Entity Setup
Entity Setup Case Study: Choosing the Right Corporate Form in Serbia vs North Macedonia
Comparing legal forms, tax rates, and administrative costs when setting up a business in Serbia vs North Macedonia—with sample calculations.
By NomadicTax Research Team • 7 min read • September 12, 2026
## Why Entity Form Matters
Your choice of business entity determines:
- **Tax rate** (corporate vs personal);
- **Deductions** and expenses allowed;
- **Compliance and reporting burden**;
- **Liability protection**;
- **Ease of doing business and access to banking, contracting, etc.**
We’ll compare Serbia and North Macedonia using a typical IT services business with €200,000 annual revenue and €120,000 deductible costs.
## Serbia: Limited Liability Company (DOO)
### Tax & Costs Overview
- **Corporate Income Tax**: Flat at **15 %** on taxable profits after expenses. + dividends taxed at **15 % / 20 %** when distributed to non-residents (depending on treaty).
- **VAT**: Standard rate at **20 %**; registration required if turnover exceeds **RSD 8 million** (~€70-80k) in a 12-month period.
- **Social & Payroll Taxes**: Employer + employee contributions required; rates vary depending on sector.
### Sample Calculation
| Item | Value (EUR) | Calculation | Tax Payable |
|------|-------------|-------------|-------------|
| Revenue | 200,000 | — | — |
| Costs | 120,000 | — | — |
| Profit before tax | 80,000 | — | — |
| Corporate tax (15 %) | — | 0.15 × 80,000 | **€12,000** |
| Dividend (after tax) | — | remaining profit | taxed again per treaty rate (say 15 %) |
| Total effective rate | — | including payroll & dividend | ~30 % depending on structure |
## North Macedonia: Limited Liability Company (DOOEL / DOO)
### Tax & Costs Overview
- **Corporate Income Tax**: **10 %**, significantly lower than Serbia.
- **VAT**: Standard rate at **18 %**; registration threshold **MKD 1.000.000** (~€16-17k), lower than Serbia.
- **Dividend Withholdings**: **10 %** for non-residents, per treaty.
- **Payroll & Social Contributions**: Rates are also comparatively lower, though mandatory contributions remain substantial.
### Sample Calculation (Same Assumptions)
| Item | Value | Calculation | Tax Payable |
|------|--------|-------------|--------------|
| Revenue | €200,000 | — | — |
| Costs | €120,000 | — | — |
| Profit before tax | €80,000 | — | — |
| Corporate tax (10 %) | — | 0.10 × 80,000 | **€8,000** |
| Dividend taxed at 10 % | — | dividend | **€7,200** (assuming full payout) |
| Total effective tax ~| — | including payroll etc. | ~25-28 % depending on structure |
## Other Considerations
- **Regulatory complexity**: Serbia generally has more formalities (e.g., stricter accounting, audits, notarized filings); Macedonia tends to have lighter admin burden.
- **Local incentives**: Both countries occasionally offer tax credits or incentives for R&D, export-oriented work, and digital businesses. Macedonia has been more aggressive in digital innovation incentives.
- **Treaties & Access**: Serbia has broader network of tax treaties; Macedonia also has treaties but fewer; domestic withholding rates might differ.
- **Currency, banking & operational costs**: While tax may favor Macedonia in some cases, operational costs (office, staff) and ease of banking might balance things in Serbia depending on location.
## Recommendation Framework
1. **Compute your tax base** (revenues minus realistic costs including salaries, rent, tech).
2. **Estimate both corporate and dividend withholding taxes**, and social contributions.
3. **Project total compliance & admin cost**, including accounting, legal, filings.
4. **Inspect tax treaties in your jurisdictions** (if distributing profits to non-residents etc.).
5. **Factor in non-tax issues**: banking, intellectual property protection, access to clients.
If your profit margin is moderate to high, North Macedonia often offers a lower **corporate + dividend** burden. But if administrative ease, banking options, broader market access, or treaty networks are more important, Serbia may still compete favorably.
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**Take-away**: There’s no one-size-fits-all. Run full model with your numbers. But for many tech or service firms, North Macedonia often wins on baseline tax cost; Serbia offers stronger infrastructure and treaty coverage. Always plan ahead and revisit as both jurisdictions evolve policy.