How To Start A Business In Montenegro

Montenegro, nestled in Southeast Europe, is gaining plenty of attention from entrepreneurs and investors despite being a developing country. Running along the Adriatic coastline, the country boasts both beauty and a growing business environment, making it a compelling choice for startup founders.

If you are considering Montenegro as a location for your business, here is a detailed guide on the country’s successful industries, visa requirements, tax laws and some factors that could arise as potential challenges.

 

Why Choose Montenegro For Your Business?

 

Montenegro is quickly earning a reputation as a startup-friendly location for a number of reasons, mainly due to its booming tourism industry and the country’s openness to foreign ownership.

Attractive tax regime: Montenegro’s corporate tax rate is 9%, making it one of the lowest in Europe which is an immediate drawcard for entrepreneurs.

EU accession: The country is in talks to join the European Union by 2028, which would see further stability for the economy and easy access for EU residents.

Foreign ownership: Foreigners are able to own 100% of a business in Montenegro without needing to have a local partner. This gives entrepreneurs full control over their business decisions and no need to share in profits.

Strong tourism industry: Montenegro boasts breathtaking coastlines, mountains and historic towns which attracts around 2.6 million tourists every year. This offers plenty of opportunities for entrepreneurs in hospitality, real estate and adventure tourism, which is becoming increasingly popular.

Affordability: When compared to Western Europe, both the costs of living and running a business are significantly lower which is ideal for startups and small businesses.

 

Business Opportunities In Montenegro

 

The country’s economy is a diverse one, and there are several industries that stand out for entrepreneurs to consider expanding into.

Real estate and construction: Thanks to the tourism industry, the real estate market is continuing to grow to meet the demands for holiday homes and resorts. Foreigners are also able to buy property in Montenegro without restrictions, making it a location of choice for international investors.

Tourism and hospitality: Coastal areas like Budva, Kotor and Tivat are seeing more and more tourists annually, and as a result, there is a growing need for tourist spots and activities such as restaurants or yacht charter services.

IT and tech: The government actively supports the growth of the IT and tech industries, and startups in fintech and software development have started to gain a lot more traction in the last few years.

Agriculture: Montenegro has an abundance of fertile land, which make excellent conditions for organic farming and wine production. There are also opportunities for entrepreneurs to export products like olives and cheese to the rest of Europe or internationally.

 

What Are The Tax Regulations In Montenegro?

 

In addition to the corporate tax rate of 9%, the country’s personal income tax is also set at 9% if you earn an income of up to €700. If you earn more than that, it will increase to 15%.

The current Value Added Tax (VAT) rate is 21% although there are reduced rates of 7% for products and services that are deemed essential.

 

 

Visa And Residency Requirements For Foreign Entrepreneurs

 

If you are a foreigner considering starting a business in Montenegro, there are a few visas that you can apply for depending on which one is most applicable to you.

Short-Term Visa (C Visa): This visa will allow you to visit the country for up to 90 days within a 180-day period, ideal for entrepreneurs who want to scout out the area before making a decision.

Long-Term Visa (D Visa): This is available for stays exceeding 90 days which is more suited to business founders who need more time to register and set up their company.

Temporary Residence Permit: Foreigners who want to start a business in Montenegro can apply for this permit which is valid for one year and can be renewed annually. To obtain it, you will need to show proof of business ownership, accommodation as well as financial stability.

Permanent Residency: Once you have completed five years of temporary residency, you can then apply for your permanent residency.

Digital Nomad Visa: For remote workers, the Digital Nomad visa is a great option as long as you have proof of accommodation in the country, verification that you work for a non-Montenegrin company and a minimum monthly income of €1,350 that can be supported by at least 12 months’ proof of earnings.

 

Potential Challenges That You Should Consider

 

While Montenegro has plenty of upsides to starting a business there, you may encounter a few challenges along the way. Here are a few things to keep in mind that could impact you or your business.

Language barrier: The official language is Montenegrin, which all business documents are written in. If you aren’t able to speak the language, you may need to hire a local translator to help you along the way.

Some sectors have a limited workforce: Certain industries like tourism have plenty of skilled workers to hire as employees but not so much when it comes to IT or engineering, which could be a challenge.

Changes in regulations: Since Montenegro is not yet officially part of the EU, when it does happen, there could be some changes to regulations and laws.

The bureaucracy can be slow: At times, administrative processes may take longer than what you would like so this will require a fair amount of patience.

 

How To Set Up A Business In Montenegro

 

The business registration process, although sometimes slower, is fairly straightforward in Montenegro, let’s take a look at a step-by-step guide to help you.

 

Select Your Business Structure

 

There are a few businesses structures that you can choose from, but these are the most common entities:

• Sole Proprietorship: This is better suited to smaller businesses.
• Limited Liability Company: The most popular choice for startups and SMEs.
• Joint-Stock Company: Suitable for bigger businesses or investors.

 

Register Your Business Name

 

You can check the availability of the business name you would like with the Central Registry of Business Entities (CRPS) and reserve it if necessary.

 

Prepare The Necessary Documentation

 

To register your business, you will need a copy of your passport if you are a foreigner, a business address with a lease agreement and a founding act if your chosen structure is a Limited Liability Company or Joint-Stock Company.

 

Register With The CRPS

 

You can then submit your documentation and pay the registration fee which is usually between €10 and €50. The registration process can take anywhere between 5 – 7 working days.

 

Register For Tax And Social Security

 

The Tax Administration will issue you with a Tax Identification Number and if your annual turnover exceeds €30,o00, you will be required to register for VAT. If you have employees working for you, you can register them for social security contributions.

 

Should You Start A Business In Montenegro?

 

If you are looking for a European destination to start your business in, Montenegro is certainly a top contender with its rapidly developing economy among its natural beauty.

There are plenty of sectors to explore, from real estate and tourism to technology, offering exciting and diverse opportunities for entrepreneurs with exciting ideas.

By understanding the country’s local regulations, navigating the bureaucracy and accounting for potential future changes in regulations after their EU accession, Montenegro can offer you a promising location for your startup.