Montenegro, strategically located in the Western Balkans, provides advantageous investment opportunities for foreign investors. The development strategy, a key policy of the country, aims to attract foreign direct investments through a competitive and business-friendly environment. Accordingly, Montenegro aims to position itself as a major business hub in Southeast Europe, drawing companies and investors worldwide.

No Restrictions for Foreign Investments

Montenegro has been attracting many foreign investors in several promising sectors likewise tourism, energy, real estate, and infrastructure. Important to note, that Montenegro works on providing a business environment characterized by favorable regulations and financial incentives. Its business-friendly environment is supported by competitive tax rates and legal reforms that allow for smoother processes when opening and running a business. For instance, setting up a business in Montenegro is quite straightforward.

Foreign investors enjoy the same rights and conditions as local investors when establishing a company or making investments. For all foreign natural and legal entities, the state allows investments into the country without restrictions.

Numbers to Look At

Within the timeframe December 2006 to December 2023, the country received a total of €13.8 billion in Foreign Direct Investments, according to the Central Bank of Montenegro. From 2019 to 2023, Foreign Direct Investment (FDI) inflows reached €4.38 billion. Of this total, €859.9 million was directed toward domestic companies and banks, €1.7 billion represented intercompany debt inflows, €1.48 billion was invested in the real estate sector, and €296.9 million was allocated to other sectors.

The Montenegrin Investment Agency (MIA) noted that the primary investors came from Switzerland, Russia, Serbia, Germany, Italy, the USA, and other countries.

Reasons to Invest in Montenegro

Montenegro has great potential in renewable energy, offering opportunities for investors to develop green energy projects. Infrastructure development also occupies an important place in the country’s focus, offering new perspectives for investment in construction and transport.

Investing in Montenegro can therefore provide diversification in an investment portfolio. There is also a chance for strong returns, due to its growing economy and multiple sectors offering opportunities. Montenegro provides easier access to investments and simplified business registration, making it more attractive for entrepreneurs. It offers entry into a market of over 20 million consumers and greater integration into EU and global trade networks. Additionally, the country promotes the use of innovation and digital technologies, fostering a modern and competitive business environment.

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Investment Incentives in Montenegro

New businesses operating in economically underdeveloped areas are exempt from paying corporate income tax for their first eight years.

The Value Added Tax (VAT) law allows for a VAT exemption on products and services used for building and equipping catering facilities that are rated five stars or higher.

A taxpayer starting a business in an economically underdeveloped area who hires someone for an indefinite period or at least five years will not have to pay income tax for that employee for four years from the hiring date. This exemption is subject to the conditions outlined in the Law on Income Tax of Natural Persons.

The Law of Value Added Tax prescribes VAT exemption on the supply of products and services for the construction and equipping of an energy facility for the production of electricity with an installed capacity exceeding 10 MW.

Startups and spinoffs do not have to pay employer contributions for their employees. This exemption applies to workers in scientific research institutions, those involved in scientific research or innovation activities, and freelancers doing innovative work for foreign companies.

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If you are interested in investing in Montenegro, it is advisable to consult with a professional on investment opportunities that best suit your needs. Our firm specializes in international taxation, and our team is ready to assist with any related matters. If needed, we can connect you with top professionals to support your business activities in Montenegro. Please feel free to contact us.