Can a legal person/an entrepreneur who is not registered as an accounting outsourcing company in Belgrade or a physical person without employment relation provide the accounting services?
This question is very live within companies providing accounting services, but also on the first place among related parties where one company provides these jobs for the whole group.
This question is also bothering the foreign directors of a domestic legal person when the director wants to move the bookkeeping activities somewhere abroad where the accounting services are cheaper.
In continuance you should pay attention to all examples through which we will try to explain this question, because it is also connected with the unrelated persons whose accounting is done by a legal person or an entrepreneur, doing the different job through the branch with core, but not complete activity of performing accounting services.
There is also a question of what happens if a business subject engages physical person without employment relation only by concluding an employment contract or an outside employment contract.
OVERVIEW OF LEGAL REGULATION THAT DEFINES PROVISION OF ACCOUNTING SERVICES
Related to the Law on accounting, the Ministry of Finance has published different acts about this subject, and we will resolve certain dilemmas in continuance. In the Law on accounting, article 14 is related to providing accounting service by a physical person (employed or unemployed):
Let us explain: It is prescribed by this article of the Law that an entrepreneur or a legal person arranges degree of vocation, working experience and other details for a person responsible for providing accounting services and creating financial reports.
If an entrepreneur chooses this option, he must arrange the conditions related to a degree of vocational education, working experience, technical ability, the knowledge about special accounting softwares and other information related to the level of informatical education. These conditions must be fulfilled by a physical person responsible for the accounting.
If these conditions are not met, fines can be quite big: for a legal person from 100 000 RSD to 3 000 000 RSD, and for the responsible person from 20 000 RSD to 150 000 RSD, while the entrepreneur will pay for this economic crime from 100 000 to 500 000 RSD.
Article 15 of the Law deals with providing accounting services by other legal person or entrepreneur based on the contract about performing accounting services.This article of the Law determined that accounting and the creation of financial reports can be accredited by a written contract to the entrepreneur or company registered at the BRA with providing accounting services as the core activities. The legal person who can not accredit accounting services to another entrepreneur or company, but must have their own person are :
- The national bank of Serbia and other financial institutions
- Insurance companies
- Approvers of financial leasing
- Voluntary pension funds
- Companies for managing voluntary pension funds
- Investment funds
- Stock markets
- Broker - dealer companies
- Factoring companies
The Ministry of finance published several acts about article 15. of the Law. The Lawe allows providing all kinds of services by a person who does not have accounting services as its core activity in the BRA, if these services are provided to persons within that group or the branch registered in the BRA for providing certain services.
1. OUTSOURICING OFF ACCOUNTING TO ABROAD
Outsourcing is a business strategy which becomes more and more popular in Serbia andthis means that the accounting services are provided by a specialised company or an accounting agency which has a headquarter in China, for example, because it is the cheapest.
The Ministry of Finance published an act and gave next explanation: It is possible for a domestic company to commit its accounting services or one part of it to a foreign legal person, only if two conditions are met:
- A foreign legal person is a part of the same group as the domestic company.
- Complete administration of Serbian Law on accounting is ensured or the posting must be done according to the Serbian chart of account
This has positive effects and consequences .
The positive effects which are quickly visible: lower administrative expenses,than the standardisation of all the service of a Serbian company with parent foreign company.
Possible negative effects and long-term consequences can apply on the employees in a foreign subject, because it is a common case that employees are not familiar with local laws.
2. ACCOUNTING SERVICES IN BELGRADE BY A LEGAL PERSON REGISTERED FOR OTHER ACTIVITY
Cases like these are very common in practice, but they also collide with article 15 of the Law, so the Ministry of Finance published a positive act about this issue in February 2019
'When it comes to providing accounting service to the third parties according to the Law, one of the conditions is that provider has registered accounting services as its core activity. In practice, if a legal person registers a branch with a core activity – providing accounting services, we think that in this case, the branch can provide accounting services to the legal person who is not a part of the company (third persons)'.
This act allows providing accounting services only if a branch is registered with this kind of activity in the BRA. When these persons are connected within a group, then the branch doesn't have to be registered.
3. SERVICES WITHIN A GROUP BY ENTITY NOT REGISTERED FOR ACCOUNTING SERVICES
All the accounting services are given to one legal person within business systems and concerns and it often happens in practice that this person doesn't have providing accounting services as his/her core activity in the BRA. That is why there is a dilemma about the employment of Law.
The dilemma is solved by publishing several acts about this subject by the Ministry of finance, where it is explained that the person providing accounting services can do that within a group, related persons and that a branch must be created if these services are provided for an unrelated person.
4. ACCOUNTING SERVICES BY OUTSOURCED EMPLOYMENT CONTRACT
This is related to the accountants who are employed at one company or retired but do part-time work for another business subject. This dilemma from practice was resolved by the Ministry of Finance in December 2016 according to which a person is allowed to do this job if he/she meets the conditions for providing accounting services and the entrepreneur concludes appropriate outside-employment contract.