White-Collar Crime 2021

Last Updated October 21, 2021

Serbia

Law and Practice

Author



JPM Janković Popović Mitić was established in 1991, and is the most experienced full-service Serbian law firm. Throughout the last three decades JPM has been assisting international and local clients in their commercial endeavours in Serbian and SEE regional markets. The firm's 30-plus-strong team of professionals covers all legal areas in every major industrial and corporate sector, ranging from energy, banking and transport to renewable energy, IT and life sciences. JPM's criminal law and criminal compliance legal team has a multidisciplinary background and the agility to counsel and provide services of defence and representation to affected companies and individuals, throughout criminal and other penal proceedings, in response to the fact-finding and preliminary investigation, as well as during criminal and other penal cases in all their later stages.

There are three main categories of offences in Serbia: criminal offences, misdemeanours and commercial offences.

Criminal offences can be prescribed only by law, while misdemeanours and commercial offences can be prescribed also under general acts of lower rank than the law.

Criminal Offences

The main law prescribing criminal offences, both their general elements and special criminal offences, is the Criminal Code (CC), but certain criminal offences are also contained and prescribed under other laws regulating particular legal areas – for example, the Company Law and the Law on Banks.

General elements of the criminal offence

For any action to be considered as a criminal offence, the required general elements are that such action is: (i) prescribed as a criminal offence by the law, unlawful, and (ii) committed with a guilty mind (ie, mens rea). Additionally, each criminal offence has its own special elements provided in either the CC or another law that incriminates a particular criminal offence.

The offender committing a criminal offence may only be only a natural person, although a legal entity may exceptionally be liable for committing a criminal offence under the conditions provided by a special law.

Guilt – mental competence, premeditation and negligence of the offender

An offender is guilty if he or she:

  • was mentally competent (ie, able to understand the significance of the act and able to control their actions),
  • acted with premeditation (ie, was aware of the act and wanted to commit it, or was aware that another person could commit the act and consented to its commission); and
  • was aware (or should or could have been aware) that his or her action was prohibited.

An offender is also guilty when acting in negligence. This means that the offender: was: (i) aware that by his or her action offence could be committed, but recklessly assumed that it would not occur, or that he or she would be able to prevent it, or; (ii) was unaware that by his or her action an offence could be committed, although – due to circumstances under which it was committed and his or her personal characteristics – he or she was obliged to be and could have been aware of such a possibility, if so explicitly is provided by the law.

Commission of a criminal offence by action and omission

A criminal offence, by default, can be committed only by action, and by omission only when the law explicitly stipulates that a failure to undertake an action is prescribed as a criminal offence; extraordinarily, a criminal offence can be committed by omission, even if the law defines the offence as commission, if elements of such criminal offence have materialised by the offender's failure to do what he or she was obliged to do.

Attempted criminal offence, inappropriate attempt and voluntary abandonment

An attempt of criminal offence exists when offender commences a criminal offence with premeditation, but does not complete it. Thus, an attempt shall be punishable if such offence is punishable by law with a term of imprisonment of five years or more, and for the attempt of other criminal offence only when the law explicitly prescribes the punishment of attempt.

With respect to inappropriate attempt, an offender who attempts to commit a criminal offence with an inappropriate tool, or against an inappropriate object, may be remitted from punishment. Furthermore, an offender who attempted to commit a criminal offence, but voluntarily abandoned the act of commission or prevented occurrence of consequences thereto, may also be remitted from punishment, except if the offender has not completed the criminal offence due to circumstances preventing or considerably hindering commission of the criminal offence, or due to assumption that such circumstances were present.

Misdemeanour

The main substantive (and partially procedural) general law regulating misdemeanours is the Misdemeanour Law. Misdemeanours may be prescribed by a law or a decree, and/or by an ordinance of the Assembly of the Autonomous Province, municipal assembly, and city/town assembly.

A misdemeanour is an unlawful, culpably committed act that is stipulated as a misdemeanour by the law or a regulation of the competent authority and for which a misdemeanour sanction is prescribed.

A misdemeanour may be committed by action or omission when the regulation stipulates, as a misdemeanour, the failure to undertake a certain action.

The offender will be punished for the attempted misdemeanour only if such is explicitly prescribed.

A natural person, an entrepreneur (in the course of his or her activity), a legal entity, the responsible person in a legal entity (the person entrusted in the legal entity with certain tasks related to management, business or work process) or in a state body (the person who performs certain duties) may be liable for a misdemeanour if, at the time of committing the misdemeanour, he or she was mentally competent and has committed the misdemeanour with premeditation or negligence and was aware (or had to be aware and may have been aware) that such actions were prohibited.

Negligence is deemed enough for a misdemeanour liability to exist, except when the regulation on misdemeanour stipulates that the offender of a specific misdemeanour will be punished only if that misdemeanour was committed with premeditation.

Commercial Offences

Basic law regulating commercial offences is the Commercial Offences Act. Commercial offences and the penalties provided thereby may, within the limits of the powers determined under the Constitution and the limits of the Commercial Offences Act, be prescribed by laws and decrees.

A commercial offence is a socially harmful violation of the regulations on economic or financial operations which has caused or could have caused graver consequences, and which is defined as a commercial offence by a regulation of the competent authority.

A legal entity may be liable for a commercial offence as well as a responsible person therein (a person entrusted with a certain range of activities in the field of economic or financial operations within that legal entity).

Criminal Offences

The CC prescribes two types of statute of limitations and their deadlines  – namely, the limitations for criminal prosecution and the limitations for the enforcement of penalties. Both categories distinguish so-called relative and absolute obsolescence.

The statute of limitations for criminal prosecution begins to run from the day when the criminal offence was committed, but if the consequence of the criminal offence occurred later then the statute of limitations for criminal prosecution begins from the day on which the consequence occurs.

The CC does not explicitly prescribe the beginning for the statute of limitations for the prosecution of continuing criminal offences, permanent criminal offences, and criminal offences of the so-called state/situation.

The prevailing stance of the court’s jurisprudence is that, in the legal construction of a continuing criminal offence, the statute of limitations is calculated separately for each criminal offence thereunder. However, there are also a significant number of court decisions with the perception that the statute of limitations in continuing offences should be calculated from the day the last offence was committed, being a part in the construction of the continuing criminal offence.

The court’s jurisprudence, on the other hand, is unified towards permanent criminal offences. Those are criminal offences in which the consequence consists in causing unlawful state or change, which lasts for a certain time, and which constitutes the elements of being of a permanent criminal offence. The courts' stance is that the statute of limitations is calculated from the moment of cessation of the effect of such consequence resulting from a permanent criminal offence.

In criminal offences of the so-called state/situation, where the consequences last for a certain period, but do not enter into the elements of the criminal offence itself, the statute of limitations is calculated from the day of occurrence of the subject state/situation.

A criminal prosecution cannot be commenced (relative statute of limitation) when certain, precisely stipulated deadline expire within the CC, the terms of which are stipulated according to the maximum penalties for criminal offences. Limitations on criminal prosecution shall come in effect in any case after expiration of double the time period required by law for limitation of criminal prosecution (absolute statute of limitation).

Misdemeanours

Misdemeanour Law also distinguishes the statute of limitations for initiating and conducting misdemeanour procedure and the statute of limitations for the enforcement of penalties and protective measures.

The statute of limitations for initiating and conducting a misdemeanour procedure begins to run from the day when the misdemeanour was committed, and procedure cannot be initiated or conducted (relative statute of limitations) if one year has elapsed from the day the misdemeanour was committed.

Exceptionally, for offences in the field of customs, foreign trade, foreign exchange operations, public revenues and finances, public procurement, trade in goods and services, environment, prevention of corruption and air traffic offences, a special law may prescribe longer deadline for statutes of limitations, but not longer than five years.

