Montenegro is a safe, economically viable and politically stable country with the potential to continue economic growth. It is characterized by both political stability and multi-ethnic harmony. In addition to two international airports, four sea ports, one of which connects us with the whole world, developed road and railway infrastructure, the construction of the Bar-Boljare highway place Montenegro among the top investment destinations in the region.
Foreign legal and natural persons have the right to establish a company in Montenegro under the same conditions as nationals. The most common forms of companies are:
Foreign investors may invest in any industry and are free to transfer funds, assets and other goods, including proit or dividend. Foreign investors enjoy national treatment, i.e. have the same status as the domestic ones.
Foreign investors include: foreign physical or legal persons with headquarters abroad; companies with more than 25% of foreign capital; Montenegrin citizens residing abroad for more than 12 months, or companies set up by foreign citizens in Montenegro.
Foreign investments are implementable through:
The tax system for foreign investors is the same as for local business entities.
Corporate income tax amounts to 9%. The tax rate on personal income is 9% i.e. 11% on gross wages higher than € 720. Upon payment of corporate income tax, business entities operating in Montenegro have the possibility to transfer funds to their accounts abroad at the end of the year.
Two positive VAT rates are applied, namely the standard rate of 21% and the reduced rate of 7% (for basic food stuffs, such as milk, bread, lard, cooking oil and sugar; medicines and some medical devices; books, textbooks and teaching aids; potable water; feed;fertilizers and breeding livestock; plant protection products and propagation material, etc.
The zero rate applies to export transactions and delivery of medicines and medical devices that are funded by the National Health Insurance Fund.
Real estate transfer tax rate is proportional and amounts to 3% of the tax base.
If the tax liability (output tax) for the taxable period is lower than the input VAT, deductible for the same period, the difference is either recorded as tax credit for the coming period or refunded, following the taxpayer’s request, within 60 days from the date of submission of the VAT return.
To taxpayers who are predominantly involved in export and those who have shown excess input VAT in three consecutive VAT assessments this difference is refunded within 30 days from the date of submission of VAT return.
In order to improve business climate and increase competitiveness of the economy, in January 2015 the Government of Montenegro adopted the Regulation on Boosting Direct Investments which defines financial incentives for new investments. The funds for the enhancement of investments are allocated on the basis of a public announcement for the investment projects with the minimum value of investment of 500.000€ and under the condition that it ensures opening of at least 20 new jobs or for the investment projects with the minimum value of 250.000€ for investment in north and central region except in Capital city Podgorica under the condition that it ensures opening of at least 10 new jobs within the period of three years, from the date of the conclusion of the agreement on the use of funds. A foreign investor may also be the user of funds provided that it establishes an economic entity in Montenegro.
Incentive measures at the national level include the tax incentives for investing, such as: exemption from corporate tax, taxes on personal income, the subsidies for employment of certain categories of unemployed persons.
The Government of Montenegro adopted the 'Promotion Programme of Business Development', which seeks to encourage the development of micro and small enterprises on land connected to utilities, increase employment in less developed municipalities, as well as activate the capital of domestic and foreign investors who could identify an interest in the implementation and advancement of this project. Investors can use premises within the local self-government, suitable for capacity building, connected to utilities, intended for coordinated and planned use by a number of companies and manufacturers, which enables joint use of premises, utilities, financial, technical and other services, thus attaining business operations with lower cost.
In addition to tax exemptions and administrative facilitations, investors who choose to operate within the business zone will be also provided with complete logistical support so that their business operations will be further facilitated.