Doing Business In: Montenegro

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Beautiful place, with a high mountain covered by snow and ice, with a long river, and beautiful beaches, a lot of sources of energy, Montenegro is a good place to merge nice and useful.

Montenegro offers a lot of possibilities for business development.

  • Population: 622,373 (2017 midyear est.)
  • Area: 14.000 km2
  • Government: is an independent and sovereign state, republican form of government. Montenegro is a civil, democratic, ecological and the state of social justice based on rule of law.
  • Capital city: Podgorica, population: 185,000
  • Membership of international organizations: Montenegro is in process of European Union integration and negotiations between Montenegro and the European Union officially begun on 29 June 2012, Brussels. Montenegro joined the NATO in June 2017, and also Montenegro is member of many international organization as UN, WTO, OSCE.
  • Official language: Montenegrin.
  • Currency: euro (EUR), since 2002.

Business environment

Since it’s independency 2006, Montenegro has made a great progress in social and economic development and proved as a safe, politically stable and economically viable country with potential for fast growth.

Montenegro is characterized by the following business benefits significant for investments in various fields:

  1. Political and monetary stability;
  2. Legal framework for investment reformed according to the EU;
  3. Favorable tax policy: 9% tax on profit, 7/19% VAT, 9/15% income tax;
  4. Simple START UP;
  5. Liberal regime of foreign trade;
  6. The national treatment of foreign investors;
  7. A set of incentives established at national level, in form of tax exemptions, for investments in the northern part of the country and in newly established business zones;
  8. Investment incentives and subsidies given at local level in form of utility fees exemptions, favorable land rental/purchase price, reduction of property tax rate;
  9. Developed telecommunication infrastructure;
  10. No restrictions on profit, dividend or interests.

Based on the principles (member) of the WTO (2012), Montenegro is a signatory of the multilateral and bilateral agreements – Stabilization and Association Agreement with the EU, CEFTA 2006, EFTA, Russia, Ukraine and Turkey, which enables the cumulating of origin and duty-free trade with around 800 million consumers.

Foreign investment regime

Foreign investor may be a foreign natural or legal person established abroad, a company with a share of foreign capital of over 25%, the Montenegrin citizen residing abroad for more than a year and the company established in Montenegro by a foreign entity.

Foreign investor:

  • may establish a company (either alone or with other investors), invest in companies, buy a company or part of it, establish a part of a company.
  • is taxed the same as domestic investors.

The share of foreign investors may be in cash, goods, services, property and securities.

Foreigners in Montenegro have the right to purchase real estate under the conditions fulfilled by domestic entities and by presenting an identification document.

However, according to the Law on Property Relations, a foreigner cannot own natural resources, public goods, agricultural land, forests and forest land, cultural monuments of great and special importance, real estate in a land-border area up to a depth of one kilometer and islands, real estate located in an area which was declared by law an area in which foreigners cannot have right of ownership in view of protecting the interests and security of the country.

Foreigners may be entitled to a long-term lease, concession, BOT and other arrangements of public-private partnership, over the above-mentioned real estate.

Law on Foreign Investment, which was adopted by the Parliament in 2011, establishes the framework for investment in Montenegro and eliminates previous investment restrictions, extends national treatment to foreign investors, allows for the transfer and repatriation of profits and dividends, provides guarantees against expropriation, and allows for customs duty waivers for equipment imported as capital-in-kind.

In December 2019 a new Law on Public Private Partnerships has been adopted by the Government, and it also has been established the Montenegrin Investment Agency (MIA), in order to better promote investment and foster economic development.

Taxation regime

Taxation treaties

Montenegro has signed many taxation treaties with the countries on income and property, which regulate double taxation. There are 44 taxation treaties in force with Albania, Austria, Azerbaijan, Belarus, Belgium, Bosnia and Herzegovina, Bulgaria, China, Croatia, Cyprus, Czech Republic, Denmark, Egypt, Finland, France, Germany, Greece, Hungary, Italy, Ireland, India, Korea, Kuwait, Latvia, Macedonia, Malaysia, Moldova, Malta, Holland, Norway, Poland, Portugal, Romania, Russia, Serbia, Slovakia, Slovenia, Sri Lanka, Sweden, Switzerland, Turkey, Ukraine, United Kingdom, and the United Arab Emirates.

There are also 23 bilateral investment treaties in force with following countries: Austria, Czech Republic, Finland, Denmark, Malta, France, Germany, Poland, Greece, Netherlands, Spain, Cyprus, Lithuania, Slovakia, Romania, the Republic of Serbia, Qatar, Macedonia, Azerbaijan, the United Arab Emirates, Moldova, Israel, and Switzerland.

Business structures

The business activity organization and conduct in Montenegro is basically regulated by the Company Law according to which there is following modes of business organization possible to establish:

  1. Entrepreneur,
  2. Partnership,
  3. Limited Partnership,
  4. Joint Stock Company,
  5. Limited Liability Company, and
  6. Foreign Entity Branch.