Initiation and conduct of misdemeanour procedure is obsolete in any case when twice as much time has elapsed as required by law for statute of limitations (absolute statute of limitations).

Commercial Offences

The Commercial Offences Act also distinguishes between the statute of limitations for prosecution for commercial offences and the statute of limitations for the enforcement of penalties for commercial offences.

The statute of limitations for prosecution for commercial offences begins to run from the day when the commercial offence was committed.

The statute of limitations for prosecution for commercial offences occurs when three years have elapsed from the day the offence was committed (relative statute of limitations).

Exceptionally, for commercial offences in the field of foreign trade, foreign exchange and customs operations, the statute of limitations for prosecution occurs when five years have elapsed from the day the commercial offence was committed.

Criminal Offences

CC stipulates that Serbian criminal legislation shall be applied to:

(a) anyone committing a criminal offence on the territory of Serbia, on a domestic vessel, regardless of where the vessel is at the time of committing of the act, or in a domestic aircraft while in flight or a domestic military aircraft, regardless of where the aircraft is at the time of committing of criminal offence;

(b) anyone who commits certain criminal offences provided under the CC, such as offences against the constitutional order and security of Serbia, or offences against humanity and other goods and values protected by international law, if these crimes were committed against Serbia or its citizen;

(c) anyone who commits the crime of counterfeiting money abroad if the counterfeiting relates to domestic money;

(d) a citizen of Serbia when, in addition to the criminal offences listed in (b) and (c) above, he or she commits another criminal offence abroad, if he or she is found on the territory of Serbia or extradited to it and if the criminal offence is punishable under the law of the country where it is committed, except when there is the approval of the Republic Public Prosecutor or when it is provided by a ratified international treaty;

(e) a foreigner who commits a criminal offence against Serbia or its citizen(s) abroad and when it is not the criminal offences listed in items (b) and (c) above, if he or she is found on the territory of Serbia or extradited to Serbia and if the criminal offence is punishable by law of the country in which it was committed, except when there is the approval of the Republic Public Prosecutor or when it is provided by a ratified international treaty;

(f) a foreigner who commits a criminal offence abroad against a foreign state or towards a foreigner for which, according to the law of the country in which it was committed, an imprisonment of five years or more may be imposed if he or she is found on the territory of Serbia and not extradited to a foreign state; if it is a criminal offence which at the time of its commitment was considered a criminal offence according to general legal principles recognised in international law, prosecution, with the approval of the Republic Public Prosecutor, may be undertaken in Serbia regardless of the law of the country where such criminal offence was committed.

The Law on the Liability of Legal Entities for Criminal Offences provides its application on: domestic and foreign legal entity liable for a criminal offence committed on the territory of Serbia; and a foreign legal entity liable for a criminal offence committed abroad to the detriment of Serbia, its citizen(s) or a Serbian legal entity and to a domestic legal entity liable for a criminal offence committed abroad.

Misdemeanours

The Misdemeanour Law stipulates that the provisions on misdemeanours are applicable on the territory of Serbia when prescribed by law or decree.

Foreign natural and legal persons and foreign responsible persons in legal entities are liable for misdemeanours as well as domestic natural, legal and responsible persons, but a foreign legal entity and a responsible person may be punished for a misdemeanour committed on the territory of Serbia only if it has a business unit in Serbia, or a representative office or if the offence was committed by means of transport.

For misdemeanours committed abroad, the offender can be punished only exceptionally if it is provided by law or a decree.

Commercial Offences

The perpetrators of commercial offences can be held liable only if such offences were committed on the territory of Serbia.

A foreign legal entity and a responsible person in a foreign legal entity may be liable for a commercial offence only if the foreign legal entity has a representative office on the territory of Serbia, or if the commercial offence was committed by its means of transport.

Criminal Offences

According to the CC, the perpetrator of a criminal offence can only be a natural person and guilt is one of the general elements of a criminal offence without which it cannot exist.

Additionally, there are particular criminal offences, having as their special element a requirement for the existence of the capacity of a responsible person in a legal entity (ie, a person who, under the law, regulations or authorisations, performs certain management, supervision or other tasks from the activity of a legal entity, or a person who is entrusted with the performance of those tasks or an official when it comes to criminal offences in which the responsible person is designated as the offender, and in the CC they are not provided in the chapter on criminal offences against official duty).

Hence, if the offender of a specific unlawful behaviour would not have this capacity, it could not be such a criminal offence, for which existence this property is required. However, certain criminal offences, which in a broader sense could be related to the function of a person in a legal entity, can exist regardless of whether the offender has the status of a responsible person in accordance with the legal definition.

In Serbia, the liability of legal entities for criminal offences is regulated by a special law on the Liability of Legal Entities for Criminal Offences. Legal entities, which can be either domestic or foreign (their status as legal entities being assessed under Serbian law) may be liable for criminal offences and appropriate criminal sanctions may be imposed on them only under the conditions stipulated by this law.

The liability of legal entities is based on the guilt of the responsible persons (natural persons who are legally or factually entrusted with a certain range of activities in the legal entity, and persons who are authorised or can be considered authorised to act on behalf of the legal entity) in those legal entities.

The legal entity is liable for a criminal offence committed by the responsible person within its activities or authorisations in order to gain benefit for the legal entity, or if due to the lack of supervision or control by the responsible person it is possible to commit a criminal offence to the benefit of a legal entity if such offence is committed by a natural person acting under the supervision and control of the responsible person.

If a legal entity ceases to exist before the end of the criminal procedure, a fine may be imposed on the legal entity that is its legal successor, provided that the liability of the legal entity that has ceased to exist has been determined. If the legal entity ceases to exist after the final procedure whereunder the liability has been determined and the sanction for the criminal offence has been imposed, the fine shall be enforced against the legal entity being its legal successor.

A legal entity that changes the legal form in which it operated after committing a criminal offence is liable for the criminal offence under the same conditions as it would be prior to form change, and a legal entity in bankruptcy is liable for criminal offences committed before or during bankruptcy procedure.

Misdemeanours

Misdemeanour liability is considered individual and is based on the guilt of the offender.

Legal entities can be held liable for violations:

  • committed by the action of their managing body or responsible person (a person entrusted with certain tasks related to management, business or work process) or by failing of the management body or the responsible person to duly supervise;
  • committed by an act of another person who was authorised to act on behalf of the legal entity;
  • when the managing body makes an illegal decision or an order enabling the commission of a misdemeanour;
  • when the responsible person orders a natural person to commit a misdemeanour;
  • when a natural person commits a misdemeanour due to the failure of the responsible person to supervise or control him or her.

When, during misdemeanour procedure, the legal entity ceases to exist, its liability for the misdemeanour ceases as well. However, in case of the existence of a legal successor, that legal successor is liable for the misdemeanour.

Commercial Offences

The liability of legal entities for commercial offences is also based on the liability of their responsible persons (persons entrusted with a certain range of activities in the field of economic or financial operations in a legal entity) and the legal entity is liable for an commercial offence if it has been committed by the action of management body or responsible person or another person who was authorised to act on behalf of the legal entity or by failure to perform due supervision by the management body or the responsible person.

Pursuant to Serbian law, each natural person or legal entity harmed by the commission of any criminal offence has the right to compensation for the damage suffered by the offender. The procedure and scope of compensation for damages differs and depends on whether the injured party claims compensation in criminal or misdemeanour procedure or in a separate case (ie, in civil procedure).

