Company formation in brief

Establishing business in Montenegro - the English name for this small Balkan state - is possible within a week. At the same time, a foreign investor is not restricted in any way what activity to choose (from an agricultural cooperative or a construction organization up to an insurance company or a bank). Foreign investors are subject to the same rules of law as local entrepreneurs in Montenegro.

Six organizational and legal forms for establishing business

The law of Montenegro provides for the following six organizational and legal forms of companies for establishing business:

* Entrepreneur;
* Limited Liability Company  (d.o.o.);
* Joint Stock Company (a.d.);
* General partnership  (o.d.);
* Limited partnership  (k.d.)
* Part of a foreign company.

A private entrepreneur, partnership or branch registration does not require any charter capital.

A limited liability company may be established with a minimum capital of EUR 1, a joint-stock company - with EUR 25 000.

All Montenegrin business participants may be non-residents. As for the registered address, initially, it can be provided by a local lawyer. Each company needs to be registered for VAT payment purposes and to open an account with one of the local banks.

Montenegro has the lowest corporate tax rate in Europe, it is 9%.

Montenegrin law aims to increase the jurisdiction’s attractiveness for foreign investors and provides a number of benefits, for example, by fully exempting entrepreneurs who establish business in undeveloped areas of Montenegro from income tax payment for 3 years.

The VAT in Montenegro varies from 7% to 17%. There are four categories of entrepreneurs recorded on a preferential basis in a special group and entitled to pay this tax, namely:

* Private entrepreneurs with the turnover of no more than Ђ18’000 in the reporting period are not required to be registered and to provide reporting for VAT purposes;
* Agricultural producers are exempted from VAT and receive an additional payment of 5% of their sales;
* Travel agencies, intermediaries selling antiques, artworks and second-hand items may provide reporting in respect of the VAT under a simplified scheme.

Interests are charged with a 5% tax rate, and dividends, royalties and capital gains - with a tax rate of 15%, unless other tax rates provided for by double taxation treaties are applicable.

Montenegro Double Taxation Agreements

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