Out of the above stated modes of business organization, taking into consideration information collected and experiences, there are two models that are usually used by foreigners “Limited Liability Company” and “Foreign Entity Branch”.

Limited Liability Company (LLC)

LLC is a form of business organization highly recommended to be established for various aspects, that is to say:

  • It can be organized by foreign and domestic individuals and legal entities, equally,
  • Founders are liable for the company’s actions up to the amount of their equity in the company,
  • There is no minimum number of founders and maximum is 30,
  • Minimum amount of founding capital is 1,00 EUR, and there is no maximum,
  • Registered founding capital must be fully paid, but also can be disposed of freely,
  • There are no registered or bearer shares, but founders hold equities in the company,
  • Company’s obligatory bodies are Assembly and Executive Director, while Board of Directors is optional,
  • In a one-founder company, a Founder exercises all rights and obligations of the Assembly,
  • Equities are not registered with the Securities Commission,
  • Executive Director can be only an individual, and not corporate structure,
  • LLC gains the status of independent legal entity as of the date of its registration with Montenegrin Company Registry (Company registry).

LLC is a form of business organization used most often by both domestic and foreign investors, mostly because of its independency and limited liability towards the Founder, as well as for the reasons that Foreign Entity Branch at this moment, and according to its practical functions in this jurisdiction, does not provide to the mother company any favourable aspect in this type of organization, that is better elaborated below.

Foreign Entity Branch (Branch)

Foreign Entity Branch is the type of business organization used sometimes by the foreign investors, for the following reasons and with the following practical aspects, that is to say:

  • Branch must be registered with the Company registry,
  • It must conduct business activity in full compliance with the Montenegrin regulations,
  • All changes in the mother company, Branch must report with the Company registry,
  • Foreign Entity Branch does not have a status of an independent legal entity,
  • Branch has its Founder/Mother Company and Authorised Representative as equivalent to the Executive Director in the LLC,
  • Taking into consideration practical requirements of the state and municipality bodies, in all aspects of its function, Branch is equal to the LLC and requirements attached to the status of LLC.

Taking into consideration that, as practice showed the Branch is not interpreted in the sense and as a legal institution of foreign legal systems, as such form of organization currently must have all requisites as LLC, as : Tax and VAT Number, employed Authorised Representative, paid social security contributions, engaged business premises and pertaining business license, its own annual financial report and obligation to pay income tax, and others, almost all foreign investors organized before in such a form are currently trying to make new establishment as LLC, as consolidation between mother and daughter company became impossible.

Current opportunities & future prospects

Business zones

Government of Montenegro has adopted the Decree on Business Zones which has the goal of stimulating business development and creating more attractive investment opportunities.

A business zone represents a developed area in construction terms, which is fully equipped with utility infrastructure and directed at production activities and favourable conditions for investment.

This Decree on Business Zones regulates the conditions for the establishment of business zones, according to the classification of strategic importance, the establishment, organization and management, improvement of infrastructure in business zones and other issues relevant to the work of business zones.

There are eight bussiness zones in Montenegro.

Business zones are divided to:

  1. Business zones of strategic interest;
  2. Business zones of local government interest.

Business zone can be founded by State or units of local governments.

Location of business zone could be owned by the State, units of local governments or could be private property.

The business zone of strategic interest shall be founded by the Government of Montenegro, independently or in a cooperation with the other founder.

Department of units of local governments shall found the business zone of the local interest, independently, or in a cooperation with the other founder, with the prior consent of the Ministry.

The beneficiaries of business zones will have more encouraging work conditions in terms of lower costs and resolved infrastructural problems.

Such benefits are intended for small and medium-sized enterprises engaged in light industries which do not harm the environment.

These include industrial branches whose production is focused on the means of consumption (food, textiles, tobacco, furniture and electronics industries and the finishing and assembling of final products).

Business incentives offered by the zones are:

  • Developed land with all the necessary permits;
  • Lower lease prices of business premises;
  • Reduced administrative costs;
  • Integration of complementary business activities;
  • Other business incentives.

The government offers in this regard in the partnership with local municipalities, some incentives through business zones, which exist in several cities outside the capital.

Investment Incentives

In accordance to the Decree on Direct Investment Incentives the Montenegrin government offers financial incentives to investors based on the value of their investment. These incentives refer equally to Montenegrin and foreign entities or investors that can benefit from these incentives.

For investments greater than EUR 500,000 that create at least 20 new jobs within three years from the date of signing the incentive agreement, both domestic and foreign investors can apply for cash grants in the amount of EUR 3,000-10,000 per every new job created. For investments

in the North and Central region, except for the capital Podgorica, the minimum investment is EUR 250,000 with a threshold of creating 10 new jobs. For capital investments greater than EUR 10 million that create at least 50 new jobs, incentives can be awarded in the amount of up to 17 % of the investment value. These incentives also include refunds on infrastructure development costs incurred in the process of completing the investment project.