Compensation in a Civil Procedure

In practice, the injured parties most often decide to pursue property claims in civil procedure for two reasons. The first reason is speed and efficiency, given that criminal courts very often, since the data and evidence at their disposal in criminal procedure do not give them enough elements to decide on these claims, instruct the injured parties to realise the claims in litigation. The second reason is the possibility of more complete compensation, given that civil liability under Serbian law is broader than criminal and punitive liability in general; it thus provides injured parties with the possibility of compensation for all damages, both actual and lost profits, and not just the amount that would be deemed obtained as material benefit by committing a criminal offence/misdemeanour/commercial offence determined in a criminal procedure.

The competent courts to decide on claims for damages in civil procedure are primary higher, or commercial courts, depending on whether the claim is filed only against the offender or also against a legal entity, as well as the amount of the claim itself.

Compensation in a Criminal Procedure

The Serbian Criminal Procedure Code (CPC) provides the possibility that injured parties, before a court in a criminal procedure may submit a property claim to the court in charge of the trial for a particular criminal offence, which arose because of the commission of the criminal offence. Such claim may relate to damages, restitution or annulment of a certain legal transaction. The court acting in the criminal procedure decides on the property claim with the same judgment by which it decides on the criminal offence and the guilt of the offender, but only if this does not significantly delay the criminal procedure.

Compensation in a Misdemeanour Procedure

The court in a misdemeanour procedure decides on the property claim of a person who has been damaged by the commission of a misdemeanour, and which may relate either to compensation for damages or to the return of property (restitution), unless this significantly delays the procedure.

If the evidence in the misdemeanour procedure does not provide a reliable ground for accepting the property claim in whole or in part, the court shall instruct the injured party to realise his or her property claim or a surplus thereto in litigation.

Apart from all the regulations which Serbian authorities had rendered in relation to the State of Emergency and the global pandemic that have affected various spheres of economic and social life in Serbia, the most significant trends relate to the areas of tax evasion and environmental protection.

Most likely under the significant influence of public opinion and growing public demands for more attention to environmental protection, pioneering attempts have appeared to protect the environment also through criminal prosecution.

Whilst the Serbian CC dedicates a whole chapter to environmental protection, containing as many as 18 criminal offences, and whilst the legislative framework in Serbia, when it comes to environmental protection is, in our opinion, adequate, the jurisprudence that would address the most typical criminal offences against the protection of the environment does not yet exist.   

For these reasons, attempts at criminal prosecution for these kinds of criminal offences are sporadic and represent an introduction of the domestic practice in proceedings for new criminal offences that have long existed in the law, although they have not yet been established in the legal practice.

The second trend is related to the stricter regulations on tax evasion.

The authorities are making increased efforts to detect and prosecute acts of tax fraud (criminal offences as well as misdemeanours). In this context the most significant are the latest amendments of the Law on Tax Procedure and Tax Administration, which enacted a special form of tax fraud-related criminal offence, – namely, tax fraud in relation to VAT.

Another law that has attracted a lot of attention, especially in the media, is the Law on the Determination of the Origin of Property and the Special Tax, which regulates the conditions, manner and procedure of determining the property and increase in property of an individual person, as well as a special tax of 75% on the increase in property for which an individual person cannot prove that it was acquired in a lawful way.

The only prosecuting authority for criminal offences that can be considered acts of white-collar crime is the public prosecutor. Depending on the specific criminal offence and the due punishment, the primary public prosecutor, the higher public prosecutor, or the public prosecutor of the Higher Prosecutor's Office acting in a special department for the fight against corruption may have competence. Thus, if the specific criminal offence meets the legally prescribed conditions of a criminal offence of organised crime in accordance with the Law on Organisation and Competences of State Authorities in Suppression of Organised Crime, Terrorism and Corruption, the Prosecutor for Organised Crime may also be competent in that respect.

Apart from the special organisational unit, in charge of suppressing organised crime, and the Ministry of the Interior, which acts upon the requests of the Prosecutor for Organised Crime, there are no special police units that deal exclusively with white-collar crimes. Within the police administrations of larger cities, there are organisational units specialised in dealing with the areas of the fight against commercial offences or the fight against corruption, which, as a rule, conduct investigations for criminal offences in this area.

For trials, again depending on the specific criminal offence and the due punishment, the primary or higher courts may be competent, or, if the specific criminal offence meets the conditions to be considered a criminal offence of organised crime, the Special Department of the Higher Court in Belgrade for organised crime, with jurisdiction for the whole territory of Serbia.

In procedures related to commercial offences, the only prosecuting authority is the public prosecutor, and, given the sanctions provided for commercial offences, only the primary public prosecutor is competent. Conversely, commercial courts are competent for trials.

The misdemeanour procedure is initiated upon the request of the authorised body or the injured party. The body competent to initiate a misdemeanour procedure is provided by special laws, or other by-laws which also prescribe a particular misdemeanour. Misdemeanour courts are competent for trials.

There are no rules applicable exclusively to white-collar crime investigations that differ from investigations concerning any other crime.

The initiative to commence a pre-investigation procedure, conducted by the competent police authorities, independently or with the participation and by order of the public prosecutor, or the initiative to commence an investigation, conducted by the public prosecutor on the basis of his or her order may come from any natural or legal person or a state body.

The CC also provides for a special criminal offence of failure to report a criminal offence or an offender – this is punished by imprisonment from six months to five years for officials and responsible persons in legal entities, in the event they fail to report criminal offences which they learn of in the performance of their duties, if such offences can be punishable for five years in prison or a graver sentence under the law.

The same procedural rules, provided under CPC for all other criminal offences, are applicable to the collection of evidence related to white-collar criminal offences. The powers of the police and the public prosecutor differ somewhat, depending on the stage of the procedure – ie, whether it is a pre-investigation or investigation phase. Moreover, in certain cases, the probative value of evidence and the possibility of its use in criminal procedure before the court depends on it.

In the pre-investigation phase, the police are obliged to take the necessary measures to find the offender, to prevent him or her going into hiding or escaping, to discover and provide traces of the criminal offence and objects that could serve as evidence, as well as to collect all information that would or could be useful for the successful conduct of a criminal procedure. In that respect, the police can:

  • undertake necessary measures in connection with the establishment of the identity of persons and objects;
  • post a wanted circular for a person and objects being searched for;
  • in the presence of a responsible person inspect certain facilities and premises of public authorities, enterprises, shops and other legal persons, inspect their documentation and if necessary seize it;
  • upon order of the judge of preliminary procedure obtain a record of telephone communications or the base stations used, or establish the location of the place from where a communication is being conducted;
  • summon citizens in order to collect required information;
  • upon order of the public prosecutor and in presence of a defence attorney, conduct a hearing of the offender, etc.

Evidence obtained by the police in this manner may be used in criminal procedure if the evidentiary actions were carried out in accordance with the CPC.

In the investigation phase, after the issuance of the order on its conduct, the public prosecutor is authorised to take all evidentiary actions provided under and in accordance with CPC. These are, for example:

  • the hearing of the offender;
  • examination of witnesses;
  • ordering an expertise and undertaking examination of experts;
  • investigating or reconstructing the event;
  • obtaining documents and taking samples;
  • checking accounts and suspicious transactions such as checking data, monitoring suspicious transactions and temporary suspension of suspicious transaction;
  • seizure of items and documents, etc.

Specific white-collar offences include the following:

  • abuse of position of a responsible person (Article 227 CC);
  • abuse concerning public procurement (Article 228 CC);
  • accepting bribes in conducting business activities (Article 230 CC);
  • giving bribes in conducting business activities (Article 231 CC);
  • money laundering (Article 245 CC);
  • abuse of official position (Article 359 CC);
  • trading in influence (Article 366 CC);
  • soliciting and accepting bribes (Article 367 CC); and
  • bribery (Article 368 CC).

