Montenegro offers one of the most dynamic economies in the Balkans. After the strife of the 1990s and independence from Serbia in 2006, the Montenegrin government has been singularly focused on creating prosperity.
That means attracting entrepreneurs by making setting up a company in Montenegro as attractive as possible.
This is what you need to know about Montenegro’s company formation rules and procedures — from the incorporation process to which company taxes you’ll pay in Montenegro.
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Important Sources and Useful Information
The most important factor in understanding entry, visa, residence and citizenship requirements is having access to correct, reliable and up-to-date information. That’s why we’ve provided the following list of links to our sources:
- https://www.gov.me/en/article/types-of-visas-2
- The Law on Foreigners (Aliens Act) (Official Gazette of Montenegro, No. 82/08, 56/14, 28/15, 16/16, 12/2018 and 03/2019; ENG version)
- Decree on Visa Regime – (Official Gazette of Montenegro, No 33/19)
- Government of Montenegro information on Citizenship and Residency in Montenegro.
- Ministry of Foreign Affairs
- https://www.gov.me/en/article/temporary-residence
- https://www.gov.me/en/article/permanent-residence
- https://www.gov.me/en/article/programme-for-attracting-digital-nomads-in-montenegro-adopted
- https://en.wikipedia.org/wiki/Visa_policy_of_Montenegro
- https://www.wikidata.org/wiki/Q7935378
- https://montenegrodigitalnomad.com/residency-in-montenegro
- Montenegro Law on Personal Income Tax – Download the PDF
- Ministry of Finance and Social Welfare of Montenegro, Department of Public Revenues
- Ministry of Foreign Affairs – Agreements on Double Taxation Avoidance treaties
- https://taxsummaries.pwc.com/montenegro/individual/taxes-on-personal-income
Popular Types of Companies in Montenegro
Those forming a company in Montenegro usually choose a limited liability corporation.
In Montenegrin, LLCs are known as Društvo s ograničenom odgovornošću (DOO). Important requirements for starting one include:
- 1 – 30 shareholders, either individuals or legal companies, local or foreign
- At least €1 in founding capital
- An executive director who will live in Montenegro and be paid a salary by the company
- Sight of passports for all of the founders and the executive director
For DOOs, the company formation process takes about 7 working days at most and can be completed from outside the country with power-of-attorney letters.
Making yourself the executive director of your company will satisfy the employment requirements for obtaining a temporary residence permit.
Other Options for Setting Up a Company in Montenegro
As well as LLCs, you can also run your company as:
- A joint-stock company (Akcionarsko drutvo): These require at least €25,000 in founding capital (sometimes much more for companies like stock exchanges and insurers) and have a stringent set of rules, including appointing a board of directors and an auditor.
- General (Ortako drutvo) and limited liability partnerships (Komanditno drutvo): The former is less formal, and all partners maintain full liability for company debts. For the latter, limited partners are only liable for the amount they invest and don’t have the same powers as general partners.
- Sole proprietorships: These are small companies with no capital requirements or protection for the owner’s personal assets.
Registration of any of the above companies can take 2-4 weeks to register, depending on their type of business.
Montenegrin Rules for Incorporation
As well as the previously discussed characteristics of an LLC, Montenegro’s company incorporation process requires you to:
- Choose an original name (not already registered) for your company.
- Have foundational documents (foundation act, articles of incorporation, etc.) court certified.
- Select one primary activity for your company.
- Depending on that activity (e.g., a travel agency), you may need to have a physical office in Montenegro.
- Have a correspondence address in Montenegro and an account at a Montenegrin bank.
- Have a stamp made with the company’s unique seal on it.
- The company should maintain accounting records even in the case of minimal to no income.
How Do You Register a Company in Montenegro?
Montenegro’s company registration process is easy and straightforward. The Central Registry of Business Entities (CBRE) of the Tax Administration collects corporate documentation and issues a tax-identification number as well as a VAT tax number.
This “one-window” registration process (instead of having to fill out forms and register with various different government departments) is one of the strong suits of doing business in Montenegro.
Costs of Incorporating and Registering a Company in Montenegro
How much it costs to incorporate a company in Montenegro depends partly on the complexity of your operation and, therefore, how much outside advice you need. In more detail:
- It costs at least €50 in fees and charges to register with the CBRE, have a stamp made and your company’s registration published in the official gazette.
- A virtual office and registered address cost €25-€75 a month, depending on location and usage.
- For joint stock companies, fees might be double that amount.
- Hiring a consultant to handle Montenegro’s company registration process for you will cost around €2,000, while saving you a lot of time and headache.
- Most lawyers and accountants will bill by the hour for their services and are usually willing to provide an up-front quote.
Montenegro As a Home for Your Offshore Company
Broadly speaking, for the purposes of this guide, offshore companies are corporations registered under the laws of a country but not doing business with the citizens of that country.
This arrangement often exempts them from paying taxes in their country of registration.
Montenegro is not an offshore jurisdiction. Unlike places like Panama or Anguilla, Montenegro’s tax system is more akin to Andorra. We aren’t seen on “tax haven” blacklists or offshore jurisdictions, but we do offer many of the same advantages, including:
- A very reasonable company income tax rate
- Low-cost and straightforward process for setting up a company in Montenegro
- A banking system that is not part of automatic information sharing schemes
Important Points About Montenegro’s Company Tax Rate
Montenegro has a fairly straightforward tax system. As part of their pro-business, growth-minded tax system, Montenegro has a flat tax on company earnings.
What Is the VAT in Montenegro and Who Has to Pay It?
As of January 1, 2018 the standard VAT charged on the sale of goods and services is 21%. Any company with annual net sales above €18,000 must register with the government and remit VAT on a monthly basis. For turnover below €18,000, the VAT is 17%.
Goods imported into Montenegro are exempt from VAT if their value is under €75.
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Other Tax Considerations for Montenegrin Companies
If you’re not a tax resident of Montenegro, but set up and operate your company here you will pay withholding tax on the income you send home as dividends, interest and royalties.
Generally, a standard 15% rate applies as the dividend tax for all three. That could be different if your home country has a double taxation treaty with Montenegro.
Why Choose Montenegro if You’re Setting Up a Company?
Montenegro is in a leading spot on the list of countries where entrepreneurs choose to relocate. That’s because:
- It’s easy to register your company in Montenegro.
- Your company tax rate will be lower in Montenegro than almost anywhere else in Europe.
- The country uses the euro and is closely integrated into the modern global economy.
Though it’s rarely considered an ideal country to register an online company, it can be a very strategic place to do business.
Sound interesting? Drop me a line with any follow-up questions you have about the company formation process in Montenegro.
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