Login || Select language: SRP | ENG
CustomsSimplified proceduresCustoms TariffForeign exchange operations
Foreign trade operationsVATExcise Tax Frontier controls

Foreign exchange operations

Foreign exchange operations

Foreign exchange operations
The law on Foreign Trade Operations governs several types of foreign exchange operations. The conditions and manners of their enforcement are governed by particular chapters of this Law and by-law regulations adopted for implementing the Law on Foreign Trade Operations.

1. Current transactions
 
Current transaction means transactions concluded between residents and non-residents for purposes other than the transfer of capital. Payment, collection and transfer under current transactions between residents and non-residents shall be executed freely, in accordance with the Law on foreign trade Operations and, without restrictions, include the following:
  1. payments under foreign trade transactions and other external current transactions within the meaning of the law governing foreign trade;
  2. payments relating to the repayment of a part of the principal and interest on credits; 
  3. return of investment funds, as well as transfer abroad and repatriation of profit from direct investments; 
  4. transfers in favour of natural persons relating to: pensions, disability pensions and other social benefits, transfers relating to taxes and fees, interstate cooperation, liquidated damages under insurance contracts, transfers relating to valid and enforceable decisions, transfers relating to gains from lotteries, concession compensations, subscriptions and penalties and other transfers, as well as transfers relating to the costs of family sustenance. 
1.1 Collections and payments relating to exports and imports of goods and services
 
Collections and payments related to exports and imports of goods and services as current transactions in terms of the Law on Foreign Exchange Operations are fully liberalized for a period of one year from the date of export or import of goods and services, or from the date of advance collection or payment for goods or services.  After the prescribed deadline, these transactions are considered as foreign credit operations  and as such must be recorded in the National Bank of Serbia in the manner and within the time limits prescribed  by the Decision on Recording of Foreign Credit Operations (“Official Gazette of the Republic of Serbia”, No. 85/11). 
 
1.2. Offsetting  of debts and claims
 
Law on Foreign Exchange Operations prescribes that offsetting debts and claims may be carried out on the basis of realized foreign trade in goods and services and on the bases of external credit transactions in foreign exchange, but under different  conditions , depending on  the type of operation generating  the debt or claim  which is the subject of offsetting  in terms of this Law.
 
Therefore, the terms and rules for carrying out of these operations are closely governed by two regulations:
  • Regulation on conditions and manner of offsetting debts and claims under the realized  foreign trade in goods or services and on reporting to the Foreign Exchange Inspectorate on offsetting (“Official Gazette of the Republic of Serbia”, No. 14/12) and
  • Regulation on conditions and manner of offsetting  debts and claims under the foreign credit operations in foreign exchange (“Official Gazette of the Republic of Serbia, No. 99/11).
1.3. Buying and selling of claims and debts
 
Banks or residents, except natural persons-residents, may buy or sell, i.e. pay or collect claims and debts generated in foreign trade transactions of residents.
 
These operations may be carried out only on the basis of a contract in writing concluded between all participants in the operation and under the conditions and in the manner prescribed by the Regulation on Detailed Conditions and Manner of Transferring  of Claims and Debts under Foreign Trade Transactions of Residents (Official Gazette of the Republic of Serbia” no.112/06).
 
2. Capital transactions 
 
Capital transactions are transactions between residents and non- residents for the purpose of transferring capital. Payments, collections and transfers between residents and non-residents relating to capital transactions are free, except the Law on Foreign Exchange Operations provides otherwise.
 
Capital transactions for the purposes of the Law on foreign Exchange Operations include:
  • direct investment;
  • investment in real estate;
  • securities transactions;
  • financial derivative transactions;
  • transactions with investment and voluntary pension funds;
  • credit operations;
  • guarantee operations;
  • deposit operations;
  • operations based on an insurance contract in line with the law governing insurance;
  • unilateral transfers of means of payment (personal and physical).
2.1 Direct investments
 
For the purposes of the Law on Foreign Exchange Operations, direct investments are resident's investments into a legal entity abroad and non-resident's investments into a legal entity in the Republic for the purposes of getting included in the management of such legal entity's activities. In these cases, the investor shall acquire at least a 10% stake in share capital, and/or at least 10% of voting rights, in a period not longer than one year following the first investment into that legal entity in the event of successive investments (for the purpose of reaching the threshold of 10%).
 
