The Serbian Law on Foreign Exchange Amended

On 20 April 2018, the amendments to the Law
on Foreign Exchange (the “Law”) were
adopted and will enter into force on 28 April 2018. Exceptionally, the
application of certain provisions related to the assuming of competencies over foreign
exchange control by the National Bank of Serbia is delayed until 1 January
2019.

The main reasons behind the amendments to
the Law are the harmonisation of the obligations that the Republic of Serbia undertook
under the Stabilisation and Association Agreement and an alignment with international
standards in the area of the prevention of money laundering and terrorism financing.
These amendments contribute to the further evolution of the digital and IT sector
in Serbia – in accordance with the activities that the Serbian Government
directed towards the development of this field.

The main amendments to the Law are the
following:

• The list of issuers of long-term securities in which the residents
  may freely invest has been expanded – residents may
  now invest in long-term securities issued by the European Union and in legal
  entities registered within EU territory. Banks remain free to invest in
  long-term securities;
• The capital flow based on short-term portfolio investments is liberalised
  –residents and
  banks may perform the sale and purchase of short-term securities of certain
  issuers, while non-residents from the EU may sell and purchase short-term
  securities in the Republic of Serbia in accordance with the law regulating the
  capital market;
• It is clarified that the creditor’s consent is required in cases of permitted
  debt assignment, which is a correction stipulated for the purposes of harmonisation
  with the general rules on obligations;
• Entering into certain cross-border credit transactions in electronic
  form has been enabled;
• Short-term borrowing by natural persons and branches is enabled – the resident natural persons may take loans/credits from non-residents from the EU with a repayment term
  of up to one year, while branches may take a loan/credit from a non-resident founder from the EU under the same conditions;
• The approval of financial loans by a resident legal entity to a
  non-resident is liberalised, as well as the granting of sureties and other security
  instruments under credit transactions between non-residents – the National Bank of Serbia is expected to adopt a bylaw which
  will prescribe the conditions and the manner under which these transactions
  will be carried out, whereby the restrictions prescribed by this bylaw will be
  exclusively for the purposes of preserving public interest and financial
  stability. The same bylaw should further regulate the conditions under which a resident
  legal entity will grant sureties and other security instruments under credit
  transactions between residents and non-residents;
• The scope of transactions based on which a resident legal entity may
  obtain a guarantee and surety from a non-resident has been extended – the resident legal entities now may
  obtain guarantees and sureties from non-residents also for transactions concerning
  the import of goods and services, as well as for investment works by non-residents
  in Serbia;
• All residents (as opposed to natural persons only) may execute cross-border
  payment transactions via payment institutions and public postal operators;
• Charity organisations may receive charity donations from abroad
  through electronic money issuers as well;
• The sale and purchase of digital products in foreign currencies in
  Serbia is permitted under certain conditions – (i) that the payment is made using a payment
  card or electronic money through a local payment service provider, and (ii)
  that these products are delivered exclusively through telecommunications,
  digital or IT devices;
• The National Bank of Serbia assumes the competencies over foreign
  exchange control from the Tax Administration as of 1 January 2019 – The National Bank of Serbia will
  assume the competencies of the Ministry of Finance, Tax Administration over the
  issuance and revocation of authorisations and certificates for the conduction
  of currency exchange operations and the supervision over currency exchange
  operations and the foreign exchange operations of residents and non-residents.