Opening a taxi business in Serbia can be an interesting business opportunity, but the activity cannot be reduced simply to registering an entrepreneur or company and purchasing a vehicle. Taxi transportation is a specially regulated activity, which means that several requirements concerning the carrier, drivers, vehicles and the manner in which transportation is provided must be examined before starting operations. LLD Attorneys provides legal support to entrepreneurs and companies planning to enter the transportation sector and other regulated industries.
If you are considering opening a taxi business, one of the first issues to determine is the city or municipality where the business will operate. In addition to the Serbian Law on Road Transport of Passengers, an important part of the applicable requirements is regulated by local self-government authorities. Consequently, the specific requirements, procedures and documentation may differ depending on where you intend to provide taxi transportation services. LLD Attorneys can assist with reviewing the applicable legal requirements and preparing the documentation necessary to start the business.
The question of what is needed to open a taxi business therefore does not have exactly the same answer in every city. Before registering the business, it is necessary to examine the legal framework, the requirements for providing taxi transportation, the requirements applicable to vehicles and drivers, as well as the relevant local administrative procedures. The primary legislation is the Law on Road Transport of Passengers, while additional rules are adopted by the competent local self-government authority.
What Does Opening a Taxi Business Involve?
Taxi transportation is a specific form of public passenger transportation. Unlike many ordinary business activities where registration of the appropriate business activity may be sufficient to start operating, taxi transportation is subject to additional regulatory requirements.
First, the carrier must be properly registered for the relevant business activity and must subsequently meet the statutory requirements for providing taxi transportation. The law provides that taxi transportation is performed within the territory of the local self-government unit for which the carrier has the appropriate authorisation.
In practical terms, planning a taxi business requires consideration of several separate issues:
- registration of an entrepreneur or company;
- fulfilment of the requirements for taxi transportation;
- vehicle requirements;
- requirements applicable to taxi drivers;
- local permits and administrative procedures;
- tax and accounting obligations.
Additional information on legislation and documents relating to passenger transportation is available through the website of the Ministry of Construction, Transport and Infrastructure.
Requirements for Opening a Taxi Business
The requirements for opening a taxi business depend on the relevant local self-government authority, but they can generally be divided into several categories.
The first step is choosing the appropriate legal form. A taxi operator may conduct business as an entrepreneur, while depending on the intended business model, establishing a limited liability company may also be considered. The choice between an entrepreneur and a limited liability company will depend, among other things, on the number of vehicles, the organisation of the business, the number of drivers and the expected volume of operations.
The vehicle must then be brought into compliance with the applicable requirements. A vehicle used for taxi transportation must meet the technical and other conditions prescribed by Serbian legislation and local regulations. The law establishes specific requirements for passenger vehicles used for taxi transportation.
Taxi vehicles must also use the prescribed taximeter and other required markings and equipment. The applicable regulations also establish requirements concerning the issuance of receipts to passengers and the collection of fares.
Is a Diploma Required?
One of the common questions asked by prospective taxi business owners is: Is a diploma required to open a taxi business?
The answer depends on whether the question concerns the owner of the business, the person managing the business or the driver, as well as on the specific requirements applicable in the relevant city or municipality.
Particular attention should be paid to the requirements applicable to taxi drivers. In addition to holding an appropriate driving licence, local regulations may prescribe additional requirements, such as a certain amount of driving experience, knowledge of the city or other professional qualifications.
Therefore, simply owning a vehicle and holding a driving licence does not necessarily mean that a person can immediately start providing taxi services.
How to Obtain a Taxi Licence?
The expression “taxi licence” is commonly used, although from a legal perspective it is important to distinguish between the different approvals, permits and documents required for conducting the activity.
For taxi transportation, the procedure does not end with registering a company or entrepreneur with the Serbian Business Registers Agency (APR). Relevant procedures must also be completed before the competent local authority in accordance with the applicable local regulations.
Under Serbian law, a taxi carrier may provide taxi transportation only within the territory of the local self-government unit for which a valid authorisation to perform taxi activities has been issued.
Before submitting an application, it is therefore advisable to verify:
- whether the carrier fulfils the applicable requirements;
- whether the vehicle fulfils the prescribed conditions;
- whether the driver fulfils the applicable requirements;
- which documents must be submitted;
- which administrative fees apply;
- which authority is competent to decide on the application;
- whether any additional local requirements apply.
Taxi Business vs. Scheduled/Line Passenger Transport
The phrase “opening a taxi business for line transportation” can sometimes lead to confusion. Taxi transportation and scheduled passenger transportation are not the same type of transport.
Taxi transportation is generally provided using passenger vehicles and is organised according to the specific characteristics of taxi services. Scheduled or line passenger transport, on the other hand, operates along predetermined routes, according to an established timetable and under the conditions prescribed for that type of transportation.