Direct investments shall include: incorporation of a legal entity, branch or representative office, purchase of shares or stake in the capital of legal entity, recapitalisation of legal entity by granting of subordinated credits and loans, as well as any other form of investment allowed by the Law.  
 
Payments and transfers of capital relating to direct investments  of the residents legal entities, entrepreneurs and natural persons  abroad are free, in accordance with the law governing the foreign trade operations, while the payments and transfers of capital relating to direct investments  of non-residents in the Republic are also free, but in line with the law governing foreign investments.
 
Decision requiring reporting on direct investments in international operations (“Official gazette of the Republic of Serbia”, No. 87/09) and Directive for implementation of the Decision requiring reporting on  direct investments in international operations (Official Gazette of the Republic of Serbia”, No. 87/09) prescribes the obligation to report to the National Bank of Serbia on direct investments  of non-residents in the Republic of Serbia, as well as on direct investments  of residents abroad. 
 
2.2. Securities transactions
 
Law on Foreign Exchange Operations prescribes that securities are determined by the law governing the capital market.
 
Securities may be domestic or foreign securities.
 
Domestic securities are securities issued by a resident in the domestic and foreign market, and may also be denominated in foreign currency if so prescribed by a separate law.
 
Foreign securities are securities issued by a non-resident.
 
Resident legal entities, entrepreneurs and natural persons may effect payment and collection for the purposes of buying and selling equity securities abroad that do not constitute direct investments. 
 
Relating to long term debt securities, the Law on Foreign Exchange Operations prescribes that residents legal entities, enterpreneurs and natural persons may effect payment and collection for the purposes of buying and selling long-term debt securities issued by EU countries, OECD member countries, international financial organizations and development banks or financial institutions founded by foreign states. They also may effect payment for the purposes of buying other long-term debt securities abroad whose level of risk (rating) and issuer country are prescribed by the National Bank of Serbia.
 
Residents may effect payment and collection for the purposes of buying domestic securities that are denominated in foreign currency and issued abroad.
 
Non-residents may effect payment for the purposes of buying long-term debt securities as well as equity securities in the Republic of Serbia, in accordance with the law governing security market.
 
Unlike operations with long-term securities, the Foreign Exchange law prescribes that residents, except the National Bank of Serbia and the banks,  can not make payments for the purchase of foreign short-term securities, as well  as non-residents can  not make payments for the purchase of short-term securities in the Republic.
 
Conditions and manner of security operations and the requirement to report about them are governed by the following by-law regulations of the National Bank of Serbia:
  • Decision on Conditions and Manner in which Banks May Buy Foreign Short-term Securities in  Foreign and Domestic Markets (Official Gazette of the Republic of Serbia”, No. 16/07);
  • Decision on Determining the Level of Risk of the Issuer of Long-term Debt Securities in which Residents May Invest Abroad  (“Official Gazette of the Republic of Serbia”, No. 85/11);
  • Decision on Performance of Financial Derivative Transactions (“Official Gazette of the Republic of Serbia”, No. 85/11);
  • Decision Requiring reporting on  External Operations “Official Gazette of the Republic of Serbia”, No. 87/09);
  • Guidelines for Implementing the Decision Requiring Reporting on External Operations (“Official Gazette of the Republic of Serbia”, No. 87/09).
2.3. Foreign credit operations
 
For purposes of the Law on Foreign Exchange Operations, foreign credit operations are credits, granted by a bank or a foreign bank, and loans between residents and non-residents, denominated in foreign exchange.
 
The Law on Foreign Exchange Operations includes the following foreign credit operations:
  • commercial loans;
  • credits and loans related to foreign trade in goods, including syndicated credits and loans;
  • subordinated credits and loans;
  • Short-term time bank deposits (with maturity up to one year;
  • Short-term bank credit lines;
  • Exports and imports of goods and services, for the purposes of this Law considered as foreign credit operations;
  • Other operations having the characteristics of foreign credit operations;
  • Bank guaranties, sureties and other types of warranties issued by a bank in favour of non-resident creditor against foreign credits taken by residents from non-residents and foreign credit operations between two non-residents abroad;
  • warranties and other means of collateral that a resident – legal entity and entrepreneur issue in favour of a non-resident creditor against foreign credits taken by residents from non-residents, as well as warranties and other means of collateral that a resident – legal entity issues against foreign credit operations between two non-residents abroad.
Foreign credit operations shall also include dinar-denominated credits and loans granted to residents in accordance with the provisions of this Law by international financial organizations and development banks or financial institutions founded by foreign states, as well as dinar-denominated credits that banks grant to non-residents. Foreign credit operations denominated in dinars are governed by the provisions of Decision on Conditions and Manner of Performing Foreign Credit Transactions in Dinars (“Official Gazette of the Republic of Serbia”, No. 85/11).
 
