Why is Serbia one of the most attractive jurisdictions for tokenization in Europe?
In 2021, Serbia became one of the first countries in Europe to adopt a comprehensive legal framework for digital assets — the Law on Digital Assets (Official Gazette of the Republic of Serbia, No. 153/2020). This law established the legal certainty and institutional framework that enable investors and companies to issue, trade, and utilize digital tokens under clearly defined rules.
What makes Serbia particularly interesting is the fact that, as a country that is not yet a member of the European Union, the Serbian legislature has the freedom to create regulation that is exceptionally favorable for tokenization — including the possibility of direct tokenization in Serbia of financial instruments under a lighter regime than that envisaged by the Capital Market Law. According to the latest data, the market capitalization of digital assets in Serbia stands at approximately EUR 5.5 billion, while it is estimated that between 4% and 6% of Serbian citizens own some form of digital asset.
Key Fact: Serbia is among the rare jurisdictions in Europe that allow direct tokenization of financial instruments under a lighter regulatory regime, representing a significant competitive advantage for issuers and investors.
How does the Law on Digital Assets regulate tokenization?
The Law on Digital Assets (LDA) defines digital assets as a digital record of value that can be digitally bought, sold, exchanged, or transferred, and that can serve as a means of exchange or for investment purposes. The law explicitly distinguishes between two categories of digital assets:
Virtual currencies (e.g., Bitcoin) — digital assets that are not issued or guaranteed by a central bank, do not have the status of legal tender, but are accepted by natural and legal persons as a means of exchange. Virtual currencies are supervised by the National Bank of Serbia (NBS).
Digital tokens — intangible proprietary rights that, in digital form, represent one or more other proprietary rights. This may include ownership rights over movable or immovable property, equity interests in companies, rights to financial instruments, intellectual property rights, rights to profit participation, rights to interest, or the right to demand performance of a specific obligation. Supervision is exercised by the Securities Commission.
The law also recognizes hybrid digital assets — which have characteristics of both virtual currencies and digital tokens — in which case both regulatory bodies (NBS and the Securities Commission) exercise supervision.
What can be tokenized under Serbian law?
Thanks to the broad definition of digital tokens, Serbian law enables the tokenization of virtually every type of asset and right. The most common examples in practice include:
Asset Type | Tokenization Example | Key Regulation |
Real estate | Fractional ownership of a commercial property | LDA + Law on Property Relations |
Company equity | Tokenized shares in an LLC for capital raising | LDA + Company Law |
Financial instruments | Tokenized bonds or shares (up to €3M annually) | LDA Art. 8 (exemption from Capital Market Law) |
IP rights | Tokens representing the right to license revenue | LDA + Copyright Law |
Revenue/profit rights | Revenue-sharing tokens in project financing | LDA |
Service rights | Utility tokens for platform or service access | LDA |
Serbia’s Competitive Advantage
The Law on Digital Assets is one of the few legal frameworks in Europe that permits direct tokenization of financial instruments. Where a digital token does not have the characteristics of shares and the total value of issued tokens over a 12-month period does not exceed EUR 3,000,000, only the provisions of the LDA apply — not the stricter Capital Market Law.
What does the tokenization process look like in practice?
The tokenization process in Serbia follows clearly defined steps that ensure legal certainty for issuers and protection for investors.
Step 1: Token classification
First, it is necessary to determine the legal nature of the token. Is it a utility token, a security token, or a hybrid token? The classification determines which regulatory body exercises supervision, which legal regime applies, and what obligations the issuer has toward investors. This is a critical step that requires expert legal analysis.
Step 2: White paper preparation
The white paper is the key document published during the issuance of digital assets. It contains detailed information about the issuer, the characteristics of the digital asset, the rights the token confers, risks, the planned use of raised funds, and technical aspects of the project. The law does not mandate the issuance of a white paper, but without one, it is impossible to advertise the initial offering of digital assets — making it essential in practice. The white paper is submitted to the competent authority (the Securities Commission for digital tokens) for approval to publish. To date, 10 white papers have been issued in Serbia, with a growing trend.
Step 3: Initial offering of digital assets (ICO/ITO)
After approval to publish the white paper, the issuer may proceed with the initial offering. Subscription and payment for digital assets begin no later than 30 days after approval. Upon completion of the offering, the issuer is required to publish a report on the outcome of the initial offering on its website within three business days.
