• postpone the obligation to submit detailed breakdown of the VAT return together with the VAT return for 1 July 2018;
  
• introduction of a new special taxation regime for the supplies of investment gold;
  
• the obligation to file a tax return also exists in cases of suspension of liquidation procedures, and not only in cases of the initiation and completion of the liquidation procedure;
  
• new rules on tax depreciation, deductibility of expenses for bad debt provisions, the deductibility of expenses from debt write-off performed in accordance with the National Bank of Serbia regulations, sale and purchase price of an asset - capital gain/loss, bankruptcy and liquidation, services subject to withholding tax, tax holiday and transfer pricing.

Labor Law and Law on Employment of Foreigners

The National Assembly of the Republic of Serbia adopted amendments to the Labor Law and the Law on the Employment of Foreigners, which entered into force on 25 December 2017 and which prescribe certain novelties which are of importance for the employers, such as:

• shorter deadline for registration of employees to mandatory social insurance;
  
• obligation for the employers to keep a record on overtime work;
  
• detailed provisions regulating delivery of the decision on termination of employment agreement which now apply to delivery of the warning as well;
  
• stricter fines for non-compliance with legal provisions, new exceptions from application of the Law on Employment of Foreigners;
  
• defining new type of work permit for special cases of employment i.e. work permit for training and specialization, has been introduced;
  
• extension of the work permit for the seconded persons and work permits for movement within the company which may be extended for a period of up to two years; and
  
• request for extension of the work permit needs to be submitted at the earliest 30 days before expiration of the valid work permit, and no later than the expiry date of the previous work permit.

Law on Amendments to the Law on Bankruptcy

On 14 December 2017 the National Assembly of the Republic of Serbia adopted the Law on Amendments to the Law on Bankruptcy, which entered into force on 25 December 2017. This law does not apply to bankruptcy proceedings that were pending at the time when the law entered into force. New institutes have been introduced in accordance with comparative legal solutions, while a number of existing provisions have been further elaborated, with the aim of more efficient conduct of the bankruptcy proceedings and improvement of the settlement of creditors, as well as improvement of the position of secured creditors:

• position of the secured creditors has been improved by granting secured creditors the right to participate in the creditors' committee. The members will now be elected from the secured creditors’ rank, and participation of these creditors will be necessary when deciding on matters within the competence of the creditors' committee;
  
• the rules applicable to bankruptcy proceedings and conditions for pledged assets that are to be settled outside of the standard bankruptcy proceedings have been elaborated upon to a greater extent;
  
• certain provisions of the reorganization process have been further clarified and elaborated upon in order to harmonize court practices and to prevent abuse of this mechanism, which in practice has led to extremely long reorganization procedures at the expense of creditors; and
  
• more efficient mechanisms for controlling the conduct of bankruptcy administrators, the participation of authorized appraisers and court experts, as well as certain legal remedies and persons entitled to submit them.

Law on Electronic Document, Electronic Identification and Trust Services for Electronic Transactions

The new Law on Electronic Document, Electronic Identification and Trust Services for Electronic Transactions, which entered into force on 27 October 2017, was adopted with the aim to establish fundamental legal framework which will provide more room for implementation of electronic forms of conducting business operations and bringing it to the same level of use as the existing classic forms. It is also expected that it will induce a faster and more efficient manner of conducting business for companies, and more efficient functioning and work of public authorities as well. This law inter alia governs e-documents, electronic identification, trust services for electronic transactions, e-signature, e-stamp and time stamp, as well as electronic delivery.

Law on Agricultural Land

The National Assembly of the Republic of Serbia adopted amendments to the Law on Agricultural Land, which entered into force on 1 September 2017, by which citizens of the EU are able to buy up to two hectares of arable land in Serbia if they meet certain legal requirements. Such a person must have:

• at least 10 years of residence in Serbia within a local government unit in which he/she wants to purchase land;
  
• cultivated the respective agricultural land for at least three years;
  
• a registered active agricultural holding; and
  
• machinery and equipment in order to undertake agricultural production.

Additionally, agricultural land which is designated as construction land (in accordance with lex specialis), or is designated as protected property, or is located near military facilities, or is less than 10 km away from the Serbian border, cannot be transferred to citizens of EU.