Serbian legislation expressly provides that a passenger vehicle used for taxi transportation cannot simultaneously be used for scheduled/line passenger transportation.
Therefore, if your business idea involves transporting passengers between predetermined locations according to a fixed route and timetable, it is necessary to determine whether the intended activity actually falls under another category of passenger transportation rather than taxi transportation.
How Much Do I Need to Invest?
The cost of starting a taxi business depends primarily on whether the entrepreneur already owns a suitable vehicle and how many vehicles the business intends to operate.
The main categories of initial investment may include:
- establishment and registration of the business;
- purchase or financing of vehicles;
- technical adaptation and equipment of vehicles;
- taximeter and other required equipment;
- vehicle registration and insurance;
- administrative fees;
- costs of obtaining the necessary documents;
- accounting services;
- fuel and vehicle maintenance;
- salaries and social contributions for drivers, where applicable;
- potential office or business premises costs.
For this reason, there is no single universal answer to the question of how much opening a taxi business costs.
The initial investment may be relatively limited if the entrepreneur already owns a suitable vehicle. By contrast, a business model involving several vehicles or a larger fleet requires substantially more capital.
What Additional Investments Should I Expect?
In addition to the initial investment, a taxi business should be planned with regular operating expenses in mind.
The most significant costs will generally include vehicle maintenance, fuel, insurance, registration, driver salaries and tax obligations.
A larger taxi operation may also involve additional expenses, such as dispatching software, a taxi booking application, marketing, office rent, administrative staff and maintenance of a larger vehicle fleet.
Before starting the business, it is advisable to prepare a cost projection covering at least the first 12 months of operations.
What Are the Main Expenses?
The expenses depend significantly on the business model.
A taxi entrepreneur operating a single vehicle personally will have a very different cost structure from a company operating ten or twenty vehicles and employing several drivers.
Particular attention should be paid to:
Fixed costs – accounting, potential rent, insurance, registration, software and other recurring expenses.
Variable costs – fuel, maintenance, tyres and vehicle depreciation and wear.
Employee-related costs – salaries, taxes and social security contributions where drivers are employed.
Before making an investment decision, it is important to prepare a realistic calculation. Revenue generated from taxi rides should not be confused with the actual profit of the business.
What Percentage Goes to the Government?
There is no single percentage that applies to every taxi business.
Tax obligations depend on the legal form of the business, the applicable tax regime, the manner in which drivers are engaged, the level of revenue, VAT status and other circumstances.
The question of what percentage goes to the government should therefore be considered through several different obligations, including income or corporate profit tax, payroll taxes and social security contributions, potential VAT obligations and applicable local fees and charges.
The appropriate tax structure should be analysed together with an accountant before the business begins operating, rather than only after the company has already been established.
Taxi Business Fees and Taxes
Taxi business fees are not necessarily the same throughout Serbia. In addition to national administrative obligations, local self-government authorities may impose their own fees and charges for procedures within their jurisdiction.
For example, the City of Belgrade provides for various administrative fees relating to taxi transportation procedures, including applications and decisions concerning compliance with the applicable requirements, taxi permits for vehicles and drivers, and other relevant documents.
For this reason, the exact amount of fees should always be checked with the local authority in the city or municipality where the business is intended to operate.
How Much Can a Taxi Business Earn?
The question of how much a taxi business can earn is often one of the most important considerations for a prospective investor. However, revenue and profit are not the same thing.
Total revenue depends on factors such as the number of rides, the average fare, the number of operating hours, the city, seasonal demand and the number of vehicles.
At the same time, the revenue generated must cover fuel, maintenance, registration, insurance, salaries, taxes, social contributions, accounting and other operating expenses.
The profitability of a taxi business should therefore be assessed through a realistic business plan. The financial calculation for a single vehicle may be completely different from the calculation for a fleet of ten or more vehicles.
Conclusion
Opening a taxi business in Serbia involves considerably more than simply registering a business entity. Before starting operations, it is necessary to ensure compliance with the regulations governing taxi transportation, verify the requirements applicable to the vehicle and driver, complete the relevant procedures before the local authority and organise the tax and accounting aspects of the business.
It is particularly important to verify the requirements applicable to the specific city or municipality, since certain matters are regulated at the local level. The Ministry of Construction, Transport and Infrastructure publishes relevant legislation and information concerning passenger transportation on its website.
If you are planning to establish a taxi business, entrepreneur or company for the purpose of providing taxi transportation services, a legal assessment before making the investment can help identify the applicable requirements, necessary documentation and appropriate sequence of procedures, while also reducing the risk of unnecessary costs arising from an unsuitable business model or vehicle.
