Investing in real estate in Serbia can be one of the ways to obtaining residence permit, besides most common way – through opening a company in Serbia and Belgrade. Residence permit by real estate investment is one of the increasing ways of obtaining residence permit for foreign investors.
Residency in Serbia through property purchase can be excellent way to establish presence in Serbia and consequently, at later stage, develop business operations.
What is Residency by Investment in Serbia?
Obtaining residency by investment in Serbia can be done through purchasing real estate in Serbia. Therefore, ownership of the real estate can be a basis for obtaining residence permit in Serbia.
There are some important points when considering possibility of Serbian residence permit by real estate investment.
Who Can Apply for a Residence Permit by Real Estate in Serbia?
One of the first questions that arise when one thinks of buying property in Serbia is whether you are entitled to purchase real estate in Serbia. Unfortunately, it is not a case that foreigner of any nationality can purchase real estate in Serbia.
Rather, only citizens of the states with which Serbia has established reciprocity can purchase property in Serbia and, therefore, apply for residence permit.
That being said, there are two ways reciprocity can be established:
- formal reciprocity or
- factual reciprocity.
Formal reciprocity exists when there is a bilateral agreement between Serbia and certain state, based on which citizens of both country are mutually entitled to purchase real estate in another state. There is a number of states with which formal reciprocity was established and whose citizens can buy property in Serbia.
Other way is factual reciprocity which exist when there is no concluded agreement between certain state and Serbia, but reciprocity has been established through the exchange of official notes between the competent authorities of the two states – Serbia and the state with which reciprocity is being established. In that case, citizens of those states can also buy property in Serbia and apply for residency.
Ministry of Justice provides information whether there is established reciprocity between Serbia and certain state.
Purchase of real estate through company in Serbia
Alternative option can be purchasing real estate in Serbia through company in Serbia. Namely, if the purpose in investing in Serbian real estate market, it can be done by buying property via company, even though owner of Serbian company is foreign citizen who is not entitled to purchase real estate. In that case, owner of the real estate is a company, meaning that owner would not be entitled to residency in Serbia via real estate.
However, in that case, owner of such company can apply for residence permit in Serbia through company.
Types of Real Estate Eligible for Residency in Serbia
After establishing that foreign citizen can purchase property in Serbia, it is also important to consider what kind of real estate is eligible for applying for residency in Serbia.
Residential Properties (Apartments and Houses)
Due to legal legislative in Serbia, foreigners, in order to apply for temporary residence, should purchase specific type of real estate. Those are residential properties – apartments, houses or residential buildings. The idea of this requirement in legislation is that foreigners are purchasing real estate for purpose of actually living in those properties. Therefore, there are two conditions to be met:
- that foreign citizen can purchase real estate in Serbia, due to reciprocity, and
- that foreign citizen will live and reside in purchased property.
Land and Commercial Properties
A foreign citizen who does not perform an activity in the Republic of Serbia cannot acquire ownership of land, unlike the possibility of purchasing apartments and family residential buildings. Exception exists in cases where the land is located beneath an apartment or a residential building over which foreign citizen is acquiring ownership rights, or where the land serves for the regular use of that apartment or residential building.
It should be noted that an exception exists in relation to agricultural land, as Article 1 of the Law on Agricultural Land expressly provides that a foreign natural or legal person may not own agricultural land, unless otherwise determined by this law in accordance with the Stabilisation and Association Agreement between the European Communities and their Member States, on the one hand, and the Republic of Serbia, on the other hand.
Minimum Investment Requirements for Residency by Real Estate in Serbia
A common question we receive from clients is whether there is a prescribed minimum investment amount when it comes to investing in real estate in the Republic of Serbia. No such requirement exists — in other words, during the procedure of applying for temporary residence based on property ownership, the competent authority will not assess the value of the property.
However, it is important that the purchase be made at a market price in order to avoid potential issues with the tax authorities.
How to Choose the Right Property for Residence Permit in Serbia
Once you have determined that you are entitled to purchase property in Serbia, it is important to determine which location would be suitable for investing in real estate. In that sense, it is also important to consider market value of the real estate, since it can differ and vary significantly depending where property is located.
Most common cities in which real estate is purchased are Belgrade, Novi Sad, Nis, Subotica, Kragujevac. However, more affordable property can be found in smaller towns and cities, that can also be good option to consider.
Process of purchasing real estate in Serbia
When deciding on purchasing property in Serbia it is also important to be familiar with all steps in this process.
Our recommendation would be to follow these guidelines in order to be sure that the process goes smoothly.
Ownership and Legal Security
When you have found suitable property for investment in Serbia, both in terms of location and value, it is important to conduct legal due diligence of such property. This step is important in order to determine whether there are any possible annotations inscribed in the cadastre related to the property, which could limit possibility of purchasing such property or may present a high risk.
Also, this phase includes checking inscribed owners of the property, inscribed area of the property and other relevant and important information which needs to be considered in process of purchasing real estate.
Conclusion of Preliminary Agreement
Next phase would include drafting and concluding Preliminary Agreement with seller. This step is not obligatory, but in order to open a bank account in Serbia, some banks request delivery of concluded Preliminary Agreement.
It is important that Preliminary Agreement contains all relevant elements and in that sense, it is significant that legal specialist is engaged with drafting or reviewing Preliminary Agreement.
Also, it is notable to mention that, in case foreign citizen is not available to come directly to Serbia to sign and conclude this agreement before public notary, attorney specialized in real estate can do it on client’s behalf, based on power of attorney. Such power of attorney needs to be notarized and if needed, apostille stamp for Serbia needs to be obtained also.