For the above, the competent court may also approve special evidentiary actions such as:

  • secret surveillance of communication (which may also be ordered for criminal offences of unauthorised use of a copyright work or subject matter of related law under Article 199 CC, damaging computer data and programs under Article 298 CC, computer sabotage under Article 299 CC, computer fraud under Article 301 CC and unauthorised access to a protected computer, computer network and electronic data processing under Article 302 CC);
  • covert surveillance and recording; 
  • simulated deals;
  • computer data search;
  • controlled delivery and undercover investigator.

Internal investigations are not specifically regulated in Serbian law. Therefore, they are neither necessary nor mandatory, their implementation depending exclusively on the will of a particular company.

Whether particular evidence obtained during an internal investigation can and will be used in criminal procedure depends, primarily, on the public prosecutor's assessment of its probative value, and, at a later phase of the criminal trial on the court's assessment of whether such evidence was obtained in accordance with the relevant provisions of the CPC, thus making it permissible for use.

Generally speaking, in practice, almost all documentation of a certain legal entity can be and is used as evidence in a criminal procedure relating to white-collar offences, regardless of whether the company itself handed it over or the public prosecutor came across it in the investigation directly from that company, third parties or government authorities.

Mutual legal assistance is primarily governed by the applicable multilateral or bilateral treaties between Serbia and other countries such as Greece, Italy, Germany and Turkey. Also, Serbia has signed and ratified numerous conventions and protocols of the United Nations and of the Council of Europe, – eg, the United Nations Convention Against Corruption of 31 October 2003 (UNCAC), the European Convention on Mutual Assistance in Criminal Matters of 20 April 1959 (ECMA), and the European Convention on Extradition of 13 December 1957.

In cases in which no ratified international agreement exists or certain subject matters are not regulated under it, the Law on Mutual Legal Assistance in Criminal Matters regulates the procedure of providing mutual legal assistance in criminal matters. Mutual legal assistance encompasses the extradition of accused or convicted person, the assumption and transfer of criminal prosecution, the execution of criminal judgement as well as other forms of mutual legal assistance and the Serbian judicial authorities provide mutual legal assistance to foreign requesting states under terms of reciprocity.

Extradition of accused or convicted persons for criminal offences from Serbia to foreign states may be authorised as far as certain preconditions are met, namely:

  • the person whose extradition is requested is not a Serbian citizen;
  • the offence, in respect of which extradition is requested, has been neither committed on the territory of Serbia, nor against Serbia or any of its citizens;
  • the criminal offence, in respect of which mutual legal assistance is requested, constitutes the criminal offence under the legislation of Serbia and there is a final court decision that a criminal offence has been committed;
  • the criminal prosecution (ie, execution of a criminal sanction) is not excluded due to the statute of limitation, amnesty or pardon;
  • the request for the provision of mutual legal assistance does not refer to a political criminal offence or an offence connected with a political criminal offence;

With respect to cross-border assistance, Serbia is part of the intergovernmental International Criminal Police Organization (Interpol) and has also concluded co-operation agreements with the European Union Agency for Law Enforcement Co-operation (Europol) and the European Union Agency for Criminal Justice Co-operation (Eurojust).

For white-collar offences, prosecution begins by filing an indictment proposal by the public prosecutor (for offences punishable by a fine or imprisonment of up to eight years) or indictments (for offences for which can be sentenced to imprisonment for more than eight years).

Besides the formal requirements regarding the indictment proposal and the indictment as acts, the CPC also stipulates that the public prosecutor is obliged to undertake criminal prosecution when there are grounds for suspicion that a criminal offence has been committed or that a certain person has committed an offence prosecuted ex officio.

Exceptionally, and under the conditions provided by CPC, the public prosecutor may decide to postpone or not to undertake criminal prosecution. The public prosecutor is also entitled to drop the charges.

Postponement of Criminal Prosecution

The CPC also stipulates that the public prosecutor, until the indictment is filed, may postpone the prosecution for criminal offences punishable by a fine or imprisonment for up to five years, if the suspect accepts one or more of the following obligations:

  • to eliminate the harmful consequence caused by the commission of a criminal offence or to indemnify the damage caused;
  • to pay into a particular public account a certain amount of money used for humanitarian or other public purposes;
  • to perform certain community service or humanitarian work, etc.

In such a case, the public prosecutor will determine the deadline under which the suspect must perform the undertaken obligations, which cannot be longer than one year, and if the suspect performs the undertaken obligation, the public prosecutor will dismiss the criminal complaint by a decree.

Criminal Plea Agreement

The CPC stipulates that the public prosecutor and the offender, who in this case must have a defence attorney, may conclude a plea agreement in writing until the end of the main trial, which must contain:

  • a description of the criminal offence that is the subject of the indictment;
  • the confession of the accused that he or she has committed a criminal offence;
  • an agreement on the type, measure or scope of punishment or other criminal sanction;
  • an agreement on the costs of the criminal procedure, and on confiscation of the pecuniary benefits from the crime and the restitution claim, if one has been submitted;
  • a statement on the parties’ and defence counsel’s waiver of the right to appeal against a decision with which the court has accepted the agreement in its entirety – it may also contain a statement of the public prosecutor on desisting from criminal prosecution for criminal offences not covered by the plea agreement.

The plea agreement must be confirmed by a court’s decision.       

The CC incriminates several criminal offences against the economy and, among others, envisages:

  • criminal offences of fraud in conducting business activity (Article 223);
  • fraud in insurance (Article 223a);
  • embezzlement in conducting business activity (Article 224);
  • abuse of trust in conducting business activity (Article 224a);
  • abuse of the position of a responsible person (Article 227); and
  • abuse concerning public procurement (Article 228).

The most general criminal offence from this chapter of the CC is the offence of abusing the position of a responsible person (Article 227); this exists only if the actions of the offender did not achieve the characteristics of another criminal offence and is punished by imprisonment for three months to three years. Serious forms of this criminal offence are also envisaged, whereby graver prison sentences may be imposed, and they exist if the amount of unlawful material gain obtained by committing the offence exceeds certain amounts provided by law.

For the criminal offence of fraud in conducting business activity under Article 223 of the CC, a prison sentence of six months to five years and a fine is envisaged; for this criminal offence, more severe forms are envisaged, depending on the amount of obtained unlawful material gain, and are also sanctioned with graver punishments.

Article 224 of the CC envisages the criminal offence of embezzlement in the conduct of business activity whereby imprisonment is threatened for a term between one and eight years. This criminal offence, like the previous one, has its more severe forms whereby more severe prison sentences apply.

Another typical criminal offence is the abuse of trust in conducting business activities (Article 224a CC), which prescribes imprisonment for up to three years. Serious forms are also envisaged thereby, depending on the amount of obtained unlawful material gain, for which more severe prison sentences apply.

The Companies Law (CL) also provides for several criminal offences, namely:

  • giving a statement of false content (Article 581);
  • concluding a legal transaction or taking action in case of personal interest (Article 582);
  • violation of the duty to avoid conflicts of interest (Article 583); and
  • violation of representative's duty to act within the limits of the authorisation to represent (Article 584).

The CC distinguishes bribery between persons who give or accept a bribe within the business activity and those who do so in their capacity as officials. The liability of the offender and the incrimination itself is related to his or her capacity and whether it is a matter of giving or accepting a bribe. For the existence of any of these offences, it is not important whether it is a domestic or foreign offender. Hence, it is only important whether in this particular case the Serbian criminal substantive law can be applied under the conditions specified in 1.3 Extraterritorial Reach.

For the criminal offence of accepting a bribe in conducting of business activity (Article 230 CC), the offender shall be punished by imprisonment for a term between one and eight years.

For the criminal offence of giving a bribe in conducting of business activity (Article 231 CC), the offender shall be punished by imprisonment for three months to three years. However, a person gave a gift or provided another benefit at the request of a person and has reported the offence before having learnt that it was uncovered may be remitted from punishment.

