Why Invest in Montenegro

What to expect

Montenegro has been one of the strongest emerging nations from Europe. World Bank’s annual ratings states that Montenegro is ranked 50th among 190 economies in the ease of doing business ratings. The country have encountered consistent economic growth and have been seeing a consistent progression of foreign direct investment. Since its independence in June 2006, the government has adopted an investment structure promoting growth, employment and exports. In order to promote foreign investment and facilitate economic development in the nation, they set up the Montenegrin Investment Promotion Agency (MIPA).

Montenegro Business Facts

Tax overview

Foreign companies in Montenegro are guaranteed equal legal treatment as local ones. Foreign investor can operate in Montenegro either as a legal entity or as a natural person. There is no limit on the amount of capital invested in Montenegro. Foreign investors are encouraged
to invest freely within any industry and to transfer all assets, including profits and dividends.

Montenegro joined the World Bank and International Monetary Fund (IMF) on 18 January 2007. Then in October 2007, the country signed a Stabilization and Association agreement with the European Union (EU).
On 17 December 2011, Montenegro joined the World Trade Organization (WTO)
On 5 June 2017 the country became a member of the North Atlantic Treaty Organization (NATO).
Montenegro is an official EU candidate country.

In Montenegro;
Corporate income tax (CIT) rate is 9% (and it is one of the lowest in Europe)
Personal income tax (PIT) rate is 11%. (applicable on gross monthly wages above €720)
Standard VAT rate is 21%.
Corporate capital gains tax rates are subject to the normal CPT rate.

Value-added tax (VAT)

Montenegrin VAT principles are in line with the European Union (EU) Sixth Directive guidelines. A general 21% VAT rate is applied to taxable supplies. However, certain supplies are taxed at a reduced 7% rate (books, milk, bread, computers, medicines, etc.) and 0% rate for supplies such as export of goods, supply of gasoline for vessels in international traffic, etc.

In Montenegro, the registration for VAT may be either voluntary or mandatory. For small taxpayers who have not realised turnover exceeding 18.000 EUR within a year, voluntary VAT registration is possible. A company may not apply for deregistration for minimum 3 years once registered. For an entity that realises turnover exceeding the 18.000 EUR threshold in any 12-month period, VAT registration is mandatory.

Customs Duty

Exports

in Montenegro, there are no export duties, not is it forbidden to export any goods. However, in some cases quantity limitations can be imposed by the Montenegrin government in case of a critical shortage of certain goods or in order to protect non-renewable natural sources.

Imports

Customs duties are paid on imported goods in accordance with the rates and tariffs declared in the Customs tariffs. Duties are in line with the system of tariff codes prescribed by the World Trade Organisation (WTO).

The most important free trade agreements signed by Montenegro government are with the European Union, the European Free Trade Association (EFTA), the Central European Free Trade Agreement (CEFTA) states, Russia, Turkey, and Ukraine which led to an access to a market of around 800 million consumers.

22 Agreements on economic cooperation in force with following countries: Austria, BelgiumLuxembourg Economic Union, Bulgaria, Czech Republic, Greece, Croatia, Hungary, Germany, Slovenia, Spain, Romania, Slovakia, Albania, Argentina, Azerbaijan, Qatar, China, Republic of North Macedonia, Serbia, Swiss Confederation, Turkey and UAE.

Property Tax

Legal entities who own or have user rights over real estate in Montenegro pay property tax. The annual tax is imposed at proportional rates, ranging from 0.25% to 1% on the market value of assets as of 1 January of the current year. If/when a new property is acquired, the taxpayer must submit a tax return to the authorities within 30 days from the acquisition date (i.e. registration return for property tax) and to declare annual property tax by the submission of annual returns. The tax could be paid in two instalments, based on the decision issued by the tax authorities.

Payroll Tax

Employment income includes all receipts paid. Salaries, pensions, benefits in kind, insurance premiums, benefits, and awards above the non-taxable thresholds are provided to an individual based on employment. Employment income is subject to WHT at a flat rate of 9%.

Social Security Contributions

Social Security Contributions for pension and disability insurance, health insurance, and unemployment insurance are calculated and withheld by an employer from the salary paid to an employee.

The rates paid by the employer are as follows:

Pension and disability insurance: 5.5%.
Health insurance: 2.3%.
Unemployment insurance: 0.5%.
The rates paid by the employee are as follows:

Pension and disability insurance: 15%.
Health insurance: 8.5%.
Unemployment insurance: 0.5%.

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