Mundo´s freedom rating is essentially a freedom index whereby our teams of specialists rate a combination of freedoms which include freedom from violence and personal attacks, financial freedom from high taxes, business freedom from government interference, and especially from socialism and communism.

Political Stability (7/10)

Unstable government, protests and weak institutions have been the common denominator of this country for the last years. In fact, The Economist’s democracy index ranked Serbia as a “flawed democracy” in 2020.

The ruling party is the Serbian Proggresive Party (SNS), which has governed the country since 2012. Its opponents have denounced the increasing authoritarian practices and repression against opposition politicians.

However, you should note that just a few decades ago, Serbia was led by a strongman, Slobodan Milosevic, who was accused of crimes against humanity after the Yugoslavia war. The path to achieve an advanced democracy is not a one way round. It requires the development of democratic institutions and a political culture, a process that takes decades to complete under adequate conditions.

In the meantime, president Aleksandr Vucic remains as the leader of Serbia, having full control of the Serbian political apparatus, as the SNS controls the Executive government and has a clear majority in the National Assembly.

The statu quo gives some sort of political stability to the country. The government respects private property, especially if it is foreign investment, as relationships with the European Union are a vital matter for the government and they would not like the government harassing European businesses.

Personal Safety (7/10)

In Serbia, crime is not rampant. The murder rate has fallen sharply in recent years, as in 2021 it is on 1 case per 100,000 people.

Mainly, crime is restricted to some minor issues such as pickpocketing and car theft. Some common-sense safety precautions should be enough to manage yourself in the country.

Most violent crimes are caused either by organized crime or due to hooliganism in major sports events. Therefore, if you avoid some dangerous areas, decide not to go to crowded sports pubs while there is a big soccer match, and are generally aware of any suspicious activity you should be fine.

Lifestyle (8/10)

Serbia is a European nation that grants you nice weather and a varied, vibrant and recreational lifestyle for a low price, at least in Belgrade, Serbia’s capital and home of more than 25% of the population. In Belgrade you will find many parks, plazas, museums, restaurants and iconic places, just like most European cities.

Furthermore, living in Belgrade is not that expensive if you compare it to other European capitals, and it would grant you a great standard of living without spending as much as you would in London or Paris.

Also, thanks to its strategic location Serbia is well connected to the rest of Europe, as you can arrange a flight that would take you to any other European or Central Asia capital in a matter of a few hours.

Taxation (8/10)

The tax system in Serbia is considered to be competitive in comparison to the rest of central and eastern Europe as the country has decided to create a more business-friendly model to attract FDI and boost the economy.

There is a standard flat corporate income tax rate of 15%, the standard value of the VAT is 20%, and the personal income tax rate was slashed to 10% in 2018. The government also collects mandatory social security contributions from both employers (19.9%) and employees (17.15%), in a system that resembles a payroll tax, while the overall tax burden in Serbia is about 36.1% of the domestic income. 

In summary, the fiscal system in Serbia is far from a problem for investors, especially if you compare it to other countries in the region, like Hungary or Czechia, with a corporate tax rate of over 19%. 

Economic Potential (8/10)

The structural reforms on the Serbian economy appear to have begun to pay off. The IMF has projected that the economic outlook will remain positive. Even though the COVID-19 pandemic was a global shakedown, Serbia was less affected than other European nations, as the GDP contracted only 1,1% in 2020, a little compared with the 10% collapse on the GDP that Spain suffered the same year.

The government has shown, until now, a true commitment to reduce public spending and debt, while also creating a more business-friendly environment to increase the level of FDI in the nation. Additionally, the state of their currency (weak but not prone to inflation) might prove to be an advantage to investors as it will significantly increase the investment potential of your capital.

Serbia presents an interesting case for investors. It is a country that has been steadily improving its competitive position in the world and has implemented business-friendly and market-oriented reforms to the economy. However, the historical inefficiencies in the government’s bureaucracy, corruption, the effect of the pandemic and the ghost of political instability are still latent in the country.

Even if Serbia still has the chronic troubles of any developing country, it still is a promising asset that can bring good returns to the investment provided that the country manages to keep its current trajectory.

If you are a foreign investor, you should see Serbia as a rough diamond waiting for its moment to shine.

Solicite una consulta