An official, a foreign official or a responsible person in an institution or other entity that does not conduct business activity may be held liable for the criminal offence of accepting a bribe (Article 367 CC) which, depending on the various forms of committing acts provided by law, is punishable with imprisonment for two to 12 years or imprisonment for a term between two and eight years or imprisonment for a term of three months to three years.

Finally, for the criminal offence of bribery (Article 368 CC), the offender, if a domestic or foreign official or responsible person in the institution or other entity who does not conduct business activity, depending on the committed act by the offender, shall be punished by imprisonment for six months to five years, or imprisonment for a term not exceeding three years. If the offender reports the offence before becoming aware that it has been detected, he or she may be remitted from punishment.

In all mentioned cases, the CC provides for the mandatory confiscation of gifts or material benefits acquired.

The Anticorruption Law (AL) established an Anticorruption Agency, whose primary competence is monitoring of property and any conflict of interest by public officials; the AL is focused only on public officials.

Regarding the private sector, there is no obligation to render a compliance programme in this respect. Nevertheless, in case any person commits bribery, he or she will be criminally persecuted for one of the criminal offences of bribery envisaged by the CC, as explained in detail under 3.2 Bribery, Influence Peddling and Related Offences.

The Law on Capital Markets (LCM) prescribes the following criminal offences:

  • prohibition from engaging in market manipulation, for which a prison sentence of six months to five years and a fine is envisaged – a more severe prison sentences of three years to eight years may apply if the acts have caused a significant disruption on the regulated market or multilateral trading facility;
  • the use, disclosure and recommendation of inside information, for which a prison sentence up to one year or a fine is envisaged – for more severe forms (depending on the amount of obtained material gain), greater sanctions may apply; and
  • unauthorised provision of investment services, for which a fine or imprisonment up to one year is prescribed – a more serious form is also envisaged thereby, depending on the amount of obtained material gain, for which longer prison sentences and harsher fines may apply.

Numerous different commercial offences and misdemeanours are also prescribed in the LCM.

The Law on Banks (LB) prescribes that whoever engages in accepting deposits without an operating licence issued by the National Bank of Serbia (NBS), or engages in granting of loans and issuing of payment cards without an operating licence issued by the NBS and is not authorised to do so by law, shall be punished for this criminal offence by a prison sentence of three months to five years. More serious punishment is envisaged if the amount of material gain obtained by committing these offences exceeds certain amounts provided by the LB. Also, using the word “bank” in a business name without authorisation represents a criminal offence.

Finally, the LB envisages various misdemeanours.

The CC provides for two tax offences.

The first is the general offence of tax evasion (Article 225 CC), stipulating that the offender shall be punished by imprisonment for a term between one and five years and a fine – if, with intent, he or she or another person fully or partially avoids payment of taxes in a particular manner prescribed by the law – in the amount exceeding RSD1 million. Graver forms of this criminal offence are also envisaged by the law, whereby a tax evasion for higher amounts is punishable by more serious prison sentences.

For tax evasion and other prescribed duties or liabilities when the amounts evaded are lower than the above, the relevant tax laws provide penalties for misdemeanours or commercial offences.

The second criminal offence is non-payment of withholding tax (Article 226 CC) and it is a special type of tax evasion that refers to those taxes, contributions for mandatory social security and other prescribed duties that are paid as withholding tax. The offender of this criminal offence may only be the entrepreneur or the responsible person in the legal entity.

The Law on Tax Procedure and Tax Administration (LTPTA) provides for a number of tax offences. Specifically: tax fraud related to VAT (Article 173a), which criminal offence is a special type of tax evasion that refers only to VAT; endangering the collection of taxes and tax control (Article 175); illicit trade in excise products (Article 176); and illicit storage of goods (Article 176a).

The LTPTA and other relevant laws and by-laws that closely regulate the liabilities to pay specific types of taxes and other duties provide in detail the obligations for legal entities and entrepreneurs regarding their payment, whereby failure to comply with such obligations is sanctioned by various misdemeanours or commercial offences.

Regarding the Law on Accounting (LA), legal entities and entrepreneurs are obliged to keep proper accounting documents, business books and financial reports and to determine by a general act the responsible persons and business premises for their storage, as well as the manner of storage. Financial reports, audit reports and statistical reports are kept for 20 years.

Legal entities/entrepreneurs who do not keep accounting documents, business books, financial reports, annual business report and audit reports within the stipulated deadlines shall be fined for a commercial offence or misdemeanour.

The CC stipulates only one criminal competition law offence in relation to execution of restrictive agreements, prescribing that whoever in a business entity concludes a restrictive agreement that is not exempt from the ban within the meaning of the law regulating protection of competition, whereby the prices are determined, production or sales is restricted (ie, the market is divided) shall be punished with imprisonment of six months to five years and fined. 

According to the Law on Protection of Competition (LPC) an undertaking that abuses a dominant position in the relevant market, concludes or implements a restrictive agreement, fails to perform or implement measures to eliminate competition infringement or measure of deconcentrating, or conducts a concentration opposed to the obligation of interruption or for which the approval for implementation of concentration is not issued, shall be obliged to pay a monetary sum in the amount up to 10% of the total annual revenue generated on the territory of Serbia. The participant of a restrictive agreement that is the first to report on the existence of agreement may be relieved from the commitment to pay a monetary sum from the measure of protection of competition.

Serbia does not have a specific consumer criminal law and the consumer protection is mainly regulated in the Law on Consumer Protection (LCP). However, in connection with consumer protection the CC stipulates the criminal offence of production and putting in circulation of harmful products, which provides that the offender shall be punished by imprisonment of up to three years and a fine.

On the other hand, the LCP envisages various misdemeanours with prescribed fines for legal entities such as: not issuing an invoice to the consumer, misleading the consumer, performing unfair business practices, etc. Besides, in prescribed cases, with a misdemeanour penalty legal entities may be subject to a protective measure of prohibition to perform certain activities for a period of six months to a year, as well as a protective measure of public announcement of the verdict; further, the responsible person in the legal entity may be subject to a protective measure of prohibition to perform certain services for a period of three months to one year, or an entrepreneur may be subject to a protective measure prohibiting the performance of certain activities for a period of six months to a year.       

The CC envisages cybercrimes, which encompasses, among others, the following:

  • damaging computer data and programs (Article 298), which provides that the offender shall be punished by fine or imprisonment up to one year (more severe punishment is envisaged in case damage exceeds certain amounts);
  • computer sabotage (Article 299), which provides that the offender shall be punished by imprisonment of six months to five years;
  • creating and introducing computer viruses (Article 300), which provides that the offender shall be punished by fine or imprisonment up to two years;
  • computer fraud (Article 301), which provides that the offender shall be punished by fine or imprisonment up to three years – more severe punishment is envisaged in case damage exceeds certain amounts; and
  • unauthorised use of computer or computer network (Article 304), which provides that the offender shall be punished by fine or imprisonment up to three months.

In addition to the above-listed criminal offences, CC incriminates unauthorised revealing of a company secret by establishing the criminal offence of disclosing a business secret (Article 240), which provides that the offender shall be punished by imprisonment of six months to five years. If this criminal offence is committed for gain or in respect of particularly confidential information, the offender shall be punished by imprisonment of two to ten years and a fine. The CC defines "business secret" as information and documents declared by law, other regulation or decision of the competent authority issued pursuant to the law as a business secret whose disclosure would cause or could cause harmful consequences for the enterprise or other business entity.

In relation to the protection of business secret, the law on protection of business secrets envisages as commercial offence (Article 21) unlawful obtaining, using or disclosing of a business secret.

