Entrepreneurs following the latest market trends are likely aware of the global sharing economy enabled by the Internet. Services like Rent-a-Company or umbrella companies are a manifestation of this movement. Below, SerbiaWealth experts will explain how you can rent a company and the special advantages it gives you for doing business in Serbia.
How it all started
The practice of renting a company has recently gained traction among consultants and digital nomads. It’s no surprise that this trend has extended to Serbia, a country in Southeast Europe known for its favorable business environment.
As of 2024, company rental in Serbia holds particular appeal for IT professionals, international business consultants, and e-commerce enterprises, among others.
Company rental for business flexibility
Company rental is an ideal solution if you require only a handful of transactions each month. This approach has gained widespread acceptance in numerous Western economies. Forbes has even featured articles on the growing trend of company rental, and the UK government has provided specific guidelines on the subject, given that approximately 14% of UK consultants operate under this model. In the UK, the concept is commonly referred to as Umbrella Company Invoicing. Basically, an umbrella company and a rent-a-company offer the same services, also known as re-invoicing.
Here’s what the benefits of renting a company, applicable both in Serbia and internationally, include:
- no fixed monthly overhead costs
- payment only for services used
- reduced paperwork and bureaucracy
- lowered tax liability through tax-deductible payments to suppliers.
The essence of renting a company lies in outsourcing comprehensive business management to a third party, referred to here as the landlord. The arrangement frees you from the responsibilities of invoicing, accounting, tax filings, adhering to employment laws, insurance, social contributions, and other administrative tasks associated with company ownership. With a simple email or timesheet submission, your Serbian rent-a-company can generate invoices for your clients.
How renting a company simplifies transactions
Arguably the most significant benefit of renting a company is the convenience it offers in handling all banking transactions. As a tenant, you are spared the hassle of opening and managing bank accounts, traveling to Serbia for account setup, and dealing with any associated tax reporting liabilities. Renting a company provides immediate access to multi-currency accounts in various Serbian banks, with the option to open more as needed.
This service allows you to issue professional invoices through an established company that boasts a genuine economic presence in a respected jurisdiction. The contractual agreement for services between the landlord and your client ensures that the latter pays the landlord’s company directly. For your client, the landlord’s company is the official supplier, which eliminates the need for further scrutiny.
Serbian umbrella companies are not only advantageous for freelance consultants, small IT firms, and digital nomads but also for offshore e-commerce businesses, especially given the stringent economic substance regulations that major card associations enforce.
Receiving your earnings is a breeze this way. The process involves the company signing a back-to-back contract with either you personally or your company. After rendering your services, you issue an invoice to the Serbian company. The Serbian entity then can remit funds globally to cover your invoice, whether it’s to your bank, e-wallet, the bank account of your company in your home country, or any third party.
The company retains a commission for its services, which may be calculated as a percentage of the turnover, a fixed monthly fee, or possibly a mix of both.
Serbian company rental: opportunities and challenges
When considering rent-a-company arrangements in Serbia, it pays to be aware of certain nuances. It is certainly true that Serbia offers distinct advantages, which make it an appealing jurisdiction for company rental, yet there are also some challenges, especially with the disbursement of funds to offshore tax havens. Hence, you should evaluate your business model to determine if a Serbian rent-a-company or umbrella company meets your specific needs.
One key point is that Serbia does not have specific legislation on umbrella companies. In Serbia, they operate as standard commercial entities, providing services and engaging subcontractors to deliver them.
Serbia’s VAT system currently closely mirrors that of the EU. However, Serbia’s non-membership in the EU’s single market means that services exported from Serbia are not subject to VAT, provided they are not performed within its borders. Therefore, if you’re invoicing international clients through a Serbian company for services rendered outside of Serbia, VAT considerations are not applicable.
Serbia enjoys a positive global standing and is not deemed a tax haven. As a country on the path to EU membership, Serbia has strong ties with the European Union, which facilitates seamless financial transactions with the EU, the USA, and other regions. Serbian banks are known for their speed and efficiency. There, you can conduct transactions in all major currencies, including the US dollar, euro, and Chinese Yuan, with multi-currency capabilities being a standard feature of Serbian bank accounts.
It’s also crucial to note that Serbia maintains a tax blacklist separate from the EU’s list of non-cooperative jurisdictions for tax purposes. This primarily impacts outgoing payments from Serbian companies to those on the blacklist. While receiving funds from these jurisdictions poses no issue, the said outgoing payments are subject to a 25% withholding tax and come with extensive paperwork, which makes such transactions generally inadvisable.
Rent-a-Company costs in Serbia
The cost of a rent-a-company service in Serbia varies as each situation is unique, and there isn’t a fixed standard fee. The pricing structure is designed to be mutually beneficial for both the Serbian company and the foreign contractor. The Serbian entity assumes legal responsibility for the transactions and dedicates considerable time to liaising with banks and tax authorities.
While costs may fluctuate, a general guideline is that rent-a-company fees approximate 10% of the invoiced total. However, this percentage may be adjusted based on work complexity, transaction volume, and the flow of funds.
Why trust SerbiaWealth for reliable Rent-a-Company solutions
Interested in learning more about our re-invoicing or rent-a-company services in Serbia? Reach out to SerbiaWealth today for a personalized consultation and our seasoned experts will be right there at your disposal!