Serbia: Law On Prevention Of Illegal Business

Last Updated: 7 August 2013
Article by Karanovic & Nikolic

The recently adopted Montenegrin Law on Prevention of Illegal Business introduces a number of new concepts in the process of fiscal consolidation and combating grey market, as well as closing some loopholes and providing more clearly defined competences of inspection bodies. The law was published in "Official Journal of Montenegro" No 29/2013 as of 22 June 2013, and came into force as of 23 June 2013.

Most important new concepts introduced by the Law on Prevention of Illegal Business:

- Background:

The principal aim of the Law is to prevent the acts of participants in trading which have been permitted so far, mostly referring to evasion of liabilities to the state and abuse of debt collection from the bankruptcy estate in liquidation proceedings, in particular regarding the debtors whose accounts are frozen in forced collection actions under the Law on Enforcement and Security. Below are presented groups of new concepts which will have far-reaching implications on business activities in Montenegro.

- Access to information:

1. Public is granted access to any information or datum about tax payers held by the tax authority, according to the law on public access to information, which actually means that, upon a reasoned request of any person, the Tax Administration (the "TA") is obliged to provide all the information it has about the tax payer: the amount of tax paid, tax debt etc.

2. The Law further stipulates that, upon written request of the TA, the banks are obliged to provide data regarding money transfers of their clients across the country of overseas. These data are considered confidential.

- Obligation to transact through bank accounts

1. The Law stipulates that legal entities and entrepreneurs are obliged to keep money in their commercial bank accounts (they are expressly obligated to have an account), and make money transfers through such accounts, in particular regarding payments of tax, surtax and contributions to the calculated gross salaries and compensation of salaries, and payment of net salaries and compensation of salaries to employees. It also means that previous practice, where a part of the salary was paid through the account, and a part by "cash-in-hand" payment is now punishable by fines imposed by the law (this issue is further discussed in the last section below).

2. Nevertheless, the Law provides for the use of cash during the business day, and determines the maximum limit of vault cash which entrepreneurs and legal entities of various sizes (small, medium and large, according to the classification under the Law on Accounting and Auditing), may keep at the end of the business day. Entrepreneurs and legal entities are obliged to determine by an internal act the maximum limit of vault cash, but such amount cannot exceed the legally prescribed limit (EUR 2,000.00 for small entrepreneurs and legal entities, EUR 10,000.00 for medium legal entities and EUR 20,000.00 for large legal entities). Entrepreneurs and legal entities are now obliged to pay the amount of cash exceeding the maximum limit in their accounts by 2.00p.m. of the following day. Also, the amount of vault cash allowed to business units is 50% of the amount available to the head office. Banks, micro credit financial institutions, postal operators and organizers of games of chance are exempt from the provisions regarding maximum vault cash. There is a specific obligation of legal entities or entrepreneurs whose accounts are frozen - after becoming aware of freezing of their accounts, they are obliged to pay all cash in their bank account, and they are not allowed to keep any cash in vault.

- Ban on establishment and disposal of receivables and debts

1. The main new concepts introduced by the Law stipulate that a person holding over 30% share in capital of a company undergoing bankruptcy or liquidation proceedings, or which has outstanding tax obligation or whose accounts are frozen in forced collection actions is prohibited from setting up a new company or registering as entrepreneur. This prohibition also refers to subsidiaries of the respective company. The Law obligates the TA to examine whether these circumstances exist on registration of any new company or entrepreneur.

2. Besides, the Law prohibits companies and entrepreneurs whose accounts are frozen in forced collection actions for more than 30 days, to collect their receivables and pay their liabilities by entering into agreements for changing the creditors i.e. debtors (assignation, ceding, takeover, debt assumption etc.), set-off arrangements (compensation), transfer of securities or by any other transactions which may lead to avoidance of collection of receivables and payment of liabilities through the account. 

- Obligations of media and other persons towards TA

1. The Law also introduces the obligation for media and issuers of bulletins, catalogues and other advertising publications to, before publishing announcements or advertisements for sale of goods and services, take identification data from the parties commissioning such announcements and advertisements and to keep records of all advertising activities and report those data to the TA on a quarterly basis.

2. Also, organizers of cultural, entertainment, sports or other similar events are now obliged to inform the TA of income earned by non-residents in relation to such events and pay tax on such basis, pursuant to the tax regulations.

3. Furthermore, companies and entrepreneurs engaged in purchasing end products, semi-finished goods and/or secondary raw materials from unregistered persons are obliged to report any monthly payments to such persons exceeding EUR 100, by 15th day of the month for the previous month.

- Obligations regarding work and residence permit

1. Employer upon whose request a foreigner has been issued a work permit or a temporary work permit is obliged to enter into employment agreement with such foreigner on the date of the issuance of temporary residence permit to the same.

2. Nevertheless, employer upon whose request a foreigner has been issued a work/temporary work permit, and such foreigner was previously issued temporary residence permit to join with the family, is obliged to enter into employment agreement with such foreigner on the date when he/she was issued the work/temporary work permit. The obligation to register the foreigner for mandatory social insurance, by filing Form JPR and the other prescribed documentation with the tax authority must be fulfilled within eight days following the conclusion of the employment agreement.

3. Finally, if the employer fails to provide for temporary residence permit to the foreigner, or to enter into an employment agreement with such person or fails to register him/her with the Tax Authority within 35 days following the issuance of work permit, he will be obliged to return the work permit to the Employment Service and such work permit shall be canceled.

- Inspection

1. Given the importance of the Law, competences of the inspectors stipulated by the Law on Inspection Control extend in particular to: (i) temporary confiscation of documentation, end products, semi-finished goods and/or secondary raw materials; (ii) issuing orders prohibiting performance of business activities, i.e. certain activities until remedying the irregularities; (iii) temporary confiscation of proceeds of unjust enrichment. 

- Fines

1. Under this Law, a legal entity can be fined from EUR 10,000.00 to EUR 20,000.00, a responsible person of a legal entity can be fined from EUR 2,000.00 to EUR 3,000.00 while an entrepreneur can be fined from EUR 4,000.00 to EUR 6,000.00 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions