MONTENEGRO...

Why Establish My Business & Invest in Montenegro?

Montenegro is a small and highly open economy that fits perfectly into the global FDI trends, and in that sense, it offers a favorable investment climate. Attracting foreign investments is one of the primary objectives, aiming at positive effects like accelerating the growth of the production sector and, consequently, creating new jobs by opening new businesses and companies.

Foreign direct investments (FDIs) represent one of the essential instruments for a national economy to stimulate its production sector, import know-how, increase employment, develop infrastructure, and increase national welfare and individual wealth.

Montenegro has already achieved a milestone through many diverse FDI attracted so far: it has become a serious competitor in the global market of capital investments.

Why invest in Montenegro? Because Montenegro has:

• Political, monetary, and macroeconomic stability

• Easy STARTUP Procedure

• Liberal economic foreign trade regime,

• Favorable Progressive tax starting from 9 % Profit Tax, 7% / 21% VAT, Personal Income Tax 15 %

• International Accounting and Banking Standards

• Commercial liberty

• Geography and climate

• Numerous Double Taxation agreements so that you can easily avoid being imposed taxes in your home country based on the agreements and according to laws and regulations.

• The possibility to return your profit after tax to your home country account according to laws and regulations.

• Based on the principles of the WTO, Montenegro has signed free trade agreements with the EU, CEFTA, Russia, Ukraine, and Turkey, which allows duty-free access to a market of almost 800 million.

• A foreign investor Can establish a company (alone or with other investors), invest in companies, buy a company, or be a part of it.

• A Foreign Investor Is taxed in the same way as domestic investors.

• Progressive Corporate Income Tax starting from 9 %.

• Value added tax rate - 21% and 7%

• Taxes and contributions on personal income tax of 15%

• Total contributions paid by the employer: 9.8%

• Total contributions paid by employees 24.0%

• Various Support to investors

***The incentives at the national level include tax incentives for investments in underdeveloped parts of the country, namely:

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1. Exemption from profit tax:
The newly established legal entities in underdeveloped municipalities that perform productive activities are exempted from profit taxes for the first eight years. The tax exemption does not apply to a taxpayer operating in the primary production sector of agricultural products, transport or shipyards, fishing, and steel.

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2. Tax on personal income:
A taxpayer who starts manufacturing activities in an underdeveloped municipality is exempt from income tax for the first eight years. This tax exemption does not apply to a taxpayer operating in the primary production sector of agricultural products, shipyards, fishing, and steel.

Subsidies for the employment of unemployed persons of specific categories. The subsidies may be used by an employer who hires:
- Persons of the age of 40 years and older;
- Unemployed Roma, Ashkali, and "Egyptians" (RAE);
- Persons being in the records of the Employment Agency for more than five years;
- Persons being employed in public works;
- Persons who are employed indefinitely after the traineeship;
- Persons whose services are no longer needed (techno-economic surpluses) and who are registered in the Registry of the Employment Agency;
- Persons employed as seasonal workers;
- Unemployed persons who have been working for over 25 years and who receive money allowances;
- Persons in business zones.

For the above-listed categories of the unemployed, the employer does not pay:
- Contributions for mandatory social insurance on wages (pension and disability insurance, health insurance contributions, contributions for unemployment insurance, contributions for the Labor Fund);
- Tax on personal income.

Calculated and suspended from the employee's salary are as follows:
- Contribution for pension and disability insurance at the rate of 15.0%;
- Health insurance contribution at the rate of 8.5%;
- Contribution to unemployment insurance at the rate of 0.5%;
- Surtax;
- The employer pays these contributions in the calculated amount, including the tax on personal income. The employer pays the calculated surtax. The basis for calculating the contributions is the gross income of an employee. The employer will pay Taxes and contributions at the same time as the salaries are paid.

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3. Financial support:

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During the past two years, the Investment and Development Fund (IDF) has supported 394 investment projects of over EUR 32 million, and banks invested in its implementation and evaluation of projects of around EUR 7 million.

The main IDF objectives are encouraging and accelerating economic development. The Fund grants loan guarantees and performs tasks related to the sales of capital in the Fund's portfolio. The most critical areas of activity are:
- Support of SMEs (credit and warranty support);
- Support infrastructure and environmental projects;
- Incentives for exports and employment;
- Privatization of the rest of the social capital.
The support granted to SMEs and entrepreneurs is realized through direct loans, loans through banks, unique credit lines, guarantees, and factoring.

The credit conditions stipulate interest rates ranging from 4.5% to 6.5% with a grace period of 2 years and a repayment period of 8 years. Particular benefits are defined based on the implementation of projects in the northern municipalities and less developed towns (Cetinje and Ulcinj) for entities that hire five or more new persons during the implementation of a project, and those entities as collateral submit a bank guarantee. The MIDAS project, which is being implemented in cooperation with the Ministry of Agriculture and Rural Development, is also carried out through the IDF. The credit line for financing the project is headed by women, and a credit line for young people in business (from 21-35 years) is available at an interest rate of 4.5%.