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Tax residency in Montenegro through company formation: the keystone of an optimization strategy

calendar 3/22/2021 8:00:00 AM
author Admin System

For a couple of years now, Montenegro has gone from being a relatively unknown jurisdiction to one of the most attractive destinations for Russians, Americans, Chinese, Africans, and Latin Americans when it comes to investing and moving their assets to Europe.

Montenegro became the Balkans’ hidden gem since it decided to open up to the markets and take a pro-business stance in which foreign investors worldwide saw the ideal opportunity to invest in one of the most promising jurisdictions in all of Europe.

While Central European countries are facing a future full of debt and uncontrolled public spending, Montenegro's strategy has positioned it as one of the best options for people looking for fiscal optimization and quality of life with European standards.

Not surprisingly, more and more of our readers are asking us how to implement their fiscal optimization strategies in the Balkan jewel that is Montenegro. Even more so when the country is steadily approaching its official incorporation to the European Union.

In short, Montenegro is the best option for investors who want to make their way into Europe because it offers an incomparable combination of advantages:

  • A citizenship-by-investment program of the highest standard.
  • The possibility of obtaining an E-2 visa to do business in the United States.
  • Low real estate costs and at the same time higher profitability than the European average.
  • A tax framework that steers clear of controversies with international regulators. 
  • An 11% income tax rate for individuals and a 9% tax rate on dividends and capital gains.
  • A flat 9% corporate income tax rate.
  • Double taxation treaties to avoid double taxation in more than 40 countries.
  • Economic growth projections above the European average for the next 5 years.
  • The best quality of life in the Balkans.

At Mundo, we love to talk about Montenegro because it is one of the jurisdictions in Europe that is best poised to overcome socialist governments’ proliferation we see in other countries. That's why this nation is at the top of our list when it comes to fiscal optimization.

No wonder Montenegro is called "the Switzerland of the Balkans" in international investor circles.

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Why Montenegro? Five reasons to obtain tax residency in Montenegro

A simple tax system

Tax optimization is not only about finding a jurisdiction whose taxes are low. It is also important that you consider how the tax system works in general, how strong the laws are, and the country's government stance on tax collection. 

Luckily, Montenegro has one of the best tax systems in Europe. If you become a tax resident of this beautiful country, you can forget about complicated forms and headaches. The Montenegrin government has made a notorious effort to simplify its tax system as much as possible.

The best tax optimization in Europe

This beautiful Balkan country has a corporate tax rate that remains fixed at 9%, as does the capital gains tax, while income tax is always levied in a range between 9% and 11%. This makes Montenegro's tax rates on average twice as low as those of the rest of the European countries.

In addition, the tax system is territorial for non-resident companies, and when you combine that with the more than 40 double tax treaties that Montenegro has with other countries, it is hard not to see that this jurisdiction is one of the best to ease the tax burden of any investor or high net worth individual.

A jurisdiction that has no disputes with international regulators

Montenegro maintains a spotless record when it comes to lawsuits or disputes with international regulators who are on the hunt for financial centers around the world. In fact, Montenegro has a distinct advantage: this country is not a member of the CRS (Common Reporting Standard), which means that Montenegrin banks do not automatically cross-check information with tax authorities in other countries.

Europe's best return on investment in real estate

Montenegro's real estate industry has not stopped growing in the last few years. Unlike the rest of Europe, where there is a huge supply and very little demand, in Montenegro, it is still possible to buy luxury properties at very affordable prices, which also have a higher return on investment than what is seen in the rest of the continent.

A banking system with European standards

If we are talking about obtaining tax residency in a jurisdiction, of course, we have to make sure that we have a reliable banking system that allows investors and high net worth individuals to protect their assets. In this regard, Montenegro also shines with a modern banking system that takes good care of its clients’ security and privacy.

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Tax residency in Montenegro and how to obtain it

There are several routes you can take to become a tax resident in Montenegro, but undoubtedly our favorite way is to obtain tax residency through the creation of a company in this country.

This way, obtaining tax residency has some very distinct advantages, the biggest being an 11% corporate tax rate and an income tax rate that goes from 9 to 11%. Basically, all your income will be taxed at this rate. This is one of the best tax optimization levels you can find beyond offshore Caribbean and Pacific paradises.

