Against the backdrop of the restructuring of global supply chains and the accelerated expansion of Chinese enterprises into overseas markets, helping clients enter the European market safely, compliantly, and efficiently has become a cutting-edge issue in cross-border legal services.
On August 4, 2026, King&Capital Law Firm’s Shanghai office took the initiative to establish a platform for cross-border practical exchange. Via an online video conference, the firm invited Ms. Cheng Wentao—who has extensive experience in the Central and Eastern European market (Executive Director and Senior Legal Counsel at Beijing Wenguang Zhongshi Cultural Communication Co., Ltd., and former senior political and legal reporter at Shanghai Media Group, SMG)—to serve as the keynote speaker. She delivered a specialized training session titled “Investment Strategies and Legal Insights on Serbia” for the firm’s attorneys and client companies.
I. Why Serbia?
A “Golden Enclave” with Three Overlapping Characteristics
Why has Serbia—a country with a population of less than 7 million and a development level in the lower-middle range in Europe—become a hotspot for investment by Chinese enterprises in recent years? Ms. Cheng Wentao provided the answer by highlighting “three overlapping characteristics”:
1. Institutional Benefits as an EU Candidate Country Serbia submitted its application for EU membership in 2009 and began accession negotiations with the European Commission in 2014. The EU’s accession criteria divide the legal and policy framework into 35 negotiation chapters. Serbia has officially opened negotiations on 22 of these chapters, with 13 remaining to be initiated. Its judicial system is undergoing comprehensive alignment with the EU’s acquis communautaire . Establishing a company in Serbia means that businesses are adapting in advance to a compliance environment that meets EU standards, laying the institutional foundation for future entry into the EU’s single market of 500 million people.
2. The Zero-Tariff Channel of the China-Serbia Free Trade Agreement (FTA) The China-Serbia Free Trade Agreement (FTA), which took effect on July 1, 2024, is the first free trade agreement signed between China and a Central and Eastern European country. On the day the agreement takes effect, tariffs will be eliminated on over 60% of tariff lines, with the ultimate goal of achieving zero tariffs on 90% of tariff lines in both directions. Core products from China’s competitive industries—such as new energy vehicles, photovoltaic modules, lithium batteries, telecommunications equipment, and cables—can all enter Serbia duty-free through this channel.
3. Geographical Advantages of the Balkan Logistics Hub Serbia shares borders with eight neighboring countries, four of which are EU member states. With the completion of the Hungary-Serbia Railway, Serbia has become a key land-sea transport corridor connecting the Port of Piraeus in Greece with the Central European hinterland. Departing from Belgrade, major markets in Central, Eastern, and Southern Europe can be reached within 24 to 48 hours.
Ms. Cheng Wentao highlighted the essence of this business opportunity, noting that Serbia is a “special economic zone-level production base that is currently not under direct EU administrative jurisdiction but can achieve duty-free access to the EU market through the network of FTAs and the Stabilization and Association Agreement (SAA).” She explained that Chinese-manufactured goods, after undergoing deep processing here, can be rebranded as “Made in Europe,” thereby reasonably circumventing the EU’s “anti-dumping and countervailing” tariffs on products such as photovoltaics and new energy vehicles, as well as the “look-through” regulatory requirements of the Corporate Sustainability Due Diligence Directive (CSDDD).
II. A 100-billion-level Opportunity:
The 2027 Belgrade World Expo and the Special Legal Framework
If the FTA and SAA represent long-term institutional benefits, then the 2027 Belgrade World Expo presents an immediate strategic opportunity for Chinese enterprises.
1. The Expo Boom: From May 15 to August 15, 2027, the World Expo will be held in Belgrade. It is expected to attract exhibitors from 137 countries, draw over 4 million visitors, and generate 18 billion euros in business opportunities. For Serbia, with a total population of less than 7 million, this will directly drive a comprehensive upgrade of its infrastructure, hospitality and catering sectors, as well as its exhibition, convention, and cultural tourism industries.
2. The “Lex Specialis” Mechanism: Serbia has enacted the “Special Procedures Act for Expo 2027,” which explicitly exempts the event from the bidding restrictions of the standard “Public Procurement Law.” Core venues are being constructed primarily by China’s “national-level” contractors (such as China Road and Bridge Corporation, China Energy Engineering Group, and China Railway Construction Corporation), driving the entry of a large number of second- and third-tier subcontractors into the market. Ms. Cheng Wentao specifically noted that this mechanism does not “waive legal requirements” but rather “accelerates approval in accordance with the law.” The core value of lawyers lies in assisting enterprises in deciphering non-standard procurement rules, managing risks associated with letters of intent (LOIs), designing investment structures, and ensuring the safe implementation of projects.
