Government of the Republic of Serbia passed a Regulation establishing the Programme of schedules and use of subsidies for supporting the work of catering and tourism in business difficulties due to COVID-19 epidemic caused by virus SARS-COV-2 (“Regulation”). The Regulation was published in the Official Gazette of RS no. 11/2021 and it has been in force from 13 February 2021.

The use of subsidy under the Programme does not exclude the possibility to use direct payments in accordance with the Regulation establishing the Programme of direct payments from the budget of the Republic of Serbia to economic entities in private sector for the purpose of mitigating the economic consequences of COVID-19 epidemic caused by virus SARS-COV-2. Based on the Regulation, additional funds will be paid for subsidizing salaries in catering and tourism, in the amount of RSD two billion.

Who is eligible for subsidy?

Economic entities in private sector shall be eligible for the use of non-refundable amounts, namely:

• Resident legal entities in terms of the law regulating corporate profit tax;
• Resident entrepreneurs in terms of the law regulating citizens’ income tax;
• Representative offices of foreign legal entities.

In addition, it is necessary for economic entities to have registered one of the below enlisted activities as prevailing activity with the Business Registers Agency:

• 5610 – restaurants and mobile catering facilities;
• 5621 – catering;
• 5629 – other services of food preparation and serving;
• 5630 – services of drink preparation and serving;
• 5510 – hotels and similar accommodation;
• 5520 – retreats and similar short-stay facilities;
• 5530 – activities of camps, auto-camps and touristic trailer camps;
• 5590 – other accommodation;
• 7911 – activities of travel agencies;
• 7912 – activities of tour operators;
• 7990 – other booking services and related activities;
• 7711 – rental and leasing of cars and light motor vehicles.

The list of economic entities that meet the above requirements will be published on the websites of the Ministry of Trade, Tourism and Telecommunications (“Ministry”) and Tax Administration.

What does the subsidy imply?

The funds are allocated as non-refundable lump sum, in the amount of RSD 30.900,24 for each employee to whom the economic entity paid salary for December 2020 and filed relevant tax application.

The payment shall be effected by the Ministry to special purpose RSD accounts that the Ministry of Finance – Treasury Administration will open for such purposes.

Economic entities will be notified of the opening of special purpose RSD accounts by electronic notification to their inbox on ePorezi portal.

Economic entities may use the paid amounts only by 30 September 2021, inclusive, after which the special purpose accounts will be closed and the unused funds returned to the budget of the Republic of Serbia.

Losing the right to subsidy

An economic entity shall lose the right to subsidy if:

• It reduces the number of employees by more than 10% in the period from entry into force of the Regulation until the expiry of three months after the paid funds, excluding the employees who concluded part-time contracts with the economic entity before the entry into force of the Regulation for a period ending in the stated period;
• The allocated non-refundable amounts are not used for employee salaries in part or in full (misspending the funds) by the expiry of three months after the paid assistance.

The economic entities that lose the right to subsidy for the stated reasons shall be obliged, no later than 30 days after the receipt of the request from the Ministry, to return the used subsidies with interest starting from the day of spending the funds until the day of refund.

Large economic entities in bankruptcy or in liquidation proceedings i.e. economic entities who were in difficulties before 31 December 2020, shall be obliged to return the granted funds. Therefore, such entities shall not be entitled to subsidy and after the receipt of funds they shall be obliged to return them, however, without interest payment.

This article is to be considered as exclusively informative, with no intention to provide legal advice. If you should need additional information, please contact us directly.