How is the process to become a Montenegrin resident through the creation of a company and start optimizing your taxes? Let's take a look at it.

The most favorable option for obtaining tax residency in Montenegro is to register a company in the country. We say it is the most favorable option because if you register a Montenegrin company, you will not only be able to access tax residency, but it also leaves the door open for a definite residency in the future.

Registering a company sounds like a lot of work, but the Montenegrin system makes things easy, especially if you have the right help.

To get your tax residency, in a nutshell, the idea of registering a company has three fundamental parts:

  • Registering the company
  • Self-employment as a director
  • Obtaining your work permit

That's all you need to do. It is one of the most efficient ways to become a tax resident in Montenegro. In fact, your company doesn't actually have to operate. It is enough to complete the formality of registration and your self-employment.

Opening the Montenegrin company requires a minimum capital of 1 euro in the case of limited liability companies, which is the most chosen corporate structure for its advantages when it comes to protecting your assets.

You may be wondering about the costs of maintaining this tax optimization strategy. In this regard, you will be pleased to know that the salary you must earn to comply with the formalities can be as little as 100 euros per month. We are talking about a tax burden reduction strategy whose maintenance cost is undoubtedly cheaper than a good bottle of wine.

But, if it's so easy, why doesn't everyone do it?

Although the company registration process is particularly simple in Montenegro, there is a barrier to foreign investors’ entry. In this case, it is the Montenegrin language. The vast majority of procedures in this country are done in the official language, therefore, to implement this type of tax strategies it is necessary to have the help of legal experts who are authorized to operate in Montenegro and who speak the language perfectly.

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Our offer in Montenegro

At Mundo, we always strive to initiate partnerships with the best legal and financial experts in the best jurisdictions. Montenegro is no exception.

Today, our Montenegrin experts’ team allows us to offer our distinguished readers a virtually unlimited range of possibilities in this beautiful Balkan country. And, of course, a route to Montenegro's tax residence is part of the menu.

Our Montenegrin partners can help you become a tax resident in Montenegro through the creation of a company. You can stop worrying about the language barrier and start enjoying the benefits of this jurisdiction.

We can help you with: 

1. Company formation 

  • Preparation of the initial decision to register here. 
  • Preparation of the Memorandum & Articles of Association. 
  • Registration with the Central Company Registry. 
  • Registration with the Tax Office with VAT.
  • Registration with the Customs office. 
  • Bank account opening for the company. 
  • Company seal. 
  • Registration of an employee with the Tax Office with a draft labor agreement. 

2. Monthly/Yearly maintenance 

  • Provision of the registered address. 
  • Monthly accounting. 
  • Monthly payroll service. 
  • Monthly tax, VAT, and social security reporting. 
  • Communication with banks and other institutions up to 3 hours/month. 
  • Legal and tax consultancy up to 1 hour/month. 

3. Annual compliance 

  • Preparation and submission of the Financial Statements. 
  • Balance Sheet. 
  • Income Statement. 
  • Statistical Annex. 
  • Other annual statutory reports. 
  • Preparation and submission of the Annual Tax Declaration.

Our readers have access to preferential rates to access the services of our experts in Montenegro. If you want to learn more about starting your process of obtaining Montenegrin tax residency, don't wait any longer and contact our team. 

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Who are we and what can we do for you?

Our partners at NTL have been working for almost three decades to provide investors and high net worth individuals with the best opportunities to invest, protect their assets and optimize their tax strategies. We believe in hard work and in protecting the fruits of our labor at all costs.

For nearly 30 years, our partners at NTL have watched countries around the world turn their backs on freedom, but instead of giving up, they decided to do something to help people protect themselves from socialist and anti-business policies.

Our work, together with NTL, has led us to organize a global network of legal and financial experts in the world's most secure jurisdictions. And we are pleased to let you know that this network is now also in Montenegro.

Our Montenegrin experts work with high-profile investors to help them move their businesses to Europe's most promising country, and they can help you too.

If you want to start your tax strategy in Montenegro and enjoy the advantages of this amazing jurisdiction, you can count on us for the best tax advice. 

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