In preparation for Expo Belgrade 2027 (hereinafter “Expo”), a specialized international exposition that is scheduled to be held in Belgrade from mid-May to mid-August, 2027, the Government of the Republic of Serbia has decided to provide incentives for new accommodation that will be necessary for hosting the mentioned event.
In this respect, the Regulation on Criteria for the Allocation of Incentives for Attracting Direct Investments in the Sector of Hotel Accommodation Services (“Official Gazette of the RS” nos. 33/2019, 42/2019, 18/2022 and 103/2023 – hereinafter “Regulation”) has been amended. The changes came into force on November 29, 2023.
Apart from incentives for spas and climatic resorts that were already covered under the Regulation, incentives will now also be applicable to investment projects relating to accommodation in the Belgrade region, namely for (i) construction of hotels with 3 or more stars and with a minimum of 50 accommodation units and (ii) reconstruction or expansion of hotels with 3 or more stars and with a minimum of 50 accommodation units. Incentives will not be applicable for garni hotels and apartment hotels.
The minimum value of the investment project for which the funds can be allocated is EUR 5 million when the project relates to the construction of a new hotel, and EUR 2 million when the project relates to reconstruction or expansion of an existing accommodation. At least 25% of the costs for the realization of the project must be provided by the investor or from other sources that do not include state aid. Furthermore, the amount of incentive funds cannot exceed 20% of justified investment costs in tangible and intangible assets. Justified investment costs in tangible and intangible assets are taken into account starting from the day of application for allocation of incentive funds until the realization of the investment project. Land lease costs are also taken into account as justified investment costs during the period of the realization of the project, however under the condition that the lease continues for at least five years following the realization of the investment project. Costs relating to the rent of equipment are taken into account as justified investment costs only if the rent is in the form of financial leasing and includes the obligation to purchase the equipment at the end of the rent period.
The allocated incentive funds are to be paid out in installments, in line with the agreement on the allocation of incentive funds and available budget means. For information purposes, the Budget Law for the Year 2024 (“Official Gazette of the RS” no. 92/2023), stipulates a planned expenditure for the Expo, in an amount of RSD 22,600 million i.e. approximately EUR 193 million per year, for each of the upcoming three years (2024, 2025, and 2026).
In principle, the deadline for realization of the investment project is two years from the date of submission of the application for the allocation of incentive funds. However, upon the conclusion of the agreement on the allocation of incentive funds, the deadline can be extended until December 31, 2026.
Another condition for approval of the incentive funds is that the hotel that is the subject of the investment project remains at the same location and with the same categorization for at least five years after the realization of the project.
Unlike the conditions set forth for spas and climatic resorts that were already stipulated under the Regulation, investment projects in the Belgrade region concerning the Expo, do not determine a minimum number of new employees that need to be engaged for an indefinite time period in order for the incentive funds to be granted.
The right to participate in the procedure for the allocation of incentive funds will have investors who apply for the allocation of funds before the start of implementation of the investment project, however no later than December 31, 2024. The Regulation lists the documents that must be submitted along with the application, including among others the business plan, financial reports, and various confirmations and statements that evidence the investor’s good standing.
