Starting an IT business in Serbia – How much money do you need, and what incentives are available?
Unlike entrepreneurs who launch a business relying exclusively on their own capital, those who meet the criteria for subsidies, tax relief, and grants can significantly reduce their initial operational costs. Schemes aimed at young people under 30, such as self-employment subsidies, attract particular attention, alongside other measures that are not age-restricted but are instead defined by the line of business or the company’s stage of development.
However, many prospective entrepreneurs are unaware of which programmes they can use, nor do they realise that an incorrect sequence of planning steps can prove costly. It is equally important to position your business correctly within the incentive system, so as not to reckon without one’s host.
For instance, IT is a broad concept, and the chosen business activity makes a real difference. Although traditional IT services remain Serbia’s main export trump card, today’s incentives are far more focused on companies developing their own technology than on those effectively selling billable hours through an outsourcing model. That model did drive growth for years, but it has come under pressure as Serbia is no longer as cheap a market as it used to be (which was its key competitive advantage). Consequently, even as companies gradually shift away from traditional outsourcing towards custom software solutions, a paradox remains: the sector is recording strong growth, but it is not generating a proportional technological leap that would yield higher added value.
What you need to know when entering the IT sector
Tax advisor Milan Trbojević notes that there is no one-size-fits-all solution for business beginners; instead, the choice of incentives depends on the type of business, its stage of development, and the goals the founder wishes to achieve.
“Every programme has specific conditions, and age is rarely the decisive factor. If you are starting a service-based business, the most practical option is a lump-sum self-employment subsidy from the National Employment Service (NSZ), amounting to 380,000 dinars (420,000 dinars for unemployed persons with disabilities). That sum can cover equipment, software, registration, marketing, and part of the initial running costs. On the other hand, for developing a tech product, grants from the Innovation Fund or salary tax exemptions for founders of innovative companies are more suitable. However, these come with more complex requirements.”
In other words, the NSZ subsidy covers part of the technical launch of a service business, but it cannot fund serious development of a technology product. The Fund’s Early Development Programme can provide up to €120,000, representing a maximum of 70 per cent of the approved budget, whilst at least 30 per cent must come from private sources.
Speaking of higher-value grants, Trbojević points out that innovative start-ups developing their own product, technology, or intellectual property have better prospects (which can be significant for a market that has just gained its first unicorn) than more traditional IT services and outsourcing businesses, which can make use of general (self-)employment schemes.
“The mere fact that a company does software development does not mean it has an innovative product. The best chances for grants belong to teams that can demonstrate a technological novelty, a clear problem they are solving, strong market potential, a capable team, and their own financial co-contribution,” says our interviewee.
Given that planning to sell your own services is quite different from developing a tech product, the amount of money required at the start-up phase also varies considerably.
“IT business is not a single category. There is a vast difference between a developer selling their services and a team developing an AI or SaaS product. A service-based IT business can technically be launched with €2,000 to €5,000 if the founder already owns a computer, works from home, and handles sales independently. Factoring in a ‘cushion’ for several months of operational and personal expenses, a realistic figure is between €8,000 and €15,000. For developing an AI or SaaS product, even a modest MVP (minimum viable product) often requires €20,000 to €50,000. If a team is hired and the product is developed more extensively, the investment can easily exceed €100,000,” Trbojević explains.
Three mistakes that keep recurring
According to Trbojević’s experience in working with prospective entrepreneurs, the exact same mistakes recur persistently, regardless of the industry.
“The first mistake is registering the company before checking the eligibility conditions for incentives and confirming whether there is an actual client base. By doing so, they immediately incur fixed costs and may lose their entitlement to a subsidy. The second mistake is choosing the legal structure and tax regime based purely on what is cheapest at that moment, without considering revenue growth, VAT, the independence test, liability, investors, and how money will be extracted from the company. The third mistake is treating a subsidy or investment as proof that the business works. They spend money on equipment, an office, and hiring before establishing a stable sales system. Applications are scored and ranked, so a weak or illogical business plan can easily fall below the cut-off line. Money in the bank is not the same as a sustainable business,” he lists.
Common mistakes also include selecting a business activity code not covered by the subsidy scheme, having previously used the same subsidy, incomplete documentation, and an inability to provide the required collateral. Each year, alongside the public call, the NSZ publishes a list of excluded business activities, allowing prospective entrepreneurs to check whether their activity code satisfies the competition criteria.
It is also vital to highlight that the subsidy recipient must perform the registered activity as their primary occupation and regularly pay taxes and social security contributions for at least 12 months from the date the funds are granted. If they close the company during this period, cease trading, or fail to fulfil contractual obligations, they may be required to repay the subsidy, the tax advisor warns.
Dilemmas surrounding tax relief for new companies
Alongside non-repayable subsidies, tax relief for newly established companies attracts considerable interest, although it is often misrepresented as a benefit available to anyone starting a business for the first time.
“The current tax relief applies to a newly established company engaged in innovative activities. The founder must be employed by that company, registered for mandatory social security, and hold a stake of at least five per cent. The exemption covers income tax and contributions on the founder’s salary for 36 months from the company’s incorporation date, applicable to gross salaries up to 150,000 dinars per month. Based on 2026 parameters, total tax and contributions on a gross salary of 150,000 dinars amount to approximately 100,000 dinars per month. The cumulative economic benefit over three years can reach around four million dinars per founder,” Trbojević clarifies.
However, the biggest pitfalls lie in the fact that this relief is not intended for a standard sole trader or IT agency, that the 36-month period runs from the company’s date of incorporation (not from when the relief starts being used), and that restrictions exist regarding related legal entities and income derived from persons connected to the founders. Furthermore, this relief is not an exemption from corporate income tax, VAT, or all other taxes, but exclusively from tax and contributions on the founder’s salary.
Not all incentives are mutually compatible
Prospective entrepreneurs sometimes assume that different state measures can simply be combined, which, if true, would be like a ticket to Disneyland. However, the rules are more complex – certain programmes are mutually exclusive, meaning planning must be done prior to establishing the business.
Trbojević specifically explains what cannot be combined.
Tax exemption
The tax exemption on the salary of the founder of an innovative company cannot be used for the same person who is using a subsidy for employment or self-employment. Before applying, the founder needs to calculate what is more cost-effective: 380,000 dinars immediately or potentially greater tax savings over three years.
On the other hand, a grant from the Innovation Fund can be combined with certain other incentives if the rules of the specific call allow it, but the same cost must not be financed twice with public money.
Through the Early Development Programme, at least 30 per cent of the project must be financed from private sources, and de minimis state aid rules also apply (this refers to low-value aid, and the rules stipulate that a single market participant can be granted a maximum of 300,000 euros over three consecutive fiscal years, without prior notification and subject to the cumulation rule).
When developing innovative products, especially in areas like artificial intelligence or SaaS, Trbojević believes that the sequence of funding is more important than the source of money. He advises that the prospective entrepreneur should first verify whether the problem actually exists using their own money or money from initial customers, then build an initial prototype to obtain the first proof that the market wants the solution, and only after that use a grant for product development. An investor should be brought in when there is already proof of demand and when additional capital can accelerate growth.
“If it is a scientifically or technologically demanding product that cannot be tested without a larger investment, the grant can come earlier. However, the investor themselves is the most expensive source of money because a share of ownership is given away. I would not recommend selling ownership just to test whether the idea has any buyers at all. A grant can be an excellent solution there since it does not involve giving up a stake in the company,” he states.
What could be systemically changed
Apart from existing programmes, Trbojević sees room for improving the system primarily in simplifying information delivery for prospective entrepreneurs and better planning of state calls. The first step would be a unified portal.
“An entrepreneur would enter a few details and immediately see which programmes they qualify for, which incentives can be combined, and in what order they should submit their application. I would introduce more smaller and faster grants for testing ideas and finding initial customers. Today, product development is often financed, whilst insufficient checks are made to see if anyone will actually buy that product,” he emphasises.
As another important matter, the interviewee mentions the potential publication of the call calendar at least one year in advance, because otherwise, the entrepreneur cannot plan finances seriously; they do not know when the programme will open, how long the selection process will take, and when the money will be available.
When asked what he would do if he were starting his business today and was under 30 years old, Trbojević says he would focus most of his effort on market validation, and only then on choosing the appropriate state incentives.
“First, I would decide whether I am selling an IT service or developing my own product, as those are two completely different business models. Then I would speak with potential buyers and try to secure the first client, a letter of intent, or at least clear evidence that people are willing to pay for the product or service I offer. If I were starting a service business and met the criteria, I would first register with the National Employment Service, complete the training, prepare a business plan, and submit an application for the subsidy. Only after that would I register the business. If I were developing an innovative product, I would draw up an ownership, intellectual property, and financing plan. Before incorporating the company, I would check whether I qualify for the tax exemption on the founder’s salary,” he says.
He adds that he would finance the first version of the product with his own money or money from initial customers. Only after obtaining proof that “a market exists” for what he offers would he apply for the relevant Fund programme.
“I would only look for an investor when I can clearly demonstrate what the additional capital accelerates. I would not try to use every incentive available. I would choose a combination that suits the specific business model,” he concludes.
Note: In addition to financial incentives, free advisory services through accredited regional development agencies have been announced for prospective entrepreneurs this year, assisting with business plan preparation, documentation, and applications for state support programmes.
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