Montenegro - Frequently Asked Questions
Please refer to our FAQs below to help answer any questions you may have regarding investment, taxation and development in Montenegro.
Where is Montenegro?
Montenegro belongs to the middle Mediterranean region. It is located in Southeast Europe, on the central part of the Balkan Peninsula and southern coast of the Adriatic Sea.
What are the neighbouring countries?
Montenegro is bordered by Croatia and Bosnia and Herzegovina on the west, Serbia on the northeast, Albania on the east and Italy across the Adriatic Sea. The borders are 614 km in length with a coastline of 293 km, of which 73 km are sand beaches.
What is the capital of Montenegro?
The capital of Montenegro is Podgorica. With a population of 185,937, it represents the political, economic, administrative and cultural heart of Montenegro.
What are other major cities?
Major cities are: Niksic with a population of 72,824, which is located 54 km northwest of Podgorica, and Bijelo Polje with 46,676 inhabitants, located 120 km north of Podgorica.
What is the currency in Montenegro?
The Euro is the legal tender in Montenegro. Before the introduction of Euro to European countries, since November 1999 the official currency was the German mark.
What is the time zone for Montenegro?
West European time zone (GMT+01:00).
What is the climate in Montenegro like?
The climate is temperate Mediterranean. Continental climate is present in the north (cold winters and hot, humid summers, with well distributed rainfall); Central region is characterized by continental and Mediterranean climate; in the south prevails Adriatic climate, with hot, dry summers and autumns and relatively cold winters. Average air temperature is 27.4°C in the summer and 13.4°C in the winter. Montenegro has around 250 sunny days a year.
What is the total population in Montenegro?
The population in the country is approximately 650,000.
What are the main religions?
Montenegro is a multi-religious state with Christian Orthodox, Islamic, Roman Catholic, Jewish, Protestant and other denominations.
What is the political and legal system in Montenegro?
Montenegro is a civic, democratic and ecological country, it is the state of social justice based on the rule of law. Montenegro became an independent country on May 21th 2006. Members of the National Assembly (81) are elected directly. The Prime Minister is appointed by the members of the National Assembly. The legal system in Montenegro is Continental-European.
How to reach Montenegro by plane?
There are two international airports: in Podgorica and in Tivat (80 km southwest of Podgorica).
The Podgorica airport offers connections to: Frankfurt, Vienna, Brussels, Rome, Moscow, Paris, Ljubljana, Istanbul, Belgrade and Zurich,while the Tivat airport is used mostly for charter flights and direct flights to Belgrade and Moscow. During the tourism season, additional connections are offered.
The national air transportation company is Montenegro Airlines. Besides Montenegro Airlines, Austrian, Adria Airways, AirSerbia, Turkish Airlines, Moscow Aircompany and S7 Airlines are operating in Montenegro. Other, charter companies for air transportation are: SAS, Airberlin, GazpromAvia, Aeroflot, Malmö Aviation, Travel service, Belavia Belarusian Airlines, SkyEzpress, NordStar, Amaa, Khors Air, Holidays Czech Airlines, Tatarstan, Transaero, Windrose, Ural Airlines, ALK, Thomas Cook, Donbass Aero, Ukrain International Airlines, NIKI, KMV, Rossiya and Globus Airlines company.
In 2013, Ryanair – Europe’s only ultra-low cost carrier (ULCC) officially launched its first flights between Podgorica and Brussels. Starting from this April, Ryanair launched its route from London Stansted to Podgorica. Plans are to operate this route all year round, flying twice per week on Tuesdays and Saturdays.
Airline Website: http://www.montenegroairlines.com
What does the railroad network look like?
The Montenegrin railway network is 330 km long, single track, electrified and with normal track gauge (of which 250km are the open tracks and 80 km are station tracks). The Railroad links the Port of Bar, Podgorica and Bijelo Polje, as well as Niksic, Podgorica and Albania via Tuzi. Podgorica-Niksic track as well as the link from Bar to Podgorica, are used for freight and passenger transport.
What is the total road network in Montenegro?
The road network of Montenegro consists of approximately 920 km of main roads, 970 km of regional roads and a very extensive local network of 6,000 km. The road network was improved by important projects, such as the Sozina Tunnel, the Millennium Bridge and the Debeli Brijeg border. The Sozina tunnel has significantly shortened the distance between the Port of Bar and Podgorica, which means that the capital of Montenegro is now only 40 minutes away from the seacoast.
What are the possibilities for sea transportation in Montenegro?
There are five ports for passengers and cargo transport in Montenegro, located in Bar, Herceg Novi, Tivat, Kotor and Zelenika. The Port of Bar is responsible for 95% of the total passenger and freight transport, and has conditions for an annual turnover and transport of 5 million tons of cargo. It is situated in the southern part of the Adriatic Sea, an exceptional site where sea and inland traffic come together. This favorable geographical position (42o 0‘ north latitude and 19o 05‘ east longitude), together with the railway line Belgrade – Bar and the road network, represents a compatible traffic system that enables logical connection. Due to its favorable position, the Port of Bar is the right place for setting up a distribution centre for the whole region. There are regular passenger boat lines between Montenegro, Italy and Croatia.
What are the possible forms of foreign investment?
Foreign investment can take the form of money, securities, properties, services and assets rights. Foreign and domestic investment are treated in the same manner.
What amount of investment is required?
There is no bottom limit.
Who can join in a mutual investment?
Foreign investors can invest with one or more foreign investors, inland investors, or a combination of foreign and domestic investors.