3. Long-Term Benefits in the Post-Expo Era After the Expo concludes, more than 1,500 Expo Village apartments will be converted into residential and commercial properties, and the Expo Center will be transformed into Belgrade’s new business and exhibition sub-hub. Chinese enterprises can leverage this opportunity to establish Serbia as a regional headquarters, a warehousing and logistics hub, and a high-end manufacturing center compliant with European standards.
III. Practical Overview:
The Compliance Path from Company Formation to Capital Outflow
The core value of this seminar lies in translating macro-level strategies into actionable legal practices. Drawing on the 16 chapters of her presentation, Ms. Cheng Wentao systematically broke down the key points of the entire investment process for Chinese enterprises in Serbia:
(1) Company Formation: Do Not Simply Copy Domestic Templates. The most common form is the Limited Liability Company (LLC/DOO). The registration process includes: preliminary name approval → signing the articles of association → filing with the Agency for Public Registry (APR) → tax registration → opening a bank account → social security registration → applying for industry-specific licenses.
Warning Against Three Major Misconceptions:
Misconception 1: Directly copying domestic templates for the articles of association. Serbian corporate law contains specific provisions regarding registered capital, directors’ powers, profit distribution, and preemptive rights, among others; the articles must be customized to local requirements. Misconception 2: Assuming business operations can begin immediately upon registration. Specific industry licenses must be applied for based on the scope of business. Misconception 3: Neglecting ongoing compliance obligations. The EU’s “look-through” regulatory requirements mandate the disclosure of Ultimate Beneficial Owner (UBO) information, and ongoing compliance is a strict requirement.
(2) Outbound Capital Transfers: More Than Just Wire Transfers—It’s a Systemic Process. China imposes foreign exchange controls on cross-border investments, and outbound capital transfers require ODI (Outbound Direct Investment) filing. Ms. Cheng Wentao outlined five legal channels: capital contributions, shareholder loans, trade receivables, cross-border service fees, and royalty payments.
The Shanghai Free Trade Zone’s Fast Track: Leveraging the FT account system, onshore RMB can be directly transferred to an FTE account and freely converted into euros or U.S. dollars; the “two-way cash pool” facilitates centralized allocation of group funds; and the ODI “One-Form-for-All” system in the Lingang New Area enables parallel approval by multiple departments—including commerce, development and reform, and foreign exchange—allowing investors to obtain an overseas investment certificate within 5 to 10 business days. In addition, under the “domestic guarantee for overseas loans” mechanism, Shanghai Bank can issue a Standby Letter of Credit (SBLC), allowing local banks to directly disburse low-interest loans in euros, thereby significantly reducing financing costs.
(3) Fiscal and Tax Incentives: 15% Tax Rate and a Ten-Year Tax Exemption – Corporate Income Tax (CIT): The standard tax rate is 15%, significantly lower than the European average of 21.6%. Enterprises with fixed-asset investments exceeding 1 billion dinars (approximately 8–9 million euros) and creating at least 100 new jobs are eligible for a ten-year CIT exemption. R&D and Innovation: R&D expenses are tax-deductible at a rate of 200% (every 1 euro invested reduces taxable income by 2 euros). Free Trade Zone Benefits: Serbia has 15 free trade zones where production, warehousing, logistics, and other related activities are exempt from Value-Added Tax (VAT); imported equipment and raw materials are exempt from customs duties and VAT; and customs clearance procedures are significantly streamlined.
(IV) Labor and Employment: A “Tough Nut to Crack” in European Labor Unions—Contract Limits: Fixed-term contracts may not exceed 24 months in a single term; upon expiration, they automatically convert to open-ended contracts, resulting in soaring termination costs. Dismissal Procedures: A written warning must be served, and the employee must be given a statutory period of 8 days to submit a written defense. Failure to follow this procedure constitutes unlawful dismissal. Social Security Burden: Employers must contribute 15.15% of total wages (10% for pensions + 5.15% for healthcare), while employees bear 19.9% plus a 10% payroll tax. Taking a monthly salary of 150,000 dinars (approximately 10,000 RMB) as an example, the employee’s take-home pay is about 105,000 dinars, and the company’s actual total expenditure is approximately 173,000 dinars.
IV. Risk Warnings
Hard-Learned Lessons from Ten Real-Life “Pitfall” Cases
In her presentation, Ms. Cheng Wentao specifically cited 10 classic cases of pitfalls encountered by Chinese enterprises investing in Serbia, providing a precise risk control checklist for lawyers serving cross-border investment. The following selected cases serve as particularly stark warnings:
Case 1: Relevant Law: *Serbian Companies Act*. Abuse of a nominee holding agreement resulted in the loss of control overnight. A Chinese enterprise used a local “white glove” to hold 100% of the equity on its behalf, signing only a Chinese-language nominee holding agreement. After the company turned a profit, the nominal shareholder, relying on the absolute legal effect of official registration, unilaterally mortgaged the equity and replaced the directors. Unable to prevail against a bona fide third party (the bank), the Chinese investor completely lost control of the assets.
