Entrepreneurs looking to expand or relocate their business to the European region often choose to register as a sole proprietor or company in Montenegro. This is due to favorable tax conditions and the simplicity of registration compared to neighboring countries. Moreover, establishing a company provides grounds for obtaining a temporary residence permit, enabling legal long-term residence in Europe.
MyReloc offers highly qualified assistance in business registration and relocation to this beautiful country. Our team provides consulting services to help you choose the most suitable legal form for business registration based on your circumstances and needs.
How to open SP or Company in Montenegro
In Montenegro, the most popular business structures among entrepreneurs are Sole Proprietorship (Preduzetnik) and Limited Liability Company in Montenegro (DOO).
The SP form in Montenegro is often chosen by small businesses that don’t require many employees. Technically, SP allows an individual to legally engage in commercial activities without establishing a legal entity. To become a sole proprietor, you need to:
- Choose your business area and determine the appropriate business activity code (Djelatnost). Experts say the most promising sectors currently are: boat and car rentals, hospitality, agriculture, and beauty services. However, keep in mind that consumer demand for many goods/services is low among the local population due to modest income levels. On the other hand, the tourism sector is rapidly growing.
- Submit a founding act to the Central Commercial Court.
- Obtain certification, which usually takes about five business days.
- Receive a tax identification number.
- Open a business account at a local bank to handle financial operations and pay taxes.
Note: In some cases, additional licenses/permits may be required to legally operate, depending on your business area.
SP vs Company in Montenegro — Drawbacks of SP:
- SP in Montenegro allows operation in only one business activity stated at registration. For most trades, you’ll need to equip a workspace and obtain additional permits. DOO, on the other hand, allows for multiple activities as defined in the charter — advantageous for entrepreneurs combining various services (e.g., selling and delivering goods).
- If problems arise, SPs are personally liable with all personal assets.
- SP can only be owned by one person, whereas DOO can have up to 30 founders (including legal entities).
- DOO registration is actually faster and easier than SP.
- To obtain a residence permit based on SP, the municipality requires a license for a specific activity, which can only be issued if you rent an office — not always necessary for all professions. Even with an office, some municipalities may refuse a permit unless you already hold a residence permit, which you likely don’t have yet.
- Another disadvantage of SP is the complex and not fully transparent tax system compared to DOO or sole proprietorship regimes in other countries. The taxes for SPs in Montenegro vary based on income and business type.
If the annual turnover is below €18,000, a lump-sum tax regime applies. The actual amount is determined by tax authorities after reviewing your annual report. It can range from €135 to €5,000 based on which of the four tax groups your SP falls into by income and activity type. This regime suits artisans offering services directly to the public, such as welders, technicians, photographers, pastry chefs, taxi drivers, beauty professionals, or those renting out apartments to tourists.
For consulting, financial, and intellectual services, as well as retail, real estate, and hospitality businesses, this simplified tax regime is not allowed.
If the annual turnover exceeds €18,000, tax is calculated on actual income. Since 2022, income tax is 15%. Additionally, you must pay monthly contributions ranging from €114 to €285. This tax regime suits those in intellectual professions like IT, marketing, or blogging.
If turnover exceeds €30,000, SPs must also register for VAT. The standard VAT rate in Montenegro is 21%. For international operations — 0%. Some industries may benefit from reduced VAT rates.
If you hire employees, you’ll need to pay taxes and contributions on their salaries. The total amount depends on the salary. For instance, if an employee earns €450, about 26% must be paid in taxes and contributions.
Choosing the Right Business Structure
You should carefully weigh the pros and cons of each legal structure based on your specific situation. In some cases, SP is more beneficial; in others, DOO is the better choice. Regardless of your decision, it is crucial to handle tax reporting diligently — ideally by hiring a local professional. Montenegro’s government frequently updates its tax laws, and it’s essential to stay compliant to avoid fines.
Our Services for Montenegro:
Legal support
Registration of DOO and SP
Assistance opening bank accounts in Montenegro
Accounting services
Real estate and yacht search & acquisition
Residence permit processing for employment, business, etc.
