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27/03/2012

Amendment of the decree on the disposal of public land at a price below the market price – commercial opportunity for small and medium enterprises

 

On 21 March 2012 the Government of the Republic of Serbia enacted the Decree amending existing decree on conditions and manner under which local government is authorized to dispose of or lease construction land either at a price/rent below the market price/rent or free of charge (“Official Gazette of the Republic of Serbia” no. 21/2012) (“Amended Decree”). The primary goal of the Amended Decree is to increase the number of employees through enhancing the development of small and medium enterprises.

Namely, the Amended Decree has retained all previously existing provisions, whilst at the same time it has introduced changes to the regulation of leases of the land to small and medium enterprises at a price below the market price.
In addition, the Amended Decree has excluded the possibility for acquiring the land at a price lower than the market price, for those individuals who already own or lease the land on the territory of that local government, which is determined in relation to the implementation of the projects of economic development.The Amended Decree introduces the following changes important for the business development of small and medium enterprises:

— the construction land is leased by the local government only for the purpose of construction of facilities intended for productive activities.

— the construction land could be leased provided that the area of the cadastral lot is not larger than 2500 m2, and that according to the relevant planning document such lot has been determined to be used for the construction of buildings.

— potential lessee according to the Amended Decree is obliged to:

  • change the use of land, or to construct a building as stipulated under the lease agreement or the planning document, within the two-year deadline as of the notarisation of the lease agreement;
  • hire at least one new worker on an indefinite term for every 200 (two hundred) m2 of the leased construction land, or to hire ten new workers on indefinite term in the case of leased construction land over 2000 (two thousand) m2, within the five-year deadline as of the notarisation of the lease agreement;
  • if the lessee fails to fulfill the agreed obligations, the local government is entitled to unilaterally terminate the lease agreement, and charge the lessee with the full market price of the leased construction land as of the moment of notarisation of the lease agreement

The procedure for the leasing of the land according to the Amended Decree (procedure reserved only for small and medium enterprises) includes the following:

— prior to the issuance of a public call for the lease of the construction land, the assembly of the local government shall adopt a decision on leasing of the construction land. The decision shall contain all essential elements of the lease agreement (i.e. information on cadastral lot, number of workers to be hired by the lessee, etc.).

— this decision will then be submitted for approval to the Government of Serbia, through a competent Ministry. The application for approval is filed by the Attorney General’s Office or other authority in charge of representation of the local government. The Government of Serbia is obliged to issue its decision on the application within 8 days as of the filing.

— after obtaining the approval from the Government of Serbia, local government shall pass the Decision on the issuance of public call for the lease of construction land. All essential elements of the lease agreement determined by Decision shall form a part of the public call for the lease of the construction land.

— Initial amount of rent for the lease of construction land is RSD 0 (zero dinars).

In order to qualify as bidders, small and medium enterprises need to have realised minimal annual turnover in the past two years in the amount of RSD 3 million. Each and every bidder has to deliver evidence on paid taxes and other public expenditures in accordance with the relevant regulations of the Republic of Serbia.

 

For more information please contact:
Milos Vuckovic, Partner, Real estate
milos.vuckovic@karanovic-nikolic.com