Optimal Legal Structure for Your Business in Montenegro

Published on October 5, 2025 and written by Cyril Jarnias

Montenegro, a small Balkan country, has become a top destination for foreign entrepreneurs in recent years. With its attractive tax framework and simplified procedures, the country offers excellent opportunities to launch your business. However, choosing the right legal structure is crucial for your project’s success. In this article, we will explore the different options available to you and guide you in making your choice.

Montenegro: A Promised Land for Entrepreneurs?

Since gaining independence in 2006, Montenegro has implemented economic policies favorable to foreign investors. The country stands out with its corporate tax rate of only 9%, one of the lowest in Europe. Additionally, administrative procedures for business creation have been significantly simplified.

In 2024, Montenegro recorded economic growth of 3.5%, driven particularly by the tourism and services sectors. The country is attracting more and more foreign entrepreneurs, drawn by its development potential and strategic position at the gates of the European Union.

However, before getting started, it’s essential to thoroughly understand the Montenegrin legal system and choose the structure best suited to your project.

Main Legal Structures in Montenegro: Make the Right Choice!

The Montenegrin legal system offers several company forms, each with its advantages and disadvantages. Here are the main options available to you:

1. Limited Liability Company (DOO)

The DOO (Društvo sa ograničenom odgovornošću) is equivalent to the French SARL. This is the most popular legal form in Montenegro, particularly suitable for small and medium-sized businesses. Its main advantages are:

• Limited liability up to the amount of contributions
• Minimum share capital of only 1 euro
• Great flexibility in management
• Possibility to have a single shareholder

The DOO is particularly recommended for entrepreneurs starting their business in Montenegro or those with modest-sized projects.

2. Joint Stock Company (AD)

The AD (Akcionarsko društvo) is equivalent to the French SA. It’s more suitable for large companies and projects requiring significant investments. Its main characteristics are:

• Minimum share capital of 25,000 euros
• Ability to raise funds by issuing shares
• More complex governance structure with a board of directors

The AD is generally chosen by companies with significant growth ambitions or those planning to go public in the future.

3. Sole Proprietorship (Preduzetnik)

For entrepreneurs wishing to operate alone, the Preduzetnik (sole proprietor) status can be an interesting option. This status offers the following advantages:

• Simplified creation formalities
• No minimum capital requirement
• Simplified accounting

However, the entrepreneur is personally liable for the business’s debts, which can represent a significant risk.

Sole Proprietorship or Company: What to Choose in Montenegro?

The decision between a sole proprietorship (Preduzetnik) and a company (DOO or AD) depends on several factors. Here are some elements to consider:

Advantages of Sole Proprietorship

The Preduzetnik status can be advantageous for small activities or business startups. It offers great administrative simplicity and reduced creation costs. Additionally, taxation is often more favorable for small incomes.

However, this status also has major disadvantages:

• Unlimited liability of the entrepreneur for personal assets
• Difficulty raising funds or forming partnerships
• Less professional image with partners and clients

Benefits of Creating a Company

Creating a company, particularly a DOO, offers many advantages for developing your business in Montenegro:

• Protection of personal assets
• Increased credibility with business partners
• Ability to form partnerships and raise funds more easily
• Easier tax optimization

For most foreign entrepreneurs establishing in Montenegro, creating a company is generally recommended. It offers better legal protection and greater development prospects.

Special Case of Liberal Professions

Certain liberal professions (lawyers, doctors, architects…) are subject to specific regulations in Montenegro. In some cases, operating as a sole proprietorship may be mandatory or more advantageous. Therefore, it’s essential to inquire with the relevant professional bodies before making your choice.

Key Steps to Create Your Business in Montenegro

Once you’ve chosen your legal structure, here are the main steps to follow to create your business in Montenegro:

1. Choose a Name for Your Business

Your business name must be unique and not already used in Montenegro. You can check name availability with the Central Registry of Business Entities (CRPS).