Opening bank account
Next action would be opening a bank account in Serbia. This procedure can also be completed by attorney at law through special power of attorney, so there is no need for traveling to Serbia solely for this purpose.
Conclusion of sale and purchase agreement
This phase includes drafting sale and purchase agreement which will contain rights and obligations of both parties as well as certain specifics agreed upon during the negotiations between the parties. It is important that sale and purchase agreement is properly drafted by attorney at law, in order to avoid any potential issues.
Sale and purchase agreement is signed before public notary and notarized and this action can also be done via special power of attorney issued to attorney at law.
Notarization of Clausula intabulandi
Usually it is the case that buyer had certain deadline for payment of purchase price indicated in Sale and Purchase agreement, i.e. that purchase price is not paid immediately.
In that case, upon payment of full purchase price, as it is indicated in the agreement, seller notarizes document – statement called Clausula intabulandi, by which he confirms that purchase prices is paid and agrees that buyer can be inscribed in the cadastre as new owner.
Registering Ownership
Upon conclusion of Sale and Purchase agreement and payment of purchase price, procedure of registering ownership before competent cadastre is conducted. Once foreign national is inscribed in the cadastre as new owner, it is only when he/she is considered as owner of the property.
Obtaining Tax Identification Number (TIN)
One of the obligatory steps is also submitting request to Tax Administration for obtaining Tax Identification Number – TIN. This request must be submitted by Serbian national, and can be done by attorney at law through power of attorney.
Taxation and Costs of Buying Property in Serbia
When considering costs of purchasing real estate it should be noted that those costs include not only purchasing price of the property, but also additional costs that incur during the process.
Purchase Fees
Buyer of the real estate will have a costs of notarization of agreements and Clausula Intabulandi before public notary. This fee is paid directly to the public notary and depends on the value of the property in question.
Cadastre Fees
Upon conclusion of agreements, buyer will have to pay an administrative fee to the cadastre for registering ownership rights. This fee is paid to the competent cadastre office.
Tax on the Transfer of Absolute Rights
Buyer will be obliged to pay tax on the transfer of absolute rights, that is determined by competent tax administration. The rate of the Tax on the Transfer of Absolute Rights amounts to 2.5% of purchase price.
Annual Property Taxes
Besides Tax on the Transfer of Absolute Rights, owner of the real estate will have to pay also annual property tax.
Legal and Agency Fees
If real estate agent was included in process of finding a property, buyer will have costs related to the agency fee.
Besides, there will be also legal fees, if attorney at law was involved in process of conducting legal due diligence, drafting or reviewing agreements, obtaining TIN, signing agreements on behalf of the client and opening a bank account.
Step-by-Step Process of Obtaining a Residence Permit by Real Estate Investment
Once procedure of purchasing real estate is conducted, application for residence permit by real estate investment in Serbia can be initiated. Therefore, this is step-by-step process:
- Purchasing real estate and registration of ownership;
- Preparation of documents needed for application;
- Submission of the application;
- Receiving decision and obtaining residence card.
Purchasing Property and Registering Ownership
First step is purchasing real estate in Serbia for purpose of applying for residency by investment in Serbia, as it is described. Once the property is bought next step is registration of ownership right within the cadastre.
Preparing Documentation for Application
Crucial phase is preparation of all necessary documentation for application. Such documents include, among others proof of ownership right over real estate, valid passport, proof of funds and other relevant documents.
Submitting the Application to the Serbian Authorities
Application is submitted through government portal electronically by delivering all necessary documents as well as proof of payment of administrative fee.
Receiving and Renewing the Residence Permit
Final phase includes rendering a decision by competent authority and delivery of such decision to applicant. Residence permit can be issued for a maximum period of 3 years and can be renewed for a same period of time.
Can Property Ownership Lead to Permanent Residency or Citizenship?
Upon approval of residence permit by real estate in Serbia and residing continuously in Serbia for three years, a foreign citizen can apply for permanent residency. Permanent residence is the authorization for the long-term stay in the Republic of Serbia. Further, a foreign citizen who has approved permanent residence can file application for citizenship of Serbia.
Therefore, property ownership can lead to permanent residency through real estate investment in Serbia and, consequently, to Serbian citizenship. Of course, it is important that during the whole process foreign national has ownership rights over real estate in Serbia.
FAQ – Residence Permit by Real Estate Investment in Serbia
No, there is not prescribed minimum investment related to residency in Serbia through property purchase.
This process may take up to few months, depending on the phase of finding appropriate real estate and conducting the process of purchasing it.
Yes, ownership of real estate in Serbia can lead to residence permit, permanent residency and consequently, citizenship.
Why Consider Serbia for Residency by Investment?
Serbia offers a strategic European location, making it an ideal location for living and conducting business. With favorable conditions for investors, obtaining residency in Serbia through investment is simpler and more efficient than in many other countries.
Moreover, the procedure for obtaining Serbian residency by investment is straightforward, transparent, and time-efficient, allowing you to secure your status with minimal bureaucracy.
In summary, residency by investment in Serbia combines strategic location, favorable conditions, legal stability, and an easy application process, making it a unique opportunity for foreign nationals seeking to invest in Serbia.
This article is for informational purposes only and does not constitute legal advice. If you need additional information regarding the topic in question, please feel free to contact us by email at office@ncrlawyers.com or by phone at +381677049551.