Financial Offences

In Serbia, financial offences are prescribed in numerous different laws. The main law is the CC which prescribes, among others, the following criminal offences:

  • fraud in conducting of business activity (Article 223);
  • fraud in insurance (Article 223a);
  • embezzlement in business activity (Article 224);
  • accepting a bribe in conducting of business activity (Article 230);
  • giving a bribe in conducting of business activity (Article 231);
  • counterfeiting money (Article 241);
  • forging securities (Article 242);
  • money laundering (Article 245).

In addition to the CC, the Law on Foreign Exchange Operations prescribes two types of offences – criminal offences and numerous misdemeanours. The said law envisages as criminal offences buying or selling foreign currency to natural persons without due authorisation issued by the NBS, and payment to or collection of payment from non-residents in the amount over EUR100,000. Numerous different financial misdemeanours are also prescribed in the Law on Payment Services.

Trade Offences

The CC is the main law prescribing trade criminal offences such as:

  • execution of a restrictive agreement (Article 229);
  • unauthorised production (Article 234);
  • unauthorised trade (Article 235);
  • unauthorised usage of another's business name and other special marks of goods or services (Article 238);
  • production and putting in circulation of harmful products (Article 256).

On the other hand, the Trade Law envisages misdemeanours, such as: selling goods without declaration, selling goods without published price, failure to keep mandatory records on trade, etc.

Custom Offences

As per criminal offences relating to custom, it is noteworthy that only one criminal offence is envisaged in this regard – smuggling (Article 236 of the CC). However, the Custom Law provides for various misdemeanours.

Concealment as a criminal offence in Serbia is represented through two different criminal offences: (i) preventing control (Article 237 CC), which provides that the offender shall be punished by imprisonment of up to one year, and (ii) preventing and obstructing evidence (Article 336 CC) that relates to any obstruction of evidence in the procedure before the court or competent state body.

Typical of concealment predicate offences is tax evasion (Article 225 CC), whereby an offender – in order to avoid payment of taxes – gives false information on legal income, objects and other facts relevant to the determination of tax.

The Serbian CC recognises as forms of criminal conspiracy: (i) aiding, in which an accomplice helps an offender to commit a criminal offence, and (ii) incitement, in which an accomplice incites an offender (ie, encourages a criminal offence to be committed).

Legal definitions of aiding and incitement are of a general nature and can be applied on all criminal offences. Corporate criminal offences are no exception, and for the existence of aiding or incitement in those criminal offences, there is no need for additional conditions to be fulfilled.

Regarding punishment of an accomplice, an inciter shall be punished with the prescribed punishment for the incited criminal offence. An abettor shall be also punished with the prescribed punishment for the criminal offence for which he or she aided, but with the possibility of penalty mitigation.

The CC envisages money laundering as converting, transferring, obtaining, keeping or using property while aware that such property originated from a criminal offence, with intent to conceal or misrepresent the unlawful origin of the property, or concealing and misrepresenting facts on the property while aware that such property originates from a criminal offence shall be punished by imprisonment of six months to five years and a fine; more serious punishment is prescribed if certain thresholds of the laundered money are exceeded.

The law on prevention of money laundering and financing of terrorism obliges, among others, banks, exchange offices and providers of money transaction services to undertake necessary checking (eg, verifying the identity of the client, verifying the legal basis for a transaction) while transferring money. The NBS has rendered several by-laws which in detail prescribe the procedure and steps on how to fulfil obligations from the said law.

The Administration for the Prevention of Money Laundering is established in Serbia with the primary goal of conducting anti-money laundering activities, conducting necessary trainings and examinations in this area, and unifying national legislation with the international standards.

The compliance of legal entities with laws and other regulations certainly minimises the possibility of exposure to punishment, especially for misdemeanours and commercial offences.

As for the punishment concerning a criminal offence, given it is based on the personal guilt of the offender, and the responsibility of legal entities for criminal offences (based on the guilt of the responsible person therein and requiring the intention of the responsible person to obtain benefit for a legal entity), if the elements of a specific criminal offence are met, the compliance of the legal entity with laws and other regulations does not affect the existence of the criminal offence, nor the punishment of the offender or legal entity if he or she is also its responsible person.

In Serbia, in respect to the criminal law there are no exceptions or de minimis exceptions for white-collar criminal offences nor for any other sectors. Consequently, white-collar criminal offences are subject to the general provisions of the CC, as for all the other criminal offences.

Provisions on mitigation of punishment, remitting from penalties and provisions on mitigating circumstances provided under the CC, which apply to all other criminal offences, are applicable to white-collar criminal offences (as well as for commercial offences which are accordingly regulated by the CC in this respect).

The court shall determine a punishment for a criminal offender within the limits set forth by law for such criminal offence, regarding the purpose of punishment and taking into account all mitigating and aggravating circumstances which the court determines as such.

The court may determine the punishment below the prescribed minimum or a milder type of punishment when the law for a particular offence provides that the sentence may be reduced or that the offender may be remitted from punishment and the court does not remit him or her from it. This also applies, if there are particular mitigating circumstances indicating that the purpose of punishment can be achieved with a reduced sentence, although it provides the limits to which the sentence can be reduced, if mitigation is possible at all (which depends on whether the offender is a returnee, whether he or she committed the criminal offence at the time of the examination determined under previously imposed suspended sentence, etc) and depending on the prescribed range of punishment thereto.

The Misdemeanour Law provides very similar mechanisms for mitigating or remitting misdemeanour sanctions.

The law on whistle-blower protection prescribes three different kinds of whistle-blowing:

  • internal – a whistle-blower who warns his or her employer of illicit activity;
  • external – a whistle-blower who warns a competent official of illicit activity; and
  • public – a whistle-blower who warns the public of illicit activity.

The said law prescribes obligation of the employers with more than ten employees to render internal programmes regulating procedure and protection of whistle-blowers. It is strictly prohibited to punish whistle-blowers by any means (termination of the employment agreement, decreasing salary, transferring to lower position, etc). In case a whistle-blower is punished, he or she may submit a lawsuit to protect his or her rights as well as for damage compensation. Such a court procedure is considered urgent.

In addition, the said law envisages various misdemeanours in case the employer does not comply with the obligations deriving from the law.

The CPC explicitly stipulates that everyone is presumed innocent until proven guilty of a criminal offence by a final court decision. Hence, no one can be prosecuted for a criminal offence for which he or she has been acquitted or convicted by the final court decision or for which the indictment has been dismissed or the procedure is suspended by a final decision, and the final court decision cannot be changed to the detriment of the offender.

The court may base the verdict only on the facts of which it is convinced, and if there is doubt regarding the facts on which the criminal procedure depends, the existence of a criminal offence or the application of another provision of criminal law, the court must resolve this doubt in favour of the offender.

The burden of proving related to indictment/accusation in criminal procedure lies with the public prosecutor. The same applies to the procedure for commercial offences and the misdemeanour procedure.

The court shall present evidence at the request of the parties, and it may order such evidence to be presented if it finds that the presented evidence is contradictory, unclear and necessary for a comprehensive discussion of the evidence. In court practice, the prevailing stance is that the court will act in this manner only when it comes to evidence going in favour of the offender, and not to his or her detriment.

There are no specific rules in Serbia regarding the assessment of penalties in white-collar crime and therefore the usual principles apply.

