Stability and Open Economy

Upon its independence in 2006, open economy and business-friendly environment has become one of the cornerstones of Montenegrin economic policy and development.

While oriented toward complying with the demands of modern, democratic and economically developed society and market economy Montenegro became a full member of the World Bank, IMF and EBRD in 2007 and of WTO in 2012.

Today, Montenegro is one of the EU most perspective candidate countries, which status granted in December 2010, as well as member of NATO alliance from June 2017.

Business Friendly Environment

Corporate and capital gains tax rates - Montenegro has one of the lowest corporate and capital gains tax rates in Europe (9%), low barriers to entry for new businesses, equal property rights for foreigners and domestic persons, and a price-competitive, educated young labour force.

Highly skilled work-force - For a small country, of less than 700.000 inhabitants, Montenegro offers a highly skilled work-force at competitive costs. Young population is characterized by its multilingual talent and almost 17% of population 15+ years of age do have high school education and faculty degree.

Currency - Official currency in Montenegro is Euro (€).

GDP - The average projected GDP growth rate in 2017-2019 is 3.4%.

Tax Rates -The tax system in Montenegro includes: Corporate Income Tax (9%); Personal Income Tax (9% and 11% on the amount above the gross wages higher than average (approximately 720 EUR); Value Added Tax (standard rate 21% (applicable also on newly built properties) and rates applicable to some categories of products and services: reduced rate of 7% and zero rate) ; Real Estate Transfer Tax (3% of the tax base- real estate value); Social security contributions; Excise duties, Fees; Custom Duties.

Equal Legal Treatment - Foreign companies in Montenegro are guaranteed equal legal treatment as the local ones. Foreign investor can operate in Montenegro either as a legal entity or as a natural person. There is no limit on the amount of capital invested in Montenegro. Foreign investors are encouraged to invest freely within any industry and to transfer assets, including profits and dividends. Foreign investors can acquire rights to real estate, such as commercial property, office space, residential space or construction land.

Incorporation of LLC - Incorporation of limited liability company in Montenegro shall be registered within four working days from the submission of request and necessary documentation to the competent authority. Limited liability company is the most frequently used form which minimum share capital shall be 1 EUR and only mandatory body to be appointed is Executive Director (who at the same time has to be employed in the company).

Key investments in Montenegro and related opportunities

Infrastructure projects:

Bar Boljare Highway- This is a key infrastructure highway project led by the Ministry of Transportation and Maritime Affairs. Upon its construction, the highway shall become incorporated into international road network, connecting several countries in Central Europe. The most difficult section Smokovac-Matesevo, shall be constructed first and is expected to be opened for traffic in 2019. Design anf construction of initial section will cost approximately € 810 million.

Adriatic Ionian Motorway- The coastal expressway aims to improve connectivity within the region and the EU and will run along the hinterland, begining close to the border with the Republic of Croatia near Herceg Novi and then stretching for some 110 km to Sukobin (the border with the Republic of Albania). Estimated value of the project is € 880 million.

Energy projects:

HVDC undersea cable between Italy and Montenegro- The project envisages the construction of the new interconnection implemented by the Montenegrin TSO CGES, Government of Montenegro and Italian TSO Terna SpA. The project is worth cca. € 1100 million. The interconnection is expected to be operational in 2019.

Ionian Adriatic Pipeline- The project is based on the idea to connect the existing Croatian gas transmission system, via Montenegro and Albania with the TAP system (Trans Adriatic Pipeline) or a similar project. The total lenght form Fieri (Albania) to Split (Croatia) is 511 km crossing for 94 km. Its 5 bcm/y capacity provides the natural gas supply of Albania (1 bcm), Montenegro (0,5 bcm), the south of Bosnian and Herzegovina (1bcm) and Croatia (2,5 bcm).

Offshore exploration- Concession related to the exploration of blocks in the country’s offshore following the First International Competitive Bid Round (ENI and OAO NOVATEK) was signed in September 2016

Wind farms- in 2010 the Government of Montenegro signed contracts on the lease of land and construction of following wind farms: (i) Možura site with the Fersa & Čelebić consortium; (ii) Krnovo site with MHI-IVICOM Consulting Gmbh (Construction is completed).

Small hydro-power plants- 26  concession agreements for the construction of 44 small hydro-power plants of 89 MW

Tourism projects:

Porto Montenegro – The project includes the construction of the yacht and mega yacht marina with 850 berths, with the surrounding nautical village and a 5* hotel, luxury villas, a museum, exclusive retail and f&b outlets. The estimated investment is cca €450 million. Large part of nautical village is already constructed.

Luštica Bay-The project includes construction of a mixed-used resort with 7 hotels, golf courses, residences and 2 marinas. The project includes construction of a largest hotel in the coastal region to be operated by world-renowned luxury hotel brand The Chedi which opening is expected for summer 2018.

Portonovi- The project includes construction of high end residential units, townhouses and villas, some of which were designed by the renowned Harrods studio of London and marina with 238 deep water berths. First One&Only Hotel in Europe is currently under construction with planned opening in 2019. The hotel will contain unparalleled wellness & treatment facility Espace Chenot from the famous Henry Chenot family. The investment is estimated at cca €600 million.

Above mentioned large tourism projects in Montenegro have importan impact also on construction and development of numerous medium size tourism projects and construction sector in Montenegro.

For additional information on Montenegrin laws and regulation, as well as general legal understanding of the market and business opportunities, please send us request on following e-mail address: office@kojic-kalezic.com