The above mentioned credit transaction must be recorded in the National Bank of Serbia in  the manner prescribed by the Decision Requiring Recording of Foreign Credit Transactions (Official Gazette of the Republic of Serbia”, No.85/11).
 
2.4. Deposit operations
 
For the purposes of the Law on Foreign Exchange Operations, deposit operations deposit operations are operations based on the deposit contract  concluded between a non-resident legal or natural person in Serbia or between a resident – legal or natural person  and a bank abroad.
 
These operations are precisely regulated by the by-law regulations adopted by the National bank of Serbia:
  • Decision on Conditions and Manner of Keeping Non-residents’ Accounts “Officiial Gaazette of the Republic of Serbia”, No. 16/2007, 12/2008 and 61/2008) 
  • Decision on Conditions and Manner in which Residents May Keep Foreign Exchange in  Accounts with Banks Abroad (“Official Gazette of the Republic of Serbia”, No. 31/2012).
Residents – natural persons’ deposit operations abroad may be performed only in cases and under conditions prescribed  by the Decision on Conditions and Manner in which Residents May Keep Foreign Exchange in  Accounts with Banks Abroad. Residents – legal entities may perform these operations abroad only on the basis of the decision of the National bank of Serbia and after meeting conditions from the above Decision.
 
2.5.  Personal and physical transfers of means of payment 
 
Personal transfers of means of payment, within the meaning of the Law on Foreign Exchange Operations, are transfers of means of payment from the Republic of Serbia abroad and from abroad to the Republic that are not based on the execution of a business activity .
 
Personal transfers are effected between a resident-natural person and non- resident and include gifts and assistance, assistance to family members, inheritance, annuities, funds for settling the debt of immigrants in the Republic and funds that immigrants take out, i.e. transfers abroad. 1. This decision prescribes detailed conditions for effecting personal 
 
Physical transfer of means of payments is every transfer of cash in dinars, as well as transfer in foreign currency and securities from and to the Republic of Serbia.    
 
The customs authorities control bringing out and bringing into the Republic of Serbia of foreign cash, dinars, cheques and securities.
 
In accordance with the Law, the customs authority at the border crossing may temporarily seize from residents and non-residents all dinars, foreign cash and cheques exceeding the  amount prescribed by the  Decision of the National Bank of Serbia on Conditions for Personal and  Physical Transfer of Means of Payment to and from Abroad (“Official Gazette of the Republic of Serbia”, No.677/2006, 52/2008 and 18/2009). 
 
2.6. Foreign payment transactions and transactions in foreign exchange in Serbia
 
Foreign payment transactions are carried out in foreign exchange and dinars through a bank, under the conditions and in the manner prescribed by the Decision on Terms and Conditions  of Performing Foreign Payment Transactions (Official Gazette of the Republic of Serbia”, No. 24/2007, 31/2007, 38/2010)  and the Guidelines for Implementation of the Decision on Terms and Conditions of Performing Foreign Payment Transactions (“Official Gazette of the Republic of Serbia”, No. 24/2007, 31/2007, 41/2007, 372008, 61/2008, 120/2008, 38/2010, and 92/2011).
 
The Law on Foreign Exchange Operations prescribes that a resident may effect collection, and/or payment in respect of a non-resident other than the one with regard to whom the resident has any debts or claims under current or capital transaction, provided that the operation is allowed by this Law. 
 
Moreover, a resident debtor against credit denominated in dinars granted by an international organization and development bank or financial institution established by foreign states, may effect payment in respect of international financial organization and development bank or financial institution established by foreign states other than the one to which a resident has a debt under this operation.
 