Case 2: Relevant Laws: The Serbian Criminal Code (Krivični zakonik) & the Law on Tax Procedures and Tax Administration. Fabricating “technical consulting fees” triggered a charge of tax fraud. A Chinese subcontractor used a shell company to fabricate invoices for “technical consulting fees” to shift profits. The Serbian Tax Administration conducted a piercing-the-veil audit and determined this to be malicious tax evasion. The company was fined a substantial amount, and a Chinese executive was subject to criminal border control procedures and detained while attempting to depart the country at the airport.
Case 3: Relevant Laws: Labor Management under the Serbian Labor Code—Unlawful Dismissal Triggers Substantial Compensation and Reinstatement. Verbal Dismissal of an Employee Results in Order to Pay 18 Months’ Back Pay: A factory manager verbally dismissed an employee on the spot for absenteeism without legally serving a written warning letter or granting an 8-day period for the employee to present a defense. The court ruled that the dismissal procedure was unlawful, ordered the reinstatement of the employment relationship, and required the company to pay 18 months’ back pay as well as all overdue social security contributions and taxes.
Case 4: Relevant Law: “Law on Planning and Construction”—Infrastructure Compliance—Construction Without Approval Leads to Project Seizure and Criminal Prosecution. A company began construction without obtaining a formal building permit. After being reported, the project was sealed indefinitely, and the initial investment of tens of millions of euros was forced to be put on hold. The Chinese manager was even criminally prosecuted on suspicion of illegal construction.
Case 5: Relevant Law: “Law on Pledges of Movable Property and Rights.” Failure to Register a Pledge of Accounts Receivable Led to an Instant Cash Flow Crisis. A subcontractor secured a loan by pledging accounts receivable from a large state-owned enterprise but failed to register the security interest with the Serbian Business Registry (APR). When the general contractor withheld payment for the project, the bank discovered that the pledge was legally invalid, immediately declared the loan due in full, and froze the company’s funds, causing an instant cash flow crisis.
Case 6: Relevant Laws: The Law on Trademarks (Zakon ožigovima) & Regulations on Customs Measures for the Protection of Intellectual Property Rights. A major home appliance giant saw its sales surge but failed to apply for trademark protection in a timely manner, resulting in the trademark being maliciously registered by a local distributor. The distributor demanded an exorbitant fee of one million euros for the trademark transfer, threatening to apply for customs seizure of the goods otherwise, leaving the company in a dilemma of either exiting the market or paying the ransom.
V. Cross-Border Collaboration:
How Chinese Law Firms Can Collaborate with Local Firms on a “Firm-to-Firm” Basis
Faced with a complex local legal environment, Ms. Cheng Wentao proposed a law firm collaboration model of “Chinese firm as general contractor + local firm as subcontractor.” Taking Zijin Mining’s acquisition of the Bor Copper Mine and Linglong Tire’s construction of a super factory as examples, cross-border legal services should follow a four-step mechanism:
1. Securing the General Contractor and Ensuring a Unified Approach: The Chinese law firm, acting as Lead Counsel, centralizes project management and screens and selects suitable local law firms.
2. Two-Way Due Diligence and Compliance Checks: The Serbian law firm conducts on-site verification of asset ownership, land status, labor union relations, and environmental compliance, and issues an English-language legal due diligence (LDD) report; Chinese law firms conduct cross-compliance checks against China’s outbound direct investment (ODI) approval red lines.
3. Joint Drafting and Precise Commercial Localization: Jointly draft transaction agreements in accordance with Serbian law and FIDIC clauses, with a focus on dispute resolution, cross-border guarantees, and indemnification mechanisms; perform “precise commercial localization” of the contracts and clearly explain penalty clauses to decision-makers.
4. Dual Risk Control and Fund Disbursement: Assisted in completing registration with the National Bank of Serbia (NBS) and filing for the APR equity change; Chinese and foreign law firms each issued independent legal opinions, establishing a “dual endorsement” for cross-border compliance, and cooperated with the bank to complete anti-money laundering (AML) reviews.
Ms. Cheng Wentao also introduced five local boutique law firms in Serbia, each with distinct specialties, covering areas such as commercial real estate, intellectual property, tax and financial planning, energy and environmental protection, and civil and commercial litigation, providing direct access channels for King&Capital Law Firm to build a local resource ecosystem.
Moving forward, King&Capital Law Firm will continue to uphold the philosophy of “proactive learning, cross-disciplinary integration, and a global perspective.” The firm will persist in connecting with authoritative resources across various fields, transforming cutting-edge practical experience into client service capabilities, and providing Chinese enterprises expanding into Europe and establishing a global presence with legal solutions that combine strategic vision with practical precision.
