Montenegro is not only a resort, but also an attractive jurisdiction for registering a legal entity and doing business. It is usually easier to open a company in Montenegro than in other European countries. This became possible because the country took a course to attract foreign investment and cares about foreigners who want to invest in the local economy.
The first step for registering a legal entity in Montenegro is to decide on its future activities and goals. This determines the type of company that needs to be registered, as well as all subsequent steps. As a rule, the majority of foreigners prefer LLC, since this form of ownership covers all needs and allows you to solve all the classic tasks, including the conduct of international business.
Advantages of Montenegro for starting a company
Ease of registration and business management is an advantage that captivates from the first minutes of acquaintance with local business specifics. As in the Czech Republic, Latvia, and other jurisdictions, to open a company you will need to provide a package of documents, but its size will pleasantly surprise you, in some cases, just a foreign passport is enough. And the timing of the entire registration procedure is very fast. In 7-14 days you can become a full-fledged owner of a new company.
Other advantages of the jurisdiction include
- National currency – euro;
- Favorable location;
- Low-income taxes (9%) and VAT (19%);
- No secretary is needed;
- For small companies, audits are not required;
- Low registration fees and maintenance costs;
- Several forms of legal entities are available for foreigners. The most popular choice is DOO. This is a form that is similar in its characteristics to a domestic LLC and is also a limited liability company. AO form is available for large businesses.
Company in Montenegro for obtaining a visa or residence permit
In some European jurisdictions, it is no longer possible to obtain a residence permit based on the ownership of a company – in Montenegro, it is available (you must stay in the country for at least 275 days a year)! No wonder this country is one of the most liberal jurisdictions and a real bridge to Europe.
Visa issues are as close as possible in Schengen, however, in the case of company owners, it is enough to find a job in your own company. This is also possible for family members. When applying for a job, you must assign yourself a minimum wage, and pay taxes from it. In 2019, the amount of taxes on the minimum wage suitable for a residence permit is approximately 35 euros.
Family members can work only 1 year after receiving a residence permit. Which is also one of the most liberal rules in all of Europe. During this year, you can relax and admire the beauty of Podgorica, Budva, Berane, and other cities in the country.
Tax system
Since 2006 Montenegro has taken a course towards joining the European Union, and since 2010 it has been a full-fledged candidate. To join, it is required to bring all state systems, including the tax one, to European standards, and Montenegro has already done a tremendous job.
An important point – the citizenship and residence of the entrepreneur do not matter, everyone pays at the same rate. The current corporate income tax rate is 9%. And this is less than the rate for individuals, which reaches 15%. Income tax (9%) is the same for all forms of ownership (LLC, JSC, and others) and is obligatory for payment in case of:
- Sales of goods;
- Providing services;
- Receipt of dividends;
- From the sale of property;
- Use of property rights;
- And other cases of making a profit.
At the same time, as in all European countries, the principle of formation of the taxable base is in effect. This means that an entrepreneur can reduce tax expenses by lowering the tax base.
A company with an annual turnover of more than 18 thousand euros is required to obtain a VAT number. At the same time, it is possible to become a VAT payer voluntarily, including when opening a company or at any other time.
The VAT rate for 2019 is 19%. In 2017, it increased from 17% to 19% as part of the tax reform. Nevertheless, of all the Balkan countries, Montenegro remains the jurisdiction with one of the lowest rates. For example, in Croatia, the VAT is 22%, and in Albania and Slovenia – 20%.
When exporting goods, a zero VAT rate is applied.
