Serbia: Overview
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Serbia: troubles persist
The Union of Serbia and Montenegro, the last remnant of the former Yugoslavia, was officially dissolved fter Montenegro voted for independence in 2006. But Serbia's long history of conflict and revolutions is far from ended. Kosovo in south western Serbia is waging a war of independence.
Serbia is seeking membership to the European Union. But the Stability and Association Agreement (SAA) talks with the EU were halted in May 2006, because of Belgrade's failure to send former Bosnian Serb general Ratko Mladic to The Hague for trial for war crimes.
Probably Montenegro will be admitted first to the EU.
Serbia's residential housing market saw strong activity over the past year as a result of construction activity in the three largest cities: Belgrade, Nis, and Novi Sad, Colliers Serbia and Montenegro reports.
In Serbia, urban (or construction) land is owned exclusively by the state, and can be leased for a maximum of 30 years. Ownership of buildings and apartments, however, is not restricted. Foreign individuals who cannot own land (because of lack of reciprocity) can circumvent this restriction by incorporating themselves in Serbia.
As Serbia aligns its policies with the EU in its bid for membership, steady investment growth is expected.
The introduction of freehold ownership of land and the completion of privatization of the construction sector are expected to bolster the residential property market in the three largest cities.
RENTAL YIELDS
Yields in Belgrade range from moderate to high
In Belgrade, the center, Dedinje, Senjak and New Belgrade are the most sought-after rental districts. Demand continues to be driven by expatriates from Greece, USA, France, Great Britain, Austria, Italy and neighboring countries.
High end Belgrade apartments tend to yield around 7.7% to 8.6%. Prices for high-end apartments in prime areas average from €1,700 to €2,100 per sq. m., with monthly rentals averaging from €11 to €15 per sq. m.
Middle class apartments in good, but not exclusive areas, yield around 7.6% to 8.2%. Such apartments would sell for €1,100 to €1,450 per sq. m., with rental prices ranging from €7 to €10 per sq. m..
Wealthy locals buy many newly built properties in the high categories, to rent them out.
TAXES AND COSTS
Serbian rental income taxes are moderate
Effective Tax Rate on Rental Income |
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| Monthly Income | €1,500 | €6,000 | €12,000 |
| Tax Rate | 16% | 16% | 16% |
| Click here to see a worked example | |||
Source:
Disclaimer |
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Rental Income: In Serbia, net rental income is taxed at a flat rate of 20%, withheld by tenant. Property tax is levied at progressive rates ranging from 0.4% to 3% of the property value.
Capital Gains: Capital gains tax in Serbia is imposed at flat rate of 20% for non-residents.
Inheritance: Inheritance taxes are imposed at progressive rates from 3% to 5%.
Residents: A foreign resident pays only on his income incurred in Serbia. A permanent resident is taxed on his worldwide income.
BUYING GUIDE
Low buying costs in Serbia
Roundtrip transaction costs, i.e., the total cost of buying and selling a property, are around 8% - 9% of the property value. Transfer tax is around 5% of the property value. The real estate agent’s commission is about 3%. However, newly built dwellings attract 8% VAT instead of transfer tax, bringing transaction costs up.
LANDLORD AND TENANT
Tenancy laws
Research is ongoing.
ECONOMIC GROWTH
The last remnant of Yugoslavia
Serbia’s economy grew an average of 4.8% per year from 2000 to 2005, slow given the immense problems of post-war recovery.
The complex political relationship of Serbia and Montenegro, slow progress in privatization, legal uncertainty over property rights, scarcity of foreign investment and a substantial foreign trade deficit holds back economic growth. GDP growth of 4.8% is forecast for 2006.
Kosovo is currently administered by the United Nations after violence flared up in 1998. UN-sponsored talks on Kosovo's are continuing.
RESIDENTIAL PROPERTY AROUND THE WORLD
Asia & Pacific
Bubble fears prompt foreign ownership limits in China
America & Caribbean
The slowdown of the U.S. housing market
Middle East and Africa
Bahrain is open to foreigners and sizzling hot
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| RESIDENTIAL PROPERTY FACTS | |
| Price (sq.m): n.a. | Rental Yield: n.a. |
| Rent/month: n.a. | Income Tax: n.a. Assumptions: Owners are a non-resident couple drawing US$ / €1,500 per month in rent, with no other local income. |
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Roundtrip Cost:
8.2%
The total cost of buying and then reselling an apartment. Includes: * all transaction taxes and charges: * lawyers' and notaries' fees * agents' fees Assumptions: The buyers are non-resident foreigners. The apartment cost US$250,00 / €250,000. |
Cap Gains Tax: 20.0% Assumptions: The property was bought for US$250,000 / €250,000, and sold 10 years later, after a 100% appreciation. |
| Landlord & Tenant Law: n.a. Rating is based on a detailed study of each country’s law and practice. | |
MAY 2007
- Serbian parties in coalition deal - BBC News
SEPTEMBER 2006
JULY 2006
MAY 2006
- Independence in Montenegro may bolster properties - Inernational Herald
MARCH 2006
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