News and developments

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.