Legal aspects of buying real estate by foreign citizens in Serbia
The real estate market can be a labyrinth of complex rules and regulations, especially for foreign citizens looking to invest outside their home country. Serbia, as an attractive destination with a growing real estate market, is attracting an increasing number of foreign citizens. However, before embarking on this process, it is essential to understand the legal aspects of purchasing real estate in Serbia.
In this blog, we will cover the key aspects of the process of buying real estate by foreign citizens in Serbia, including an overview of the legal framework, permits required for purchase, taxes and transaction-related costs, as well as possible restrictions.
Buying real estate in Serbia
Serbia offers a diverse range of real estate, from urban living in cities like Belgrade and Novi Sad to idyllic houses in rural areas. Whether you want to invest in an apartment in the city center or seek a peaceful life in the countryside, Serbia has something for everyone. But how can foreign citizens navigate this diverse market?
Through this blog, we aim to provide answers to these and many other questions that may arise during the process of buying real estate in Serbia. Our goal is to provide you with a clear and detailed insight into the process, step by step, so that you can make an informed decision about your next investment.
Legal aspects of buying real estate by foreign citizens
The purchase of real estate in Serbia by foreign citizens is allowed under certain conditions. The process of buying real estate is generally straightforward, but there is a fundamental condition of reciprocity. Reciprocity means that citizens of Serbia must have the ability to own real estate in the country from which the foreign citizen comes. For foreign legal entities, there is an additional requirement that they must have a registered business activity in Serbia, as well as a business account. Tax regulations for foreign legal entities are the same as for domestic legal entities.
Permits for real estate purchase
Foreign individuals and legal entities engaged in activities in Serbia can, under reciprocity conditions, acquire ownership rights to real estate necessary for conducting that activity. Foreigners who do not engage in activities in the Republic of Serbia can, under reciprocity conditions, acquire ownership rights to an apartment and residential building, like other citizens of Serbia. However, they cannot acquire ownership of other types of land, except when it is land on which an apartment or residential building on which they acquire ownership rights is located, or land used for the regular use of the apartment or residential building.
Taxes and costs related to real estate purchase
According to the Law on Property Taxes, foreign citizens are subject to the same taxes as domestic citizens when buying real estate in Serbia. This law does not distinguish between domestic and foreign citizens, which means that all are liable for property taxes.
Absolute rights transfer tax
The first tax that buyers of real estate encounter is the property transfer tax. This tax is paid when purchasing real estate and amounts to 2.5% of the agreed purchase price. Therefore, if a foreign citizen buys real estate in Serbia, they will be required to pay this tax.
After purchasing real estate, owners are required to pay property tax annually, which is calculated based on the assessed value of the property. The property tax rate varies depending on the type and location of the property.
Notary and real estate agency costs
In addition to taxes, foreign citizens buying real estate in Serbia should be aware of other costs, including notary fees, costs of entering ownership rights in the Real Estate Cadastre, bank commissions, and real estate agencies. If you are buying a property through City Expert, you do not pay agency commission as a buyer, and you receive the entire service completely free of charge. Notarial services are mandatory when purchasing real estate, and their price varies depending on the value of the property.
Foreign citizens buying real estate in Serbia should be aware that, in addition to the property price, they will have additional costs in the form of taxes and fees. However, it is important to note that Serbia is known for its relatively low property tax rates compared to many other countries, making it an attractive destination for real estate investment. It is advisable to thoroughly familiarize yourself with the Law on Property Taxes to understand all your obligations as a property owner.
Restrictions on real estate purchase
An exception exists concerning agricultural land. The Law on Agricultural Land explicitly defines that foreign individual or legal entities cannot be owners of agricultural land (fields, gardens, orchards, vineyards, meadows, pastures, fishponds, reed beds, and marshes), and land that can be designated for agricultural production.
Rights of foreigners in Serbia
The legal aspects of buying real estate by foreign citizens in Serbia are complex, but with the right information and expert advice, the process can be far less intimidating.
If you are considering buying real estate in Serbia, make City Expert your first stop because we specialize in this area. We can help you navigate all aspects of the process, from choosing the right property to meeting all legal requirements.
For additional information, advice, or assistance regarding the purchase of real estate in Serbia, do not hesitate to contact us. Our team of experts is always ready to assist you.