2. Prepare Necessary Documents

Required documents vary depending on the company type but generally include:

• Company statutes
• Copies of founders’ passports
• Power of attorney if using a local representative
• Proof of company address

3. Open a Bank Account

Opening a bank account in Montenegro is mandatory to deposit the share capital. Many international banks are present in the country, facilitating procedures for foreign entrepreneurs.

4. Register with the CRPS

Registration is done with the Central Registry of Business Entities. Processing time is generally 4 business days. Registration fees vary depending on the company type but are relatively modest (approximately 10 to 50 euros).

5. Obtain a Tax Number and Register for VAT

After registration, you must obtain a tax number from the Montenegrin tax administration. If your annual turnover exceeds 18,000 euros, you must also register for VAT.

6. Register with Social Security Organizations

Finally, if you plan to hire employees, you must register with Montenegrin social security organizations.

The complete business creation process in Montenegro generally takes between 1 and 2 weeks. Most procedures can be completed online, greatly facilitating the process for foreign entrepreneurs.

Tax and Social Security Specifics to Know

The Montenegrin tax system is particularly attractive for entrepreneurs. Here are the main points to remember:

Corporate Tax

The corporate tax rate is 9%, one of the lowest in Europe. This rate applies to profits made by the company. Tax deductions are possible for certain investments or job creation.

VAT

The standard VAT rate in Montenegro is 21%. A reduced rate of 7% applies to certain products and services (food, medicine, books…). Companies with annual turnover below 18,000 euros are exempt from VAT.

Personal Income Tax

For sole proprietors or company directors, income tax is progressive with rates ranging from 9% to 15%. Social security contributions are added to these rates.

Social Security Contributions

Social security contributions in Montenegro are relatively high, representing about 34% of gross salary (combined employer and employee portions). However, reductions are possible for certain employee categories or in specific regions of the country.

Double Taxation Agreements

Montenegro has signed double taxation agreements with many countries, including France. These agreements prevent being taxed twice on the same income and can offer additional tax advantages to foreign entrepreneurs.

It’s highly recommended to consult a local accountant to optimize your tax situation and ensure compliance with all legal obligations.

Advantages and Challenges of Doing Business in Montenegro

Creating your business in Montenegro offers many advantages, but also some challenges to overcome. Here’s an overview of the main points to consider:

Advantages

• Attractive tax environment: With a corporate tax rate of 9%, Montenegro is one of Europe’s most competitive countries tax-wise.
• Simplified administrative procedures: Business creation is fast and can be largely done online.
• Competitive cost of living and salaries: Operational costs are generally lower than in Western Europe.
• Strategic geographical position: Montenegro is at the gates of the European Union and offers easy access to Balkan markets.
• Thriving tourism sector: The country attracts more and more visitors, creating numerous business opportunities.

Challenges

• Limited domestic market: With a population of about 620,000, the Montenegrin market is relatively small.
• Language barrier: Although English is increasingly spoken, Montenegrin remains the main business language.
• Sometimes complex banking system: Opening bank accounts for non-residents can prove complicated.
• Still developing economy: Some sectors are less developed than in Western Europe, which can pose logistical challenges.
• Corruption: Although the situation is improving, corruption remains a problem in some sectors.

Despite these challenges, many foreign entrepreneurs succeed in Montenegro. The key to success often lies in good preparation and thorough understanding of the local market.

Conclusion: Making the Right Choice for Your Business in Montenegro

Choosing the right legal structure for your business in Montenegro is a crucial decision that will significantly impact your activity. Whether you opt for a limited liability company (DOO), joint stock company (AD), or sole proprietorship (Preduzetnik), each option has its advantages and disadvantages.

For most foreign entrepreneurs, creating a DOO often represents the best compromise between legal protection, flexibility, and tax optimization. However, the final choice will depend on your personal situation, the nature of your activity, and your long-term goals.

Montenegro offers an environment conducive to entrepreneurship, with its tax advantages, simplified procedures, and growth potential. Nevertheless, it’s essential to prepare well and surround yourself with local professionals to navigate this new business environment effectively.

Whatever option you choose, careful planning and thorough understanding of the local market will be the keys to your success in Montenegro.