October 10, 2019
Enforcement of 2014 Rule Affects Intra-Company Transfers to Serbia
Serbia’s Law on Employment of Foreigners enacted in 2014 laid down a provision in Article 19 which stated that foreign national employees of a company located outside Serbia assigned to work at an affiliated local company in Serbia are initially limited to a maximum of one year. The assignment, and the corresponding intra-company transfer (ICT) work permit, would be allowed extension for a further period of one year – only if the foreign national employee’s country of nationality would have an existing social security agreement with Serbia. If no social security agreement exists with the employee’s country of nationality, and should the Serbian entity desire to extend the period of the employee’s assignment in Serbia, the employee must be placed on its local payroll – which may subject them to Serbian taxes and duties not otherwise applicable to ICTs. This provision certainly has the potential to make ICT assignments to Serbia a somewhat complicated muddle of immigration, tax, and employment law.
However, since Law on Employment of Foreigners’ enactment in 2014, Serbia’s National Labor Agency (NLA) had apparently shelved the rule and had taken no action towards implementing it – until recently. It seems like the NLA has now begun enforcing the one-year maximum on ICT work permits and is granting only a single one-year extension if the foreign national employee is from one of the eligible nations. After the initial one year (or two-years if an extension is granted) – the employee must either be placed on local payroll or exit Serbia.
A list of the 28 nations who have bilateral agreements on social security with Serbia, along with the texts of the agreements, is set out below:
| Austria | Luxembourg |
| Belgium | Hungary |
| Bosnia and Herzegovina | Macedonia |
| Bulgaria | Germany |
| Montenegro | Norway |
| Czech Republic | Panama |
| Denmark | Poland |
| France | Romania |
| Netherlands | Slovakia |
| Croatia | Slovenia |
| Italy | Sweden |
| Canada | Switzerland |
| Cyprus | Great Britain |
| Libya | Turkey |
The crux of this matter is that ICT assignments to Serbia have now become significantly complex and may require consultation with both immigration and tax specialists in their planning.
Several European Union (EU) nations are likely to adopt the EU Intra-Company Transfer Directives which will bring about a consistency in the ICT scheme across the EU nations thereby eliminating these challenging variations. As of date, fourteen EU nations have either adopted the ICT Directive or are in the process of doing so. Unfortunately, the EU adopting the ICT Directive holds the slightest probability for improving the ICT process in Serbia anytime soon. This is because, Serbia’s application for becoming a part of the the EU remains in the negotiation phase, and it is estimated that Serbia’s admission to the EU will be no sooner than 2020, if then.
Manizeh Mistry, Deputy Head – Global Immigration
