As our law firm increasingly handles cases related to White-collar crime—both as legal advisors and representatives of domestic and foreign businesses harmed by fraudulent activities in the Republic of Serbia, as well as defence attorneys for individuals facing criminal proceedings for alleged corporate offences—we have decided to launch a series of professional articles dedicated to corporate crime.
The first article in our series will focus on the practical aspects of the criminal offense of corporate embezzlement, while in the following articles, we will analyze the practical implications of other related offenses, including corporate fraud, breach of trust in business operations, tax evasion, abuse of position of a responsible person, failure to pay withholding tax, bribery in business operations, offering bribes in business operations, causing insolvency, fraudulent insolvency, creditor fraud, damaging business reputation and creditworthiness, disclosure of trade secrets, money laundering, and others.
We will write these articles without excessive reliance on criminal law theory to ensure they are engaging and understandable for business professionals and other interested parties. At the same time, our law firm will be preparing a separate article on corporate crime that will focus more on the theoretical aspects of White-collar crime, which we believe will be of particular interest to law students, attorneys, judges, prosecutors, tax advisors, and other legal professionals.
Corporate Embezzlement is regulated by Article 224 of the Criminal Code. The law stipulates the following: ''Whoever, with the intent to unlawfully obtain financial gain for themselves or another, misappropriates money, securities, or other movable property entrusted to them in the course of work within a business entity shall be punished by imprisonment ranging from three months to five years.'' Additionally, the law prescribes two aggravated forms of this criminal offense. A more severe form exists if the offense results in financial gain exceeding 450,000 RSD (approx. 3.840 EUR), in which case the perpetrator shall be sentenced to imprisonment ranging from one to eight years. The most severe form of this offense applies if the financial gain exceeds 1,500,000 RSD (approx. 12.800 EUR), in which case the perpetrator shall be sentenced to imprisonment ranging from two to twelve years.
Embezzlement is a specific form of the criminal offense of misappropriation. The key distinction lies in the fact that, in cases of embezzlement, the act involves specific items entrusted to the perpetrator based on a particular legal ground, specifically in connection with their work. However, if the entrusted items are received in public service or during employment in a state authority, institution, or another entity that does not engage in business activities, the offense falls under embezzlement as prescribed by Article 364 of the Criminal Code, which belongs to the category of offenses against official duty. This offense also has a basic form and two aggravated forms.
The act of committing this criminal offense consists of misappropriating money, securities, or other movable property that has been entrusted to the perpetrator in the course of their work within a business entity. However, for this act to qualify as corporate embezzlement, it must be committed with the intent to obtain an unlawful financial gain for oneself or another. The law defines the subject matter of this offense as money, securities, and other movable property, such as a laptop, mobile phone, electric scooter, office furniture, etc. To establish the existence of this criminal offense, it is necessary that these items were entrusted to the perpetrator in the course of their work or in connection with their work within a business entity. According to Article 112 of the Criminal Code (Definitions of Terms in This Code), business activity is defined as any activity involving the production and trade of goods, the provision of services, or other market activities aimed at generating profit or achieving another economic interest.
The case law in the Republic of Serbia interprets the concept of items entrusted in the course of work broadly, not limiting it only to items necessary for the direct performance of the perpetrator's work but encompassing all items entrusted to them within a business entity. This also includes items that arise in connection with the perpetrator’s actions. For example, in Decision No. Kž. I-444/80 of the Supreme Court of Serbia, it was established that a store manager who misappropriates money and goods from the store, believing them to be surplus, is also liable for this criminal offense. In addition to individuals employed under a standard employment contract or performing work based on another legal basis, the perpetrator of this criminal offense can also be a person in a contractual relationship or someone working through an agency.
Through numerous court rulings, Serbian case law has established that this criminal offense can also be committed by a person engaged in an informal or de facto employment relationship (commonly referred to as ''working off the books''). Additionally, case law clearly recognizes that this offense can be committed by a person who, after the termination of their employment, misappropriates or refuses to return items entrusted to them in the course of their work. For example, a former director who, upon leaving their position, fails to return a company-owned vehicle may be held liable for this offense.
This criminal offense can only be committed with intent, meaning that corporate embezzlement cannot occur as a result of negligence. Furthermore, when discussing the subjective elements of this offense, for the perpetrator to be held liable, it is essential that they had the intent to obtain an unlawful financial gain for themselves or another. If the existence of such intent is not proven, the person cannot be found guilty of committing this criminal offense. This, of course, can be particularly interesting from the perspective of evidence and proof.
Given that, in our opinion, the law has set a relatively low threshold for the most severe form of this criminal offense—namely, whenever the unlawful financial gain exceeds 1,500,000 RSD (approximately 12,820 EUR)—the court will appoint a defense attorney ex officio if you are charged with this offense and do not choose a lawyer yourself.
In practice, we most frequently encounter this criminal offense in cases where we, as legal representatives of business entities, are compelled to file criminal charges against former employees who, despite repeated requests, refuse to return assets entrusted to them during their employment. In such cases, the company is forced to rely on criminal law mechanisms to protect its rights and ensure the uninterrupted conduct of its business activities.
From a legal perspective, such cases can be interesting in terms of questions such as whether certain items were genuinely entrusted to the perpetrator in the course of their work, whether this was properly documented, when embezzlement occurs as opposed to merely disciplinary responsibility, and what happens if someone committed the act under legal or factual error (for example, if they miscounted the money—or at least claim they did—raising the question of whether they were obligated to count it correctly, etc.).
Published: 18. March 2025
Author: Kristijan Karan, attorney at law in Novi Sad, Serbia
