What is an endowment?
According to the Serbian law an endowment is a legal entity without members, to which the founder has allotted certain assets (basic assets) for benevolent cause or private purpose, namely any legitimate effort allowed by the Constitution and Serbian law.
Realization of a private interest, as Serbian Law explains, shall be considered as activities aimed at attaining individual interests of the founder of the endowment, his family or third parties (family endowments established for the purpose of educating family members and for some other legally permitted purposes)
An Endowment may be established by one or more legally capable, domestic or foreign, individuals or legal entity.
Documents for establishing
Bodies of the endowment
The board of directors which has at least three members
Chairmen of the board of directors
If the founding act and the statute are not otherwise specified, the chairman and members of the board of directors are appointed by the founder.
A manager of an endowment can be appointed only capable individual who has a place of permanent or temporary residence in the territory of the Republic of Serbia.
Assets of the endowment
The basic assets of the endowment can be goods, rights and money. The minimum value of the basic assets necessary for establishing the endowment is 30,000 EUR in RSD counter value at the middle exchange rate of the National Bank of Serbia on the date of establishment of the endownment. It is possible that the assets will be lower than 30,000 EUR with the approval of the competent ministry of Serbia.
The Endownment may acquire assets from voluntary contributions, gifts, donations, financial subsidies, legacy, interest on deposits, rent, copyrights, dividends and other revenues generated in a lawful manner.
Assets of endownment must never be less than basic assets.
The basic assets of the endowment can be rights on movable and immovable property, obligatory claims and industrial property rights, as well as cash (foreign exchange and RSD).
The founding stake of the endowment is tax-free.
Use of assets of the endowment
The assets of the endowment can be used exclusively for the achievement of the goals established by the founding act and the statute.
The assets of the endowment can not be distributed to the founders, members of the governing bodies, employees or persons affiliated with them.
Legal relationship of founders and assets of the endowment
The assets of the endownment do not represent the assets of founders, members of the board of directors, beneficiaries and other connected persons, and can not be the subject of a court dispute, divorce and represent a kind of legal protection for the founders and persons related to them.
The inheritance of the endownment
The rights of the founders to participate in the management of an endowment established for the purpose of achieving a commonly beneficial goal and their other rights in respect of the endowment shall not be transferred to successors. Therefore, it is important that the persons close to the founder and the participatnts in his will, also take part in the work of the endownment.
The endownment keeps accounting books, compiles and submits financial statements in accordance with accounting and auditing regulations.
Tax treatment of the endownment
If the donation of a property is carried out by a person or legal entity who is not a taxpayer of VAT, there is no obligation to charge and VAT payment on that turnover.
A gift tax of 2.5% is levied in case the endownment gets money as well when gives it to someone else.
Documents and Information Required for Endowment
In order to commence drafting the founding documents and to commence the incorporation procedure we require the following information:
- Names of the individuals or legal entities who shall be designated as founders;
- Description of the legacy main objectives;
- Names of the individuals who shall be designated as Members of the Governing Board;
- Name of the individual who shall be designated as the Manager (has to be Serbian resident)
- The full name of the legacy
Further, we would initially need the following documents in order to commence the incorporation procedure:
- Certificate of Incorporation of the founder – apostilled (The Hague Convention, 5th October 1961), or if the founder is a foreign natural person – a copy of his/hers Passport;
- The Resolution of the founders’ Board of Directors or other appropriate authority to establish an Endowment in Serbia and appointing the person(s) to sign the foundation documents (we prepare the draft);
- Copies of Passports (or Identity Cards for citizens of Serbia) of the designated representatives of the Legacy as Members of the Governing Board and the Manager (the Manager must be a Serbian resident); We can provide you with nominee service.
- Duly notarized Memorandum of Association (or Resolution), (we can provide the initial draft and notarize it with or without your presence);
- Duly notarized Statute of the Legacy (We will prepare this and organize notarization of the signature of the endowment’s representatives);
- Duly completed application forms for the purposes of registration in the Serbian Business Registry Agency and/or for establishing a bank account. We are providing you with these forms.
- Duly completed other application forms for the purposes of post-registration procedures (We will prepare and fill out the forms);