Company formation Montenegro

Montenegro, a country located in Southeast Europe, is bordered by the Adriatic Sea to the southwest, Croatia to the west, Bosnia and Herzegovina to the northwest, Serbia to the northeast, Albania to the southeast, and Kosovo to the east. Montenegro is divided into 23 municipalities, with Podgorica as the capital. The official language is Montenegrin, and the currency is the euro (EUR).

Montenegro has privatized its large aluminium complex, which is its dominant industry, as well as most of its financial sector. It has also begun to attract foreign direct investment in the tourism sector.

Taxation

Entities operating in Montenegro are subject to a 9% CPT.

Resident taxpayers are taxed on their worldwide profit. Non-resident taxpayers are taxed on their Montenegrin-sourced income or income attributed to their Montenegrin permanent establishment (PE). Non-residents are also subject to WHT on income sourced in Montenegro.

Montenegrin CPT Law imposes WHT on income realised from a Montenegrin source and distributed to a non-resident. The scope of the WHT applies to dividends and profit distribution, capital gains, interest, royalties, intellectual property rights fees, rental income, fees for consulting, market research, and audit services, as well as to income earned on the basis of performing entertainment, artistic, sport, or similar programmes in Montenegro.

WHT will also be payable on income earned by non-resident or resident individuals on the basis of repurchase of used products, semi-final products, and agricultural products from a manufacturer registered for VAT purposes.

Distributions of dividends and share of profits are also subject to WHT if the recipient is a Montenegrin resident (either an individual or legal entity).

The general WHT rate is 9%.

Application of a double tax treaty (DTT) may reduce or eliminate Montenegrin WHT. To qualify for the beneficial rates prescribed by the treaty, a non-resident must prove tax residency of a relevant treaty country and beneficial ownership over the income. In order to qualify for a preferential tax rate according to a DTT, a non-resident will need to provide the tax residency certificate filled out and stamped by the relevant authority of its country of residence.

 

The biggest advantages of a Estonian limited company

  • Montenegro is not an offshore jurisdiction, but a company in Montenegro has the lowest taxation in Europe - 9% on declared profit (personal profit tax is also 9%). Although it is located in Europe, it is not a EU member, which means there's no information exchange with EU (and no automatic exchange of financial account information).
  • The company is easy to incorporate and maintain, incorporation can be done remotely, minimum capital is 1 euro only, initial and ongoing costs are incomparably lower than in any EU country. Local currency is euro so there's no loss during wire transfers. The company can obtain VAT. Bank account can be opened within 20 minutes.
  • A company director or/and employee gets temporary residency in Montenegro.

The biggest mistakes when starting a business abroad

Many agencies and law firms do not advise comprehensively or wrongly. Learn what to look for.

Gravity of the situation

Often, these law firms think foreign companies are half-silk, tax evasion is favored and mailbox companies are the leaders rather than the exception. This is true, however, only in some start-up agencies that do not have the necessary expertise. Self-proclaimed law firms that do not employ tax accountants or lawyers usually set up companies that are unlikely to operate legally. We set up and look after companies that can withstand tax audits and that are legally operated.

Do you have to live in the country where you start a company?

You can set up a company worldwide, as long as the respective country allows you as a foreigner to acquire shares in local companies or to act as a managing director. If this is not the case trustees can be used. For example, Cyprus allows every EU citizen to own and run a business. Nevertheless, trustees can be used for the purpose of identity protection. However, it is important that the management takes place locally, in the country in which the company is to be taxable. In addition, a permanent establishment must be set up. Without these, a major tax offices around the world do not recognize the company and in the worst case would require additional payment of corporate and business taxes plus late payment surcharges. We rent you a real office and set up a permanent establishment that meets all requirements beyond doubt.

Problematic Law firms: Secrecy is not regarded.

Some law firms bind customers with toggle contracts and exert pressure when the customer wants to close his company. If you are a client of a law firm that has established a legally flawed company, they can be blackmailed. Because in the case of a fiscal problem, law firms without a license are not bound by a duty of secrecy.

Migrating to a different law firm

We receive many inquiries from customers who already own a foreign company and are looking for a new law firm. The process of changing law firm is made often difficult on purpose. Therefore, we have developed a principle of trust. If you are not satisfied with us and want to change, you can do that at any time. The necessary documents (resignation letter), you receive from us standardized after founding. You are therefore protected against unexpected costs and you are free at any time to visit another law firm. So far we have not lost any customer to another law firm.

Privacy / Firm Location

Your accounting documents are kept safe with us. In addition, all electronic data is stored encrypted and accessible only by us, which are bound to a professional secrecy. All accounting records are also stored locally only. Neither authorities nor hackers are able to access this data.

No taxes?

There are quite a few locations in the world that do not charge taxes on companies or individuals, or only estimate a very low flat rate tax. But this can rarely be used without corresponding change of residence. If you are a resident of any major country, the relevant double taxation agreement is decisive. Providers who promise otherwise lead them to tax evasion, which in the case of discovery usually punishes severely. We advise against setting up companies in countries that have already been blacklisted by the OECD. The foundation is usually very cheap, but the tax consequences in your origin country can be devastating. Since the introduction of the automatic exchange of information between almost all major countries, an anonymous private account no longer exists.

We comply with the following code:

  • Legally secure foundations
  • No unexpected(hidden) costs
  • No false promises
  • Finding the right solution by focusing on your requirements

With this strategy, we have been on the market since 2013 and have not disappointed any customer so far. And we prioritize it in keeping that way. We strive to ensure that every client is satisfied and does not take risks with the solutions we provide for them, but only exploits legal opportunities. Starting a company that involves doing real business is more costly than a letterbox company, but it is the only way to save on taxes without risking legal action.

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