In performing foreign payment transactions, payments in respect of a non- resident other than the one with regard to whom the resident has any debts, or collections from a non-resident other than the one with regard to whom a resident has claims, may be effected only on the basis of a contract concluded in writing between all parties to the transaction, subject to the fulfillment of all conditions prescribed by the Regulation on Detailed Conditions and Manner  of Collection or Payments in Respect of Other  Non-resident under Current or Capital Transactions (“Official Gazette of the Republic of Serbia”, No. 112/2006).
 
The Law on Foreign Exchange Operations prescribes that payments, collections or transfers between residents and between residents and non-residents in the Republic of Serbia shall be performed in dinars, with exceptional payments and collection in foreign exchange provided by this Law.
 
Moreover, the Law on Foreign Exchange Operations prescribes that payments, collection, payments in and payments out may be effected in foreign cash, but only in cases and in a manner prescribed by the Decision on Cases and Conditions of Payment, Collection, Pay- in and Payout in Foreign Cash (“Official Gazette of the Republic of Serbia”, No.67/2011).
 
3. Foreign exchange market and the exchange rate of dinar
 
Foreign exchange and foreign cash can be purchased and sold only in the foreign exchange market for the purposes allowed by this Law. Conditions and manner of operation of foreign exchange market are governed by the Decision of the National Bank of Serbia on Conditions and Manner of Operation of Foreign Exchange Market (“Official Gazette of the Republic of Serbia”, No. 10/11). 
 
The subject of purchasing and selling on the foreign exchange market may be only the types of  foreign exchange and foreign cash provided in the Decision on Types of Foreign Exchange and Foreign Cash to be Purchased and Soled in the Foreign Exchange Market (Official Gazette of the Republic of Serbia”, No. 24/2007, 116/2008 and 20/2010).
 
Purchasing and selling of foreign exchange and foreign cash in the foreign exchange market in the Republic of Serbia are effected directly or at the meeting of interbank foreign exchange market.
 
Purchasing and selling of foreign cash in the foreign exchange market are performed by banks, National Bank of Serbia, and by residents performing exchange operations in accordance with the Law on Foreign Exchange Operations. 
 
3.1. Exchange operations
 
Exchange operations may be performed by banks, while residents – legal entities and enterpreneurs may perform these operations on the basis of an authorization of the Tax Administration, provided they have fulfilled conditions prescribed by the Law on Foreign Exchange Operations.
 
Decision on Conditions and Manner of Performing Exchange Operations (“Official Gazette of the Republic of Serbia”, No. 93/11) and Guidelines for Implementation of the Decision on Conditions and Manner of Performing Exchange Operations (Official Gazette of the Republic of Serbia” No. 93/11)   of the National bank of Serbia prescribe detailed conditions and manner of performing exchange operations.
 
Entering into force of the Law  Amending the Law on Tax Procedure and Tax Administration (“Official Gazette of the Republic of Serbia”, No.93/12), abolished the  Regulation on Detailed Conditions and Manner of the Control of Exchange Operations (“Official Gazette of the Republic of Serbia” No. 7/12).
 
4. Foreign exchange control 
 
Foreign exchange control performs the National bank of Serbia, Tax Administration, customs authorities, as well as other competent authorities.
National Bank of Serbia controls foreign exchange operations of banks and other financial organizations, as well as residents and non-residents linked by property, management and business relations.
 
Tax Administration controls foreign exchange operations of residents and non-residents and exchange operations, as well as foreign exchange operations of banks and other financial organizations which are linked by property, management and business relations.
 
Customs authority controls bringing out and bringing in the territory of the Republic of Serbia of foreign cash, dinars, cheques and securities in passengers’, goods’ and postal traffic.
 
4.1 Control of foreign exchange operations of residents and non-residents
 
Entering into force of the Law Amending the Law on Tax Procedure and Tax Administration (“Official Gazette of the Republic of Serbia”, No. 93/12) abolished the Regulation on Detailed Conditions and Manner of Performing the Control of Foreign Exchange Operations by Residents and Non-residents (“Official Gazette of the Republic of Serbia”, No. 112/06, 39/10 and 15/12) which governed the conditions and manner of performing direct and indirect control of foreign exchange operations, as well as obligation of recording of foreign trade operations.
From the date of entering into force of the Law Amending the Law on Tax Procedure and Tax Administration, the control procedure is governed by the provisions of the law governing the tax control.
Commercium.rsCopyright © 2024, Commercium
Designed by:  Built by: M.G.soft