DOING BUSINESS IN MONTENEGRO IN 2023
Since 2003, Healy Consultants Group has assisted our Clients with business registration in Montenegro. Our services include i) Montenegro company incorporation ii) government license registration iii) corporate bank account opening services in Montenegro iv) employee recruitment v) visa strategies and vi) office rental solutions.
| Compare different Montenegro entities | LLC | Agribusiness company | Tourism company | JSC | Representative office | Energy company |
|---|---|---|---|---|---|---|
| Also known as | D.O.O | Agribusiness companies | Turistička kompanija | Akcionarsko drutvo | Predstavništvo | Energetska kompanija |
| Best use of company? | All products/ svcs | Agriculture, dairy processing and related activities | Construction and furnishing of hospitality business | To get pub. funding | Marketing/ research activities | Construction of energy generation facilities |
| How soon to invoice Clients? | 2 weeks | 2 weeks | 2 weeks | 5 weeks | Can not invoice | 4 weeks |
| How soon can you hire staff? | 2 weeks | 2 weeks | 2 weeks | 5 weeks | 4 weeks | 4 weeks |
| How soon can you sign a lease agreement? | 1 week | 1 week | 1 week | 1 week | 1 week | 1 week |
| How long to supply corporate bank a/c? | 4 weeks | 4 weeks | 4 weeks | 4 weeks | 4 weeks | 4 weeks |
| How long to supply co. reg / tax numbers? | 2 weeks | 2 weeks | 2 weeks | 5 weeks | 4 weeks | 5 weeks |
| Corporate tax rate on annual net profits? | 9%-15% | 9%-15% | 9%-15% | 9%-15% | 0% | 9%-15% |
| Limited liability entity? | Yes | Yes | Yes | Yes | No | Yes |
| Govt grants/incentives available? | Yes | Yes | Yes | Yes | No | Yes |
| Govt approval required for foreign owners? | No | No | No | No | No | No |
| Res. director/partner/ legal rep. required? | No | No | No | No | No | No |
| Minimum paid up share capital? | € 1 | € 1 | € 1 | € 25,000 | € 1 | € 1 |
| Can bid for Government contracts? | Yes | Yes | Yes | Yes | No | Yes |
| Corporate bank account location? | Erste Bank | Universal Capital Bank | Prva Bank | Hipotekarna Bank | Lovćen Bank | NLB Bank |
| Can secure trade finance? | Yes | Yes | Yes | Yes | Yes | Yes |
| VAT payable on sales to local customers? | 21% | 0% | 0% for hotels with 5 or more stars | 21% | 0% | 0% if capital investment is done |
| Average total business set up costs? | € 11,020 | Request a proposal | Request a proposal | € 11,270 | € 11,320 | Request a proposal |
| Average total engagement period? | 2 months | 2 months | 2 months | 3 months | 2 months | 3 months |
Montenegro business setup summary
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Advantages and disadvantages
Advantages of Montenegro company registration
- Incorporating a Montenegro LLC can be fast and uncomplicated because it only requires:
- One shareholder of any nationality and residency who can be an individual or a body corporate;
- One individual director of any nationality and residency;
- A paid-up share capital of EUR1;
- Our Client does not need to travel to Montenegro to complete company formation.
- Our Clients will find Montenegro an attractive jurisdiction for doing business because:
- 100% foreign ownership of legal entities is permitted;
- The country offers the lowest income tax rates in Europe at a rate of 9% – 15% depending on profit amount;
- Montenegro has concluded more than 40 double tax treaties that may help reduce or eliminate withholding taxes with global jurisdictions including China, Malaysia, France, Germany, Switzerland among others;
- Montenegro presents very competitive tax rates with respect to other countries in Europe;
- Montenegro is in detailed negotiations to join the European Union, giving investors access to a huge new market;
- The country is neither a signatory to the Common Reporting Standard (CRS) convention on automatic exchange of information, nor does it feature on the OECD’s grey list.
- Investors and entrepreneurs in Montenegro will enjoy government incentives including:
- VAT exemptions on construction of i) high-end hotels ii) food production and iii) energy-production facilities;
- An 8-year tax exemption of up to €200,000 for companies newly incorporated in underdeveloped municipalities;
- Reduced VAT levied at the rates of i) 7% on purchase of IT equipment and ii) 0% on other selected basic products;
- Resident entities are entitled to a foreign tax credit on taxes levied on income realized abroad; but not exceeding the amount that would have been paid locally.
- Montenegro is an attractive jurisdiction for tourism companies due to the below reasons:
- According to World Travel & Tourism Council’s 2019 report, travel and tourism had contributed to 10.4% of Montenegro’s GDP. The country is predicted to become one of the fastest and emerging tourist destinations of the world over the next few years;
- The country has a range of attractive tourist locations including i) 5 national parks; ii) mountain ranges; iii) ski resorts; and iv) lakes and deep river canyons. This further highlights Montenegro’s potential for adventure sports industry;
- Through the Tourism Development Strategy 2020, Montenegro aims to improve all its infrastructural facilities in order to make the country an all-year destination for tourists;
- Golf tourism is increasingly promoted, with one of the finest courses of Europe.
- Montenegro has a citizenship through investment program. This is an excellent, cost-effective way for non-EU citizens to obtain EU citizenship and access both freedom of movement and residency rights across Europe.
- Montenegro’s real estate costs are low. Relocating to Montenegro to live and work is inexpensive.
- Montenegro’s economy is forecast to grow by 4.1% in 2022. This will open up new opportunities for multinational Clients, and the domestic consumer market will expand.
- International investors are free to invest in any industries in Montenegro and can also acquire rights to real estate.
Disadvantages of Montenegro company registration
- Entrepreneurs looking to incorporate a public limited company will have to present a minimum share capital of €25,000 at incorporation;
- Our Clients may find Montenegro unattractive for investment because:
- Corruption is endemic in Montenegro; with the country being ranked 67th by Transparency Intentional;
- Money laundering and organized criminal groups are prevalent in Montenegro and have significant influence in both the private and public sectors;
- Montenegro has a very weak judicial system that continues to discourage foreign investments;
- Montenegro has a small market size, with a population of just about 600,000 inhabitants with very little purchasing power.
- Other challenges of doing business in Montenegro include:
- The country lacks proper infrastructure due to absence of investments and/or maintenance in the past decade;
- Our Clients who prefer services of globally recognized banking institutions may be skeptical about banking in Montenegro as the country has no presence of international banks;
- The country does not offer tax incentives to investments in sectors including i) agriculture ii) shipbuilding iii) transport and iv) steel, among other sectors;
- Montenegro was hit hard by the global downturn and has experienced a significant contraction in its service and industry sectors. Recovery has been steady but slower than in other nations in Eastern Europe;
- One of the major impediments to a free trading system in Montenegro is its poor infrastructural facilities along with the red tape. As a result, the country has been poorly ranked in the 83rd position (out of 141 countries) for its infrastructure in the Global Competitiveness Index 2019 edition.
- Incorporating a Montenegro LLC can be fast and uncomplicated because it only requires:
Best uses for a Montenegro company
- Business registration in Montenegro is ideal for those entrepreneurs looking to establish their businesses to exploit the country’s competitive tax regime that offers some of the lowest income tax rates in Europe.