The court will impose a sentence on the offender within the limits prescribed by law for such criminal offence with regard to the purpose of imposing criminal sanctions (suppression of acts that violate or endanger values protected by criminal law) as well as the purpose of punishment (preventing the offender from committing criminal offences and influencing to not commit criminal offences in the future, deterring others from committing criminal offences, expressing social condemnation for a criminal offence, enhancing moral strength and reinforcing the obligation to respect the law and achieving justice and proportionality between the committed offence and the severity of the criminal sanction) and taking into account all circumstances for a lower or severe sentence (mitigating and aggravating circumstances). Also, in particular, the degree of guilt, motives for committing the offence, the severity of the threat or violation of the protected good, the circumstances in which the offence was committed, the offender's previous life, his or her personal circumstances, his or her attitude after the offence has been committed and especially his or her attitude towards the victim of the criminal offence, as well as all other circumstances related to the offender's personality and, in determining a fine, the financial situation of the offender.

JPM Jankovic Popovic Mitic

Vladimira Popovića 8A
DELTA HOUSE, V Floor
11070 Belgrade
Serbia

+ 381 11 207 6850

+ 381 11 207 6850

office@jpm.rs www.jpm.rs
Author Business Card

Trends and Developments


Author



JPM Janković Popović Mitić was established in 1991, and is the most experienced full-service Serbian law firm. Throughout the last three decades JPM has been assisting international and local clients in their commercial endeavours in Serbian and SEE regional markets. The firm's 30-plus-strong team of professionals covers all legal areas in every major industrial and corporate sector, ranging from energy, banking and transport to renewable energy, IT and life sciences. JPM's criminal law and criminal compliance legal team has a multidisciplinary background and the agility to counsel and provide services of defence and representation to affected companies and individuals, throughout criminal and other penal proceedings, in response to the fact-finding and preliminary investigation, as well as during criminal and other penal cases in all their later stages.

Introduction

Reacting similarly to many other countries, Serbia proclaimed a State of Emergency due to the COVID-19 pandemic on its territory by enacting the Decision on Proclamation of the State of Emergency. This decision was enacted on 15 March 2020 and became effective on the same day. Further, on 19 March 2020 the authorities enacted the Order on Proclamation of the Epidemic of the Disease COVID-19, which also become effective on the day of the enactment.

In relation to the State of Emergency and the epidemic/pandemic, the authorities of Serbia have also rendered several relevant regulations, decisions, resolutions and orders, affecting various spheres of economic and social life in the country. On 15 March 2020, the government enacted and the President countersigned the Regulation on the Measures during the State of Emergency, which become immediately effective and which inter alia has prescribed the ban on take-offs and landings on all airports in Serbia to all aircrafts conducting international transport of passengers (save for certain notable exceptions) for the purpose of preventing the import and spread of COVID-19.

This regulation was accompanied by enactment of numerous by-laws, most important of which were related to limiting the retail price of protective equipment, restrictions and prohibition of movement of persons and, finally, restrictions, enacted on the basis of the Law on Protection of Population from Infectious Diseases, such as quarantine measures. 

While the violations of obligations and restrictions contained in the aforementioned regulation are mostly triggering misdemeanour liability of legal entities, entrepreneurs and natural persons with pecuniary sanctions (fines), at the same time they may constitute the acts of certain criminal offences, from the Criminal Code of Serbia (CC).

That being said, in this article we provide an overview of the criminal offences, which during the pandemic have gained in importance and were the subject of the enhanced attention of the Serbian prosecution authorities.

We shall, also, briefly address the recent criminal law developments in Serbia in the context of white-collar crime prosecution.

Pandemic-Related Criminal Offences

The outbreak of the pandemic and the consequent enactment of numerous health regulations brought about a higher frequency of criminal offences such as Transmitting of Contagious Disease (Article 249 of CC) and Failure to Act Pursuant to Health Regulations During the Pandemic (Article 248 of CC). The former may be committed by whoever fails to act pursuant to the regulations, decisions or orders for suppression or prevention of a contagious disease and thereby transmits such a contagious disease. The latter shall be deemed to have been committed only by whoever, during an epidemic/pandemic of a dangerous contagious disease, fails to act pursuant to regulations, decisions or orders setting forth measures for suppression or prevention thereof.

Behaviour of individuals who, in most cases, constituted the respective criminal offences was related to violations of quarantine measures. Public media have also reported about certain individuals who were prosecuted for hiding symptoms of the disease and continuing to engage in regular activities, thus endangering significant number of people and public health in general.

In relation to the State of Emergency and the pandemic there was a higher occurrence of indictments for the criminal offence of Causing Panic and Disorder (Article 343 of CC), which in its basic form may be committed by whoever, by disclosing or disseminating untrue information or allegations, causes panic or serious disruption of public peace and order, or frustrates or significantly impedes enforcing of decisions of government authorities or organisations exercising administrative authority. One example of an individual being officially indicted for this criminal act was reported in the public media. The case concerned an individual's dissemination of false information that gas stations would cease selling petrol to customers; subsequently, despite a prompt official denial by the authorities, this caused a short-term collapse of the gas station industry in Serbia.

The public prosecutors were also instructed to pay more attention to another criminal offence that can particularly be observed in the context of white-collar crime – ie, illegal trade (Article 235 of CC). From the standpoint of regulations that entered into force during the pandemic, the most relevant form of the alternatively prescribed forms of the subject criminal offence is the one which is committed by whoever unlawfully sells, buys or barters goods or objects, the movement of which is prohibited or restricted. It concerns the goods/objects that are subject to special trading regimes, set out by other, non-criminal, regulation, which is why this criminal offence is of blanket character.

As in many other countries, the outbreak of COVID-19 in Serbia was followed by a fast and significant increase in the prices of certain goods, in particular the means of protection against the disease (masks, gloves, etc). The authorities’ reaction was twofold, limiting the retail prices of protective equipment on one hand and restricting the movement of these goods in such a way as to ensure timely and equal market supply on the other. Under such circumstances, given the overall drastic increase of demand for protective equipment, the opportunities for potential perpetrators to conduct acts of illegal trading (within the meaning of CC, as presented above) was created. 

Environmental Crime

Pioneering attempts to protect the environment through criminal prosecution mark the onset of a new trend in Serbian criminal law practice.

The increased environmental pollution worldwide now necessitates tightening and expansion of incriminations to encompass conducts and behaviours that cause consequences in the form of damage to the environment.

Whilst the Serbian CC dedicates a whole chapter to environmental protection, containing as many as 18 criminal offences, the jurisprudence that would address the most typical criminal offences against the protection of the environment does not yet exist.   

The basic and general criminal act against the environment is the criminal offence of environmental pollution, set forth by the Article 260 of CC, which in its basic form is committed by whoever violates the regulations on protection, preservation and improvement of the environment, pollutes air, water or soil to larger extent or over a wider area, whereby the legislator is also explicitly sanctioning the negligible perpetration.

The legislator’s reference to “regulations” also makes this criminal act a blanket criminal offence, whereby conducts contrary to the relevant laws as well as by-laws are to be considered. 

As a blanket criminal offence, this criminal offence may be committed only by violation of the provision of another law or other general legal act at by-law level, and such criminal offences do not exist if the perpetrator by its actions does not breach any provision of the other law or by-law, prescribing or prohibiting certain behaviour. The basic laws whose provisions, if violated, could account as committing of the respective offence, include primarily:

  • the Law on Environment Protection;
  • the Law on Soil Protection;
  • the Law on Air Protection;
  • the Law on Waters; and
  • the Law on Waste Management.

In case of other regulations, these would mainly be general acts of administrative-legal nature, such as government regulations or rulebooks, provided that in the concrete case the general acts relate to environmental protection, preservation, or improvement.

Definitions of the concept of the environment and its pollution are provided, in the first place, in the Law on Environment Protection as a systemic law, defining the environment as a set of natural and created values, whose complex mutual relations make up the environment (ie, the space and conditions for living), envisaging that natural resources – air, water, soil, forests, geological resources, flora and fauna – are the values that constitute the environment and are therefore the objects of criminal law protection.