Step 4: Secondary trading
Tokens can be traded on licensed digital asset trading platforms. Serbia currently has two licensed crypto exchanges. Digital asset service providers must hold authorization from the competent authority and meet requirements regarding minimum capital (ranging from EUR 20,000 to EUR 125,000 depending on the type of service), organizational structure, AML/KYC procedures, and client protection.
What is the tax treatment of tokenized assets in Serbia?
Serbia has established a predictable and, in many respects, favorable tax framework for digital assets covering both natural and legal persons.
Tax Type | Rate / Rule | Note |
Capital gains tax (individuals) | 15% | On the difference between selling and acquisition price |
Capital gains tax (legal entities) | Included in corporate income tax (15%) | May be reduced by investing in capital of a Serbian entity |
VAT on virtual currencies | Exempt | Without the right to deduct input VAT |
VAT on digital tokens | Case-by-case | Requires analysis for each specific case |
Inheritance and gift tax | 2.5% (or 1.5% for second line of succession) | Exemption for first line of succession |
Holding period exceeding 10 years | Exempt from capital gains tax | Applies to natural persons |
Favorable Tax Treatment for Reinvestment A particularly significant tax incentive: if a taxpayer invests the proceeds from the sale of digital assets into the share capital of a resident legal entity in Serbia or into the capital of an investment fund in Serbia within 90 days, they are exempt from 50% of the capital gains tax obligation. For legal entities, capital gains are excluded from the tax base when proceeds are invested in the share capital of a resident company. |
Serbia and the European Union: MiCA regulation and the future of tokenization
In June 2023, the European Union adopted the Markets in Crypto-Assets Regulation (MiCA) — a comprehensive regulation establishing uniform rules for crypto-assets across all member states. MiCA becomes fully applicable from July 2026, with transitional periods for existing operators.
It is important to understand that MiCA regulates crypto-assets not covered by existing EU financial legislation. Tokenized financial instruments — such as tokenized shares, bonds, or real estate interests that have characteristics of securities — continue to fall under the MiFID II/MiFIR regime and the Prospectus Regulation, not under MiCA. This means that in the EU, the process of tokenizing securities is significantly more complex and expensive than in Serbia.
Aspect | Serbia (LDA) | EU (MiCA + MiFID II) |
Tokenization of fin. instruments | Lighter regime under LDA up to €3M | Stricter regime under MiFID II / Prospectus Regulation |
Regulatory authority | NBS + Securities Commission | National regulators + ESMA/EBA |
CASP licensing | NBS / Commission authorization | CASP authorization with EU passport |
White paper / Prospectus | White paper (lighter format) | Detailed prospectus for securities |
AML/KYC | Law on Prevention of Money Laundering | AMLD6 + Travel Rule (TFR) |
EU passporting | No | Yes — access to the entire EU market |
For investors and companies planning tokenization, Serbia offers a number of advantages: a simpler and less expensive process for projects up to EUR 3 million, a faster path to market, and regulation purposefully designed to attract innovative projects. However, it should be noted that Serbian tokens do not benefit from EU passporting — meaning they cannot be automatically offered to investors in the EU without additional compliance with MiCA or MiFID II. As Serbia progresses in its EU accession process, alignment with MiCA is a matter of time, which will bring both advantages (access to the EU market) and challenges (stricter regulatory requirements).
Practical steps for investors considering tokenization in Serbia
- Legal classification of the token. Engage a legal team with expertise in digital asset regulation to determine whether your token falls under the virtual currency, digital token, or hybrid token regime, and whether it has characteristics of a financial instrument.
- Project structuring. Define the rights the token confers on investors, select the appropriate corporate structure (SPV, LLC, or issuance through an existing company), and prepare the technical infrastructure (blockchain platform, smart contracts).
- Regulatory documentation. Draft the white paper in accordance with LDA requirements, prepare AML/KYC procedures, establish internal controls, and prepare the application for approval to publish the white paper.
- Tax planning. Analyze the tax implications for the issuer and investors, optimize the structure in line with available tax incentives (reinvestment in capital, 10-year exemption).
- Cooperation with licensed platforms. Select a licensed crypto exchange or trading platform on which tokens will be listed after the initial offering.
- Ongoing obligations. Continuous reporting, AML compliance, investor relations management, and monitoring of regulatory developments.
IVVK Lawyers — Your Partner for Tokenization in Serbia Our team provides comprehensive legal advisory for tokenization projects — from token classification and white paper drafting to tax structuring and regulatory compliance. Contact us: office@ivvk.rs | +381 60 743 46 73 | ivvk.rs |