Can Foreigners Buy Real Estate in Serbia?
This commonly asked question is significant for both those considering relocating or developing businesses in Serbia, as well as investors who see real estate acquisition in Serbia as an attractive business opportunity. Purchasing property in Serbia also serves as a basis for obtaining temporary residence for foreigners.
Market trends show a constant increase in interest from foreign buyers, both for apartments and commercial properties in cities, as well as for holiday homes outside urban areas. The number of foreign investments in the Serbian real estate market is growing steadily year by year. In this article, we provide answers regarding the possibility for foreigners to buy real estate in Serbia, the necessary steps in the property acquisition process, tax obligations, and potential risks.
Foreign individuals can buy apartments and residential buildings in Serbia. Foreign individuals and foreign legal entities conducting business activities in Serbia can acquire all properties necessary for their business operations, including various types of real estate such as office space, commercial buildings, retail outlets, warehouse facilities, and other.
However, foreign individuals or legal entities cannot own agricultural land in Serbia. Nevertheless, this limitation can be overcome by establishing a company in Serbia (Special Purpose Vehicle – SPV) that would be the buyer of the agricultural land. Regardless of the fact that the founder of the SPV company is a foreigner, under Serbian law, the company will be treated as a domestic legal entity. More information about the procedure for registration of a company can be found in our article dedicated to this topic.
In cases where foreigners are allowed to buy real estate in Serbia, this possibility is conditioned by the existence of reciprocity. Reciprocity exists if Serbian citizens are allowed to buy real estate in the country of origin of the foreign individual.
Countries with which reciprocity exists include:
| Argentina | Australia | Austria | Bahrain |
| Belize | Belgium | Belarus | Bosnia and Herzegovina |
| Brazil | British Virgin Islands | Bulgaria | United Kingdom |
| Greece | Denmark | Dominican Republic | Egypt |
| Israel | Iran | Ireland | Italy |
| Japan | Armenia | South Africa | Jordan |
| Republic of Kazakhstan | Canada | China | Cyprus |
| Lebanon | Latvia | Lithuania | Liechtenstein |
| Luxembourg | Hungary | Malta | Morocco |
| Mexico | Moldova | Germany | New Zealand |
| Norway | Panama | Peru | Poland |
| Portugal | Russian Federation | Romania | United States of America |
| Singapore | Syria | Slovakia | Slovenia |
| Turkey | Uzbekistan | Ukraine | Finland |
| France | Netherlands | Croatia | Montenegro |
| Czech Republic | Swiss Confederation | Sweden | Spain |
| United Arab Emirates | Azerbaijan | El Salvador | Qatar |
| Cuba | Senegal | Yemen | Georgia |
| Colombia | Republic of Korea | Sri Lanka | DNR Congo |
| Zambia | Algeria |
Reciprocity must be determined in each individual case. This means that any foreign individual interested in purchasing property in Serbia must submit a request for an explanation of reciprocity to the Ministry of Justice of the Republic of Serbia.
Real Estate Purchase: Procedure in 4 Steps
1. Legal Analysis of the Property
Before purchasing a desired real estate in Serbia, it is essential to conduct a detailed legal analysis. This analysis includes checking for burdens, mortgages, or other encumbrances on the property, as well as any potential legal disputes related to it.
Careful examination allows for the identification of existing legal risks, as well as those that may potentially arise in the future.
2. Drafting a Sales and Purchase Agreement and Notarization by a Notary Public
After conducting the legal analysis and determining that the property has no property-related issues, the next step is drafting a sales and purchase agreement. In addition to the basic elements such as defining the property, price, payment deadline, and method of transfer of the property, the agreement should cover all the specificity of the particular situation.
Since each sales transaction is unique, it is crucial to tailor the sales and purchase agreement to the specific needs of the contracting parties. Engaging a law firm specialized in real estate transactions is of utmost importance. Entrusting the drafting of the agreement to real estate agencies or using standard contract templates found on the Internet carries significant risks that could result in serious problems and substantial damages in the future.
The sales and purchase agreement for real estate must be concluded in writing and must be notarized by the competent notary public.
3. Registration of Ownership Rights in the Cadastre of Real Estate
It is important to note that in Serbia, ownership rights over real estate are acquired by registering the ownership rights in the Cadastre of Real Estate. Therefore, the purchase of real estate in Serbia is not completed with the notarization of the sales and purchase agreement. Furthermore, ownership of an real estate in Serbia is not acquired at the moment of notarization of the agreement but through the registration of the new owner’s ownership rights in the Cadastre of Real Estate.
The Cadastre of Real Estate registers the ownership rights of the new owner based on the notarized sales and purchase agreement provided by the notary public, and on the basis of the permission to register ownership rights (clausula intabulandi).
Clausula intabulandi can be given in the sales and purchase agreement itself or in a separate document, which is also notarized by the notary public. In practice, it is most common for the seller to issue a clausula intabulandi as a separate document only after the buyer has fully paid the agreed price.
4. Payment of Taxes
The purchase of real estate also entails certain tax obligations. Upon the purchase of real estate, a transfer tax is paid at a rate of 2.5%. The tax base for determining the transfer tax is the agreed price of the property in question. If the agreed price is lower than the market value, the tax authority will assess the tax based on the market value of the property.
The transfer tax is payable by the seller of the property, but it is most common in practice for the buyer to assume the obligation to pay this tax through the sales and purchase agreement.
During the notarization of the sales and purchase agreement, a tax return for determining the transfer tax is completed, which the notary public submits to the competent tax authority within 24 hours from the moment of notarization of the agreement.
In addition to the transfer tax, the purchase of real estate in Serbia also entails the obligation to pay property tax. The notary public also submits the tax return for property tax when notarizing the agreement. The property tax is determined by a Decision on an annual basis and is paid quarterly. The tax rate is 0.4% for properties valued up to 10 million dinars, and for properties valued above this amount, there are increases depending on the specific value of the property.
The information in this document does not constitute legal advice on any specific issue and is provided solely for general informational purposes.