With this in mind, it seems that when it comes to environmental protection, the legislative framework in Serbia is adequate. However, and as already underlined, the crucial problem is the lack of jurisprudence in this field of criminal law. This is why criminal prosecution of environmental crime in Serbia comes down to experimenting in vivo, resulting occasionally in severe violations of the basic human rights of the accused that are guaranteed by the Constitution, the laws and international treaties – for example, processing individuals for acts which, per se, do not contain elements of ecological or any other criminal offences, reversal of the burden of proof, etc.

Legislation Changes in Relation to Tax Fraud

The authorities are making increased efforts to detect and prosecute acts of tax fraud (criminal offences as well as misdemeanours). In this context we can also observe the latest amendments of the Law on Tax Procedure and Tax Administration (henceforth, "Law on Tax Procedure"), which enacted a special form of tax fraud-related criminal offence – namely, tax fraud in relation to VAT (henceforth, "VAT tax fraud").

The basic form of the respective criminal act may be committed by whosever, with the intent that they themself or any other person(s) in the last 12 months realises the right to the ungrounded refund of VAT or tax credit for VAT, files one or more tax returns for the VAT of false content, where the amount for refund or tax credit exceeds RSD1 million. Alternatively, a special form of VAT tax fraud may be committed by (i) whosever, with the intent that they themself or any other person(s) in the last 12 months fully or partially avoids the payment of VAT, does not file one or more tax returns for VAT, or files one or more tax returns for VAT of false content, or (ii) whosever, in the same intent in other manner, avoids payment of VAT, while the tax amount which payment is avoided exceeds RSD1 million.

The following question may be raised: how to differentiate the special form of VAT tax fraud from the criminal offence of tax fraud detailed in Article 225 of the CC (henceforth, "tax fraud") and what is the ratio legis behind such incrimination?

Considering the elements of tax fraud, as prescribed by the CC, it can be concluded that perpetrating the act(s) of VAT tax fraud, as prescribed by the Law on Tax Procedure, will always represent a criminal offence of tax fraud. In other words, the issue here is related to the reasons which led the proponent to propose and the legislator to enact the special form of VAT tax fraud, given that all the elements of this criminal offence are already “contained” in the criminal offence of tax fraud – ie, what would be the legal rationale for introduction in the legal system of incrimination that already exists? 

In our opinion, the reason for such incrimination seems to be the 12-month period which is included in the subjective element of the intent to commit the special form of VAT tax fraud. In this respect we are dealing with an attempt of the authorities to extend incrimination to acts which, until now – having in mind the due dates for payments of VAT determined by law, as well as constituted court practice in this respect – do not allow criminal prosecution and sanctioning of individuals who in different tax periods (monthly or quarterly) avoid payment of VAT in the amount not exceeding RSD1 million, and which amounts could not be calculated in order to surpass the objective condition of incrimination for the existence of tax fraud (ie, RSD1 million). Nevertheless, it is not clear why VAT is, at least in the legislator’s perception, so special among the different kinds of taxes which are in force in Serbia, such that incrimination was extended merely to this particular tax (VAT).

Law on Determining the Origin of Property and the Special Tax

The Law on Determining the Origin of Property and the Special Tax (henceforth, "Law on Special Tax") attracts a lot of public attention for two reasons. Whilst the public attention is attracted in light of the fact that enactment of this law was occasionally announced by various political parties in power over the past 20 years, the attention of the professional public (eg, lawyers) is attracted due to the solutions it envisages.

The Law on Special Tax was adopted and entered into force in the beginning of 2020, but its application was postponed for one year. During this period, the Law on Special Tax was subject to criticism by the professional public and the Ministry of Finance tried to remedy its deficiency through amendments, which have subsequently been adopted by the National Assembly of Serbia.

The predominant reason for the criticism of this law is that it seems that the intention of its proponent was initially directed to regulating two similar and connected concepts, which nevertheless have differences. However, in the course of finalising and adopting the Law on Special Tax, the legislator has focused on only one of the said concepts, without consistently and completely excluding other concepts from the solutions envisaged thereby.

The first concept is related to establishing mechanisms of control, whether the material status of a certain natural person corresponds to the realised income of that person in the previous period, considering submitted tax returns. Therefore, the objective here is to check whether some of the income was not reported – in other words, whether tax evasion occurred. The second concept is establishing mechanism, which is to ensure that conducting of tax inspections of comparability of assets and reported income of a certain person will lead to information and evidence, required for the conducting of an eventual criminal procedure against that person, should it be established that such person realised income and acquired assets through illegal activities (ie, by committing criminal offences).

As far as the first concept is concerned, it should be noted that the Law on Tax Procedure already recognises the so-called “cross-assessment of the tax base”, and it is not clear why it was necessary to enact a special law that would regulate essentially the same issue (ie, why it was not possible to regulate the same issue by adopting eventual amendments to the Law on Tax Procedure). The only essential difference between the two laws is the special tax rate of 75% on reported income provided by the new Law on Special Tax. The answer to this question becomes even more important if we consider that the Law on Special Tax does not in detail envisage the manner of determining the value of assets, income and expenditures for private needs. Having said that, the question is when and how exactly the Law on Special tax will be applied in practice.

As for the second concept, the Law on Special Tax was, especially after enactment of the amendments thereto, left with merely auxiliary provisions, the meaning of which may only be understood under assumption that the second concept has initially co-existed with the first as rationale for adopting the law. In other words, the mentioned auxiliary provisions seem to be redundant and bearing in mind the solutions they envisage, they raise confusion by their interpretation and application.

As an example, we would point out the odd, to say the least, Article 19 of the Law on Special Tax, under which the criminal courts are ordered to include the amount of special tax, paid on the basis of this law, in the amount of material gain acquired by criminal offence, which material gain is determined by a final and binding verdict, rendered in the criminal proceedings.

In view of the fact that a final and binding verdict can only be revised in the procedure of extraordinary legal remedies, in a situation when these remedies are allowed and in a precisely determined procedure only, in our opinion, this provision will remain inapplicable without an appropriate amendment of the procedural laws.

However, it remains to be seen whether and in what manner this law will be applied in practice, which circle of persons will eventually be covered by it and what scope it will have in practice.

JPM Janković Popović Mitić

Vladimira Popovića 8A
DELTA HOUSE, V Floor
11070 Belgrade
Serbia

+381 11 207 6850

+381 11 207 6850

office@jpm.rs www.jpm.rs
Author Business Card

Law and Practice

Author



JPM Janković Popović Mitić was established in 1991, and is the most experienced full-service Serbian law firm. Throughout the last three decades JPM has been assisting international and local clients in their commercial endeavours in Serbian and SEE regional markets. The firm's 30-plus-strong team of professionals covers all legal areas in every major industrial and corporate sector, ranging from energy, banking and transport to renewable energy, IT and life sciences. JPM's criminal law and criminal compliance legal team has a multidisciplinary background and the agility to counsel and provide services of defence and representation to affected companies and individuals, throughout criminal and other penal proceedings, in response to the fact-finding and preliminary investigation, as well as during criminal and other penal cases in all their later stages.

Trends and Development

Author



JPM Janković Popović Mitić was established in 1991, and is the most experienced full-service Serbian law firm. Throughout the last three decades JPM has been assisting international and local clients in their commercial endeavours in Serbian and SEE regional markets. The firm's 30-plus-strong team of professionals covers all legal areas in every major industrial and corporate sector, ranging from energy, banking and transport to renewable energy, IT and life sciences. JPM's criminal law and criminal compliance legal team has a multidisciplinary background and the agility to counsel and provide services of defence and representation to affected companies and individuals, throughout criminal and other penal proceedings, in response to the fact-finding and preliminary investigation, as well as during criminal and other penal cases in all their later stages.

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