Can foreign investors acquire rights to real estate in Montenegro?
Foreign investors can acquire rights to real estate in Montenegro, such as company facilities, places of business, apartments, living spaces and land for construction. Additionally, foreign persons can claim property rights to real estate by inheritance in the same manner as a domestic citizen.
Can a foreign investor perform free transfer of goods from Montenegro and under what conditions?
Foreign investors can freely transfer their funds after fulfilling all liabilities and obligations such as: income tax, return of funds invested in initial capital, share in net assets, obligations in the case of contract ending, etc. Transfer of funds is also possible in the cases of foreign currency being sold off to a registered bank, the selling of goods and services, or transfer to an account of another foreign person.
Can foreign investors be taxed differently than domestic investors?
No. Foreign investors cannot be taxed differently than domestic investors.
Is the foreign investor obligated to insure his/her investment?
The foreign investor is obligated to insure the investment according to insurance regulations.
Who can insure your investment in Montenegro?
There are various foreign companies along with other bilateral and multilateral organizations providing risk insurance against civil war, expropriation, nationalization, confiscation, inconvertibility of profits and dividends, and non-transferable currency.
What are the rights and obligations of the foreign investor?
By his/her investment, the foreign investor has made it his right to take part in the operation and/or management of a company, to retrieve all investments and all capital (in cases predicted by contract or founding act). He/she has the right to take part in profits, and to transfer and reinvest profits, including the trade of currency.
The foreign investor may make use of all the rights guaranteed by the domestic legal framework. A foreign investor is obliged to make sure that financial reports, accounting and documents are in accordance with national legal system and international accounting principles and standards. Investor is obliged to act in accordance with the regulations on environmental protection.
Can the assets of a foreign investor be taken away?
The assets of a foreign person cannot be taken away unless the law provides proof that this is in the public interest. In such a case, the investor is given a settlement fee or compensation, which cannot be less than the market value of the acquired asset.
Does a foreign investor have the right to claim damages?
Foreign investors do have the right to claim any damages that have been made by non-legal means or by incorrect performance of responsibilities by state representatives of governmental bodies, in accordance with the law.
What types of companies does the Montenegrin law permit?
Montenegrin law permits the establishment of six types of companies, the most common being: Entrepreneur, Limited Liability Company (d.o.o.), Joint Stock Company (a.d.), General partnership (o.d.), Limited partnership (k.d), and Part of a foreign company.
What is the corporate profit tax rate?
The corporate profit tax in Montenegro is 9% flat.
What are the Value Added Tax rates?
The standard VAT rate in Montenegro is 19%, but there are reduced rates of 7% for tourism, IT equipment and 0% for some basic products. The VAT turnover period averages 30 days.
What are tax incentives in Montenegro?
- Corporate Income Tax: Newly established legal entity in an economically underdeveloped municipality conducting a production activity shall have the profit tax holiday for the period of the first eight years as of the day of the commencement of the activity. This does not refer to primary agriculture production, transport and shipyards, fishery nor steel production.
- Personal Income Tax: The taxpayer that generates profit in a newly established business unit conducting the production activity in the underdeveloped municipality shall be entitled to a personal income tax deduction for the duration of eight years, except in the area of primary agriculture production, shipyards, fishery and steel production.
- Additional incentives are introduced for hiring people in certain categories (i.e. longterm unemployed, disabled, etc) in terms of social security taxes and contributions.
What is the withholding tax regulation?
A taxpayer of the Profit Tax shall be obliged to calculate, withhold and pay withholding tax on payments made on the following bases:
- Dividends and interests in profits paid to resident and non-resident legal entities
and natural persons;
- Interest, royalties and other intellectual property rights compensations, capital gain, movable and immovable assets lease fees, revenues from provision of consulting services, market research services and audit services paid to a nonresident legal entity.
The withholding tax shall be paid at the rate of 9% to a base made of gross revenue. In a case of calculation of the withholding tax for revenues paid to a non-resident legal entity, a payer of revenues shall apply provisions of an agreement for avoiding double taxation, provided that the non-resident proofs the resident status in the country with which Montenegro has concluded the agreement for avoiding double taxation and that the non-resident is the real owner of revenues.
Which countries have signed the Double Taxation Treaty with Montenegro?
Montenegro signed 42 treaties with various countries on income and property, which regulate double taxing.
At this moment, 41 treaties are in force, while 1 (with India) is pending. In force are treaties concluded with Albania, Azerbaijan, Belarus, Belgium, Bosnia and Herzegovina, Bulgaria, China, Croatia, Cyprus, Czech Republic, Denmark, Egypt, Finland, France, Germany, Greece, Hungary, Italy, Ireland, Korea, Kuwait, Latvia, Macedonia, Malaysia, Moldova, Malta, Holland, Norway, Poland, Romania, Russia, Serbia, Slovakia, Slovenia, Sri Lanka, Sweden, Switzerland, Turkey, Ukraine, United Kingdom, and United Arab Emirates.
What is the Personal Income Tax?
Personal income tax is 9% with introduction of temporary tax rate of 15% applicable only on the salaries above the average (average monthly gross salary is 720€) so only the part over 720€ monthly is taxed at 15 %
What are property tax rates?
- A transfer tax of 3 % is levied on the transfer of immovable property.
- The property tax rate can total from 0.1% to 1% of the immovable property’s market value;
- The local governance unit may set the property tax rates according to the categories of immovable property;
- The tax rate on the sale of non-cultivated land is up to 50% higher compared to cultivated land.