Corporate Taxation in Montenegro

Published on October 5, 2025 and written by Cyril Jarnias

Montenegro, a small Balkan country bordered by the Adriatic Sea, has become a prime destination for international entrepreneurs and investors in recent years. With its attractive tax system and simplified procedures, Montenegro offers a favorable environment for business development. Let’s explore together the tax benefits and steps to establish your company in this country with multiple advantages.

A Favorable Tax Regime That Attracts Businesses

Montenegro has implemented a particularly attractive tax policy to draw foreign investors and stimulate its economy. The country offers one of the lowest corporate tax rates in Europe, at just 9%. This advantageous taxation allows businesses to retain a significant portion of their profits for reinvestment and growth.

In addition to this reduced rate, Montenegro offers other tax benefits:

• Corporate tax exemption for the first 3 years of operation for newly created companies in certain priority sectors
• Tax reductions of up to 50% for investments in less developed regions of the country
• Reduced VAT rates (7%) on certain products and services such as tourism
• No withholding tax on dividends, interest, and royalties paid abroad

These incentive measures aim to attract foreign capital and promote local job creation. The Montenegrin government has bet on attractive taxation to boost its economy and establish itself as a competitive financial hub in the region.

Setting Up Your Business in Montenegro: Simplified Procedures

Montenegro has implemented simplified administrative procedures to facilitate business creation by foreign investors. Company registration can be completed in just 4 business days on average, placing the country among the fastest in the world in this area.

The main steps to create your business are as follows:

• Choose your company’s legal form (LLC, Corporation, etc.)
• Reserve your business name with the central registry
• Prepare the articles of association and other founding documents
• Open a bank account and deposit the minimum share capital
• Register with the central business registry
• Obtain a tax identification number from the tax administration
• Register with various social security systems (pension, health, etc.)

All these procedures can be completed online via the eRegister portal, which greatly simplifies the process. The total cost of setting up a business in Montenegro is approximately 50 euros, making it one of the cheapest destinations in Europe to start a business.

Additionally, there are no restrictions on foreign ownership of businesses in Montenegro. Foreign investors can hold 100% of their company’s capital without needing a local partner.

Registering with Montenegrin Tax Authorities: How It Works

Once your business is established, you must register with the Montenegrin tax administration to obtain your tax identification number and be able to file taxes. This procedure is mandatory and must be completed within 15 days of creating your company.

To register, you must provide the following documents:

• Your company’s registration certificate
• Your company’s articles of association
• A copy of your passport or ID card
• Proof of address in Montenegro
• Lease agreement for your business premises

Tax registration can be done online via the Montenegrin tax administration’s eTax portal. Once your file is validated, you will receive your tax identification number within 3 business days on average.

It’s important to note that all companies registered in Montenegro must maintain accounting records compliant with international IFRS standards. You will also need to appoint a local tax representative if you are not a resident of Montenegro. This representative will be the contact person for the tax administration and can perform certain procedures on your behalf.

Corporate Tax Obligations in Montenegro

Once registered, your company must comply with certain regular tax obligations. Here are the main declarations and payments to be made:

• Monthly VAT declaration (if your annual turnover exceeds 18,000 euros)
• Quarterly social security contributions declaration
• Annual corporate tax declaration (before March 31 of the following year)
• Payment of monthly corporate tax installments
• Annual declaration of income paid to employees

Companies must retain their accounting documents for at least 5 years. Tax audits may be conducted by the administration, so it’s important to maintain rigorous and compliant accounting.

Failure to comply with tax obligations can result in penalties ranging from 500 to 20,000 euros, depending on the severity of the offense. In case of proven tax fraud, sanctions can include business closure and criminal prosecution.

It is recommended to hire a local accountant to assist with your tax obligations and ensure compliance with Montenegrin regulations.

Double Taxation Agreements: An Asset for International Expansion

Montenegro has signed double taxation agreements with many countries, representing a significant advantage for businesses looking to develop international operations. These agreements prevent income generated abroad from being taxed twice, in both the source country and Montenegro.

Currently, Montenegro has concluded double taxation agreements with over 40 countries, including:

• Most European Union countries (France, Germany, Italy, etc.)
• The United States
• Russia
• China
• The United Arab Emirates
• Switzerland

These agreements generally cover corporate tax, income tax, and sometimes wealth tax. They define reduced withholding tax rates on dividends, interest, and royalties paid between signatory countries.

For example, the agreement between Montenegro and France provides for a withholding tax limited to 5% on dividends paid to a French company holding at least 25% of the Montenegrin company’s capital.

These agreements also facilitate information exchange between tax administrations of signatory countries, which helps combat tax evasion while providing legal security for businesses.

Montenegro vs. Other Offshore Jurisdictions: An Informative Comparison

Montenegro positions itself as an interesting alternative to traditional offshore jurisdictions, offering a balance between tax benefits and international reputation. Here’s how it compares to other popular investor destinations:

Montenegro vs. Cyprus: – Corporate tax rate: 9% in Montenegro vs. 12.5% in Cyprus – Business setup: 4 days in Montenegro vs. 7 days in Cyprus – Reputation: Montenegro is not on the EU grey list, unlike Cyprus

Montenegro vs. Malta: – Corporate tax rate: 9% in Montenegro vs. 35% in Malta (with possibility of partial refund) – Setup cost: 50€ in Montenegro vs. 1500€ in Malta – EU access: Malta is an EU member, which can be an advantage for certain activities

Montenegro vs. Dubai: – Corporate tax rate: 9% in Montenegro vs. 0% in Dubai (but introduction of 9% corporate tax in 2023) – Cost of living: Significantly lower in Montenegro than in Dubai – Business environment: Montenegro offers a more familiar framework for European businesses

Montenegro stands out for its attractive taxation, simplified procedures, and political stability. Additionally, its candidate status for European Union membership gives it increased credibility with international business partners.

Unlike some offshore jurisdictions, Montenegro is not considered a tax haven by the OECD or the European Union. This allows businesses to operate there without risking being stigmatized or facing restrictions in their international transactions.

Conclusion: Montenegro, A Future Destination for Your Business

Montenegro is establishing itself as a prime destination for entrepreneurs and investors seeking an advantageous tax environment and a framework conducive to business development. With its attractive 9% tax rate, simplified administrative procedures, and strategic position at the gates of the European Union, the country offers numerous advantages for establishing your business.

Montenegro’s political stability, its commitment to the EU accession process, and its willingness to modernize its economy make it a future destination for international businesses. The country has managed to create a balance between tax benefits and compliance with international standards, allowing it to attract investors without being considered a tax haven.

However, as with any foreign establishment, it’s crucial to research local specifics thoroughly and surround yourself with experts to guide you through the procedures. Taxation and regulations can evolve quickly, so it’s important to stay informed about potential changes.