CONDITIONS FOR REAL ESTATE PURCHASE BY FOREIGN NATURAL PERSONS IN SERBIA
Foreign citizens may buy, sell, and own real estate in the territory of the Republic of Serbia under the same conditions as domestic natural persons, providing that legal requirements set out in the Foundations of Property Law Relations Act (“Official Journal of SFRY”, nos. 6/80, 36/90, “Official Journal of FRY”, no. 29/96, “Official Gazette of RS”, no. 115/05- state act) are fulfilled. This means that the main procedure is the same, that tax rates are the same, as well as all other possible charges (fees, etc.).
The main difference refers to the fact that there must be a reciprocity between the Republic of Serbia and the country from which the foreign person comes – this means that our citizens as well may own real estate in that country from which the foreign person comes.
Foundations of Property Law Relations Act governs the right of foreign persons (both natural and legal) to acquire the right of ownership over real estate in the territory of the Republic of Serbia as follows:
- By legal transactions inter vivos (between living people) – e.g. purchase contract, gift agreement, life care contract and the like (hereinafter: based on a contract);
- By legal transactions mortis causa (by inheritance).
Right acquisition by legal transactions based on a contract
Article 82a of the Foundations of Property Law Relations Act stipulates that foreign natural and legal persons who conduct a business activity in our country may, under the terms of reciprocity, acquire the right of ownership over such immovables as are necessary for conducting of such activity (Paragraph 1), whereas a foreign natural person not conducting any business activity in the Republic of Serbia may, under the terms of reciprocity, acquire the right of ownership over a flat or apartment building equally as other citizens of the Republic of Serbia (Paragraph 2).
When the court or another authority before which the issue of reciprocity is raised (e.g. notary public, real estate cadastral office) has no knowledge of the reciprocity, it shall request the required explanation about the reciprocity from the ministry in charge of judicial affairs, particularly from the Ministry of Justice. Reciprocity explanation may be requested by any other interested party.
The issue of the reciprocity level required for the acquisition of real estate is not governed by the above Act, hence it is considered that this acquisition does not necessarily require the existence of a contractual (diplomatic) reciprocity with the relevant foreign country; instead, it is sufficient if the legislation of that country allows foreign persons to acquire real estate under terms which are not significantly more demanding than the terms stipulated by the national Act, as well as if the citizens of the Republic of Serbia are allowed in practice to acquire real estate in the territory of the relevant country (actual reciprocity).
The Republic of Serbia has an established contractual reciprocity regarding the acquisition of the ownership rights by natural persons over real estate by means of legal transactions based on a contract (inter vivos) only with a small number of countries, where legal transactions are based on trade and navigation contracts concluded in the first half of the twentieth century. In some of them, the reciprocity was expressly arranged, whereas in some of the other ones, the reciprocity exists due to application of the most favoured nation clause. These are the following countries: Great Britain, the United States of America, the Kingdom of the Netherlands and Japan.
As regards other countries with whom the reciprocity has not been contractually arranged, the Ministry of Justice has, based on the legal regulations of the relevant countries by which this issue is governed, respectively by exchange of notes, established the existence of reciprocity with many countries as specified below:
Argentina, Australia, Austria, Bahrain, Belize, Belgium, Belarus, Bosnia and Herzegovina, Brazil, the British Virgin Islands, Bulgaria, Great Britain, Greece, Denmark, the Dominican Republic, Egypt, Israel, Iran, Ireland, Italy, Japan, Armenia, the Republic of South Africa, Jordan, the Republic of Kazakhstan, Canada, China, Cyprus, Lebanon, Latvia, Lithuania, Liechtenstein, Luxembourg, Hungary, Malta, Morocco, Mexico, Moldova, Germany, New Zealand, Norway, Panama, Peru, Poland, Portugal, the Russian Federation, Romania, the United States of America, Singapore, Syria, Slovakia, Slovenia, Turkey, Uzbekistan, Ukraine, Finland, France, the United Arab Emirates, Azerbaijan, El Salvador, Qatar, Cuba, Senegal, Yemen, Georgia, Columbia, the Republic of Korea and Sri Lanka.
This list is subject to continuous amendments and supplements, and in some cases the procedure for establishing reciprocity is ongoing, thus it is recommended to send a request to the Ministry of Justice in order to obtain the most recent information and explanations.
Please note that the acquisition of agricultural land is reserved only for domestic citizens. The exception thereof is the possibility of acquiring agricultural land by EU citizens under very restrictive conditions.
In case when foreign citizens are not allowed to acquire real estate in the Republic of Serbia, this obstacle can be overcome by establishing a company in Serbia. We will write about the aforementioned, i.e. about the right of foreign legal persons to purchase real state in the Republic of Serbia, on some other occasion.
For non-residents – foreign natural persons, the identity document required for the purpose of entering into a real estate purchase contract in the Republic of Serbia is passport.
Some specific details in the procedure for foreigners
Pursuant to the latest amendments to the Procedure for Registration in the Cadastre of Real Estate and Utility Lines Act (“Official Gazette of RS”, nos. 41/18 and 95/18), when notaries public certify a purchase contract, they are obliged to provide the Cadastral Office with evidence that the property acquired by the buyer is a joint property (if the person is married) or that it is solely owned by the buyer. As foreign citizens are not exempt from this provision, problems in practice arise in respect of obtaining evidence of the buyer’s marital status when the buyer is a foreign natural person. Primarily due to the fact that all countries do not have records matching our registers, hence the following question is raised: what kind of document this should be? Some countries issue Marital Status Certificates, and some do not have such records at all, whereby it is possible to establish whether the foreigner is married or not only by means of a number in his/her passport (e.g. Belarus).
Therefore, this is one of the issues that a foreign natural person should check in his/her country (whether it is possible to obtain a marital status document) before embarking on the purchase, because even if the notary public agrees to certify the contract (with a warning), the Real Estate Cadastral Office will not record it in the Cadastre unless the evidence proving that the relevant real estate will be solely owned or a joint property of spouses has been submitted.
Payment based on the real estate purchase in the Republic of Serbia with non-residents
In respect of foreign exchange operations related to investments in real estate in the Republic of Serbia, Article 12 of the Foreign Exchange Operations Act (“Official Gazette of RS, nos. 62/06, 31/11, 119/12, 139/14 and 30/18) stipulates that payments made for the purpose of acquiring ownership of real estate by residents abroad and non-residents in the Republic of Serbia shall be made freely, in accordance with the act governing property law relations, i.e. in accordance with the Foundations of Property Law Relations Act (as explained above).
As regards payment realisation, in case when a foreigner buys real estate in Serbia, we have a foreign bank and a Serbian bank. Whether the foreign bank will or will not make the transfer depends on the regulations of the country whose citizen the buyer is. Most countries (i.e. their banks) require the buyer to submit a document (e.g. a purchase contract) on the basis of which the money will be transferred, and then it will accept to perform the transfer.
However, there are countries where transfer cannot be performed in this way, whereas the receipt of money in the Serbian bank depends on the rules of the bank itself – some banks will normally accept it and will not require submission of any additional documents (in Serbia), whereas some other banks will require submission of the purchase contract by the seller as well proving the reason of the money receipt, and only then will they allow him/her to withdraw the money. In some banks in Serbia it is sufficient that the account owner signs a statement specifying the reason why the money was credited to that account.
To put it simply, foreigners can buy real estate in Serbia under the same conditions as our citizens. However, it would be necessary that, in such affairs, the foreign person is guided by an authorised professional agency for intermediation in real estate trade, so that the operation is completed with quality and within an optimum timeframe.