Goal of the fund
The goal of the fund is to create investors value based on the principle that combines dividend returns on annual basis combined with an additional value increase of the property after a predefined period (exit value). A predefined IRR (Internal Rate of Return) and /or ROI (Return on Investment) are the preset indicators which are to be agreed internally as parameters to meet.
The techniques that the AIFM will use for effective asset management
Asset management is meant to cultivate market value so ownership (Investors-owners of units) can increase its returns, whether it has to do with real estate or any other asset (which could be up to a level of 30%). An asset manager manages assets, making important investment decisions that will help the EREIM’s portfolio grow.
There are major differences between an asset manager and a property manager in real estate. The asset manager manages the overall financial health of the investment portfolio, whereas the property manager takes care of the daily tasks of managing a property, income and growth strategy. EREIM investment strategy has been defined (see document Investment strategy, which is available on request) and focusses on their asset management.
Our team’s continuous aim is to find real estate investment opportunities that offer the optimal balance between risk and return. In analyzing risk our team will research the financial health and quality of available real estate companies investment opportunities.
Investment policy
We engage in property investments across various asset classes, including office, residential, industrial, logistics, retail, land, healthcare assets, and other business opportunities.
Our five principles
Effectiveness, Efficiency, Coherence, Relevance and Added value.
Fund management and monitoring
EREIM’s asset manager performs inventory management, processing and booking of transactions, the valuation of assets and the reporting of all individual positions in the portfolio in particular.
EREIM’s internal asset manager is responsible for the implementation of EREIM’s comprehensive investment strategy so that EREIM will maintain the highest possible quality of investments. All in compliance with investment objectives/criteria and risk/essential aspects as described in the document “Investment Strategy”.
Will AIFM delegate some tasks to a third party and which tasks?
EREIM may delegate certain tasks to third-party experts depending on the type of assets, its complexity, and its location after thorough assessment and assurance that quality meet EREIM’s standards. These external experts provide valuable knowledge and expertise in various fields relevant to the specific property, ensuring that we make adequate decisions that align with our investment objectives. By leveraging the expertise of these third-party professionals, we can optimize our investment strategy and deliver better outcomes for our investors.
Tax issues regarding investing in an AIF which does not have the status of a legal entity
Taxation of natural persons as investors
Dividend taxation
Income (from dividend) earned by a natural person as the owner of an investment unit of an investment fund is taxed as income from capital (Law on personal income tax, article 61). Rate is 15% from earned income.
As dividend it is also considered the remaining net value of the assets of an AIF that does not have the status of a legal entity, which is distributed to members, in proportion to their investment units, after the dissolution of that investment fund, which is above documented purchase value of those investment units.
Taxpayer is also a non-resident for income earned in Serbia, respecting also, if such agreement exists, the conditions of a Double Taxation Avoidance Agreement between the Republic of Serbia and the non-resident’s home country.
Tax incentives – tax credit (Law on personal income tax, article 89a)
A taxpayer who invests in an alternative investment fund, i.e. in the purchase of an investment unit of an alternative investment fund, is granted the right to a tax credit based on the annual personal income tax* in the amount of up to 50% of the investment in the calendar year for which the annual personal income tax is determined.
The right to a tax credit can be obtained only if the price for the investment unit is fully paid.
The amended Law on Amendments to the Law on Personal Income Tax entered into force on December 6, 2024, and will apply from January 1, 2025. In Article 89a, paragraphs 4 and 5 shall be added, relating to the loss of the right to a tax credit in the event of disposal of shares or units in an alternative investment fund, or investment units of an alternative investment fund, so that it now reads as follows:
‘’A taxpayer who invests in an alternative investment fund, i.e. in the purchase of an investment unit of an alternative investment fund, is entitled to a tax credit on account of the annual personal income tax up to a maximum of 50% of the investment made in the calendar year for which the annual personal income tax is determined.
The right to a tax credit referred to in paragraph 1 of this Article may be exercised only on the basis of fully paid cash deposits that acquire shares or shares in an alternative investment fund, i.e. an investment unit of an alternative investment fund.
The tax credit referred to in paragraph 1 of this Article may not exceed 50% of the determined tax liability on the basis of annual personal income tax.
Notwithstanding paragraph 1 of this Article, if a taxpayer disposes of shares or units in an alternative investment fund or investment unit of an alternative investment fund in the calendar year in which it made an investment in an alternative investment fund, i.e. in the purchase of an investment unit of an alternative investment fund, as well as in the following three calendar years, it loses the right to a previously obtained tax credit on the basis of that investment.
The taxpayer referred to in paragraph 4 of this Article shall be obliged to notify the competent tax authority of the loss of the right to the tax credit within 30 days from the date of loss of the right and to pay the obligation on behalf of the previously recognized right to the tax credit, with the corresponding interest from the due date for the payment of the annual personal income tax for the year for which he has lost the right to the tax credit.’’
Example:
| Annual personal income tax: | €10,000 |
| Investment in an alternative investment fund: | €10,000 |
| Tax credit (up to 50% of the annual tax liability): | €5,000 |
| Annual tax liability (after applying the tax credit): | €5,000 |
*Note: The annual personal income tax is taxed on the income of natural persons who, in the calendar year, earn an income greater than three times the average annual salary per employee, paid in the Republic in the year for which the tax is determined, according to the data of the republican authority responsible for statistics.
Taxation of legal entities investors
Capital gain tax
The remaining net value of the assets of an investment fund that does not have the status of a legal entity, which after the dissolution of that investment fund is distributed to the members/investors in proportion to their investment units, in money or non-monetary assets, and which is above the purchase price of those investment units, is considered a capital gain that is included into the tax base in the amount of 50% of the total realized capital gain. (Law on corporate income tax, article 35a)
Tax on income (dividend) of a non-resident legal entity as investor
Income earned by a non-resident legal entity on the basis of membership in an alternative investment fund that does not have the status of a legal entity is considered a dividend. Unless otherwise stipulated by an international double taxation treaty, withholding tax at a rate of 20% is calculated and paid on the income which is realized by a non-resident legal entity from a resident legal entity. (Law on corporate income tax, article 40)