Legal System and Judicial Independence

Montenegro’s legal system is of a civil, continental type based on Roman law.

In accordance to the Law on Courts the judicial system consisting of three levels of courts: Basic, High, and the Supreme Court. Montenegro established the Appellate Court and the Administrative Court in 2005 for the appellate jurisdiction in criminal and commercial matters, and specialized jurisdiction in administrative matters. The specialized Commercial Court has first instance jurisdiction in commercial matters. Apart from those, there are also specialized Misdemeanours Courts.

Legislative reforms from the last several years effect the efficiency and effectiveness of court proceedings which is already visible through the introduction of the Public Enforcement Agents.

For clients it is important to act in accordance to the regulation in force, in order to prevent the penalties and possible court disputes. In that regard it is important also to have experienced law firm who will advise the client drying the investment activities.

Foreign Exchange

In Montenegro are no limitations placed on the transfer of foreign currency.

The Foreign Investment Law guarantees the right to transfer and refund profits in Montenegro, and there are not difficulties in the free transfer of funds exercised on the basis of profit, repayment of resources, or residual assets.

The Citizenship by Investment Program

Government of Montenegro is very eager to attract foreign investments. In that purposes Government of Montenegro decided to implement a citizenship by investment program in the country which will allow up to 2,000 foreigners to get a Montenegrin passport after an investment of at least EUR 350,000.

Citizenship by investment program is a winning combination for both investors and Montenegro, which will result in the individual’s ability to obtain a second passport which typically opens the door to make a better connection between foreign investors and country. Also there will be a beneficial for the family member of investors.

Applicants must make mandatory contribution to an approved Government fund and to make an investment in a real estate development that is approved by the program.

Investment in real estate can be done with two categories:

  • €250,000 in approved properties located in an undeveloped region (in the north part of Montenegro)
  • €450,000 in approved properties in a developed region (the coast and the capital city of Podgorica)

In addition to that, applicants must make a non-refundable contribution (donation) to a state fund at the amount of €100,000 regardless of the investment category that they have chosen.

As Decision on Criteria, Manner and Procedure for Selection of a Person Who Can Acquire Montenegrin Citizenship by Admission for the Implementation of a Special Investment Program of Special Importance for the Industry and Economic Interest of Montenegro is in force until the end of 2021, we expect that the Government will prolong its validity for the next year also.

Sector opportunities in Montenegro


The energy sector represents one of the strategic development areas in which Montenegro has great untapped potential.

The strategic development objectives of the energy sector are defined in the National Energy Development Strategy of Montenegro by 2025, where building of new capacities for hydro and thermal power plants is planned, including small hydro power plants and other renewable and alternative energy sources.

There are already completed several projects as it is construction of the submarine interconnection cable between Montenegro and Italy as well as two wind farms in Montenegro – Krnovo, with a capacity of 72MWh; and Mozura, with a capacity of 46MWh which are currently in operation.

Montenegro has the potential to develop solar energy also because Montenegro is “rich” with solar radiation due to a good geographical position.


Tourism records the most dynamic development and influences the growth of agriculture and food processing industry, transport, telecommunication, trade, as well as a whole set of other branches.

According to the estimates presented by the World Travel and Tourism Council Montenegro records the fastest growth when it comes to travel and tourism direct contribution to GDP, with the annual growth rate 11,8%.


The banking sector is characterized by stability, with growth in deposits, the level of liquidity and capital, high levels of non-performing loans and high interest rates.

There are 7 foreign-owned banks, while 5 banks are in the majority ownership of domestic entities. The banking sector is liquid and under the supervision of the Central Bank of Montenegro.


Agriculture is one of the strategic development areas of Montenegro. Fertile and unpolluted land and pure high-quality waters represent the good Basis for the development of agriculture and food industry. The production of meat, milk, dairy products, honey, fish, vegetable, fruit, high quality wines and mineral waters is recording growth. The agricultural sector provides for 6,9 percent of Montenegrin GDP.

What to know before Investing?

Montenegro is a magnet for investment because of its business-focused economic system and a low corporate tax rate.

Montenegro is a safe country to invest in and it enjoys great economic freedom and monetary stability. It is predicted that Montenegro will join EU in the next couple of years.

Foreign companies can own 100% of a domestic company, and their profits and dividends can be repatriated without limitations or restrictions.

The Montenegro ranks 50th out of 190 economies in terms of ease of doing business, according to the 2020 World Bank Doing Business report.

Montenegro has one of the most competitive tax systems in Europe (rate of 9%); qualified and low-cost workforce; touristic potential (sea, mountain, climate); hydroelectric potential; negotiations for accession to the European Union; good quality of education and health systems.

As there are many incentives for doing business in Montenegro there is no matter in which part of the country you will invest, because in any case it will be a right choice.