Those seeking asset protection are likely familiar with trusts. These traditional mechanisms make it possible for you to own assets but have no legal association with them. Nevertheless, recent international legislation has diminished the appeal of trusts as instruments that allow you to safeguard both your capital and interests. This is why asset owners are exploring alternative avenues today to achieve greater security and privacy.
If you don’t know it yet, a Serbian endowment, often referred to as a Serbian Trust, is a legal entity designed for asset protection and family succession planning. Governed by the Law on Endowments and Foundations that was adopted in 2010, it provides an efficient framework for both individuals and families to secure their wealth and guarantee its controlled distribution over time.
Serbian endowments: key features
The Private Foundation, a.k.a. an Endowment, is the European counterpart to the trust established under Anglo-Saxon law. In Serbia, it is commonly used to manage both public and private assets. While the public or state version of a Foundation is well-known among investors, it does not confer rights for personal property protection. However, establishing a non-profit entity like a Private Endowment opens up several advantageous possibilities:
- Asset Protection: The primary purpose of a Serbian endowment is to protect assets from various risks, including legal disputes, creditors, and unforeseen financial downturns. Assets placed in an endowment are legally separated from the individual, which makes them less susceptible to external claims.
- Family Succession Planning: Serbian endowments can be structured to manage the orderly transfer of assets to beneficiaries, ensuring that family wealth is preserved and passed down according to the founder’s wishes.
- Privacy: The structure of a Serbian endowment offers a high degree of confidentiality. The details of the endowment, including the assets held and the identity of its beneficiaries, are not publicly disclosed, which means an extra layer of privacy.
- Control: Founders of Serbian endowments retain significant control over the management and distribution of assets. They can appoint trusted individuals to oversee the endowment’s operations, ensuring that their intentions are carried out effectively.
- Flexibility: Serbian endowments may be tailored to meet the specific needs and goals of the founder. This flexibility allows for the creation of a bespoke asset protection strategy.
- Tax Efficiency: Serbian endowments often offer tax advantages, depending on the founder’s circumstances and the nature of the assets held within the endowment.
Establishing a Serbian endowment: do it by the book
To set up a Serbian endowment, a minimum capital amount equivalent to EUR 30,000 is required, although exceptions may apply in certain cases. The process involves drafting a founding act and registering the endowment with the relevant Serbian authorities. Once established, the endowment operates as a separate legal entity, with its governance structure defined by the founding act.
Benefits of a Serbian endowment
When used for asset protection, a Serbian endowment comes with a myriad of benefits for its beneficiaries, spanning financial, legal, and strategic domains.
1. Protection from legal risks
Asset protection is a cornerstone of Serbian endowments, offering a secure haven for assets against legal challenges. This feature not only provides tranquility to the founder and beneficiaries but also ensures that the wealth is preserved for future generations.
2. Succession planning
The endowment can be used to define clear and legally binding instructions for the distribution of assets, avoiding potential disputes among heirs. Founders have the flexibility to name family members as beneficiaries, ensuring that the wealth is distributed according to their wishes. Even in commercial businesses, a Serbian endowment can be the owner, allowing for the continuation of the founder’s entrepreneurial legacy.
3. Financial stability
By safeguarding assets, an endowment provides long-term financial stability for beneficiaries, guaranteeing that wealth is available when needed.
4. Philanthropic goals
Serbian endowments may also be used to support charitable causes, allowing founders to contribute to society while enjoying the associated tax benefits. Do you know that in 2021 alone citizens and companies in Serbia donated EUR 42.5 million for the common good, with a significant portion of these donations channeled through endowments and foundations?
5. Asset diversification
You can use your Serbian endowment to access a diverse range of investment opportunities in the domestic and international markets. By establishing an endowment, you will separate your personal wealth from business ventures, reducing risk and ensuring a stable financial future. This structure is particularly advantageous for those looking to diversify their investment portfolio across different asset classes or geographic regions, as it allows for the strategic allocation of resources while maintaining privacy and control over the assets.
6. Tax optimization
With its tax-efficient structures, a Serbian endowment allows you to optimize the tax implications of asset ownership, thereby minimizing tax burdens and maximizing after-tax returns. This effective tax optimization vehicle leverages Serbia’s network of double taxation treaties and favorable tax laws. By establishing an endowment, individuals and entities benefit from reduced withholding taxes on royalties, dividends, and interest income, as well as potential exemptions on certain types of revenue. With Serbia’s commitment to international tax agreements in mind, you can be sure that you may use your endowment to minimize the risk of base erosion and profit shifting. This is what guarantees a more predictable tax environment for endowment founders and beneficiaries.
7. Professional expertise
With a team of seasoned professionals, including legal advisors, financial analysts, and estate planners, a Serbian endowment offers unparalleled expertise and guidance, empowering clients to make informed decisions and see into complex financial issues with confidence.
8. Peace of mind
By entrusting their assets to a Serbian endowment, clients gain peace of mind knowing that their wealth is under the stewardship of a reputable institution committed to their long-term financial security and prosperity.
No doubt, a Serbian endowment is a powerful tool for asset protection and estate planning. However, like with any other tool, you need to know how to use it in your best interests. At Serbia Wealth, seasoned industry experts provide comprehensive services for the registration of endowments in Serbia. This way, you will enjoy a seamless process from start to finish. For further information, please visit Serbia Wealth Info or reach out to us using the contact details you’ll find on our website.
