5 Crucial Criteria Before Forming a Company in Montenegro

Montenegro has become a magnet for international investors, digital nomads, and entrepreneurs due to its remarkably low 9% corporate and personal income tax rate. While registering an LLC (DOO) takes only 5-7 days with a minimum share capital of 1 Euro, proceeding with superficial knowledge can expose you to severe legal and financial risks.

The Biggest Misconceptions About Montenegro Company Registration

At Rona Legal, we have encountered many investors who fell victim to misleading internet promises like 'instant company, permanent residency.' Before you invest your time and money, you must analyze these 5 vital criteria.

1. Incorporation Does Not Grant Permanent Unconditional Residency

Under Montenegrin law, upon forming a DOO, you can appoint yourself as the Executive Director (Izvrsni Direktor) and apply for a combined work and residence permit. However:

• Temporary Status: The initial permit is temporary, valid for 1 year, and must be renewed annually.
• Strict Renewal Conditions: To renew, your company must remain active, without any tax/social security debts.
• The 30-Day Rule: If you hold a temporary residency based on your company, you are generally not allowed to be physically absent from Montenegro for more than 30 days a year (or up to 90 days with special prior notification to the police for business purposes).

Warning: If you simply open a company, pick up your ID card, and leave the country for 11 months, your residency will be revoked and cannot be renewed.

2. The 'Zero Cost' Illusion

Although the minimum capital is 1€, maintaining the company costs money every month. As an active director, you must pay mandatory social security contributions.

• Monthly Social Security (MPIO): Approximately 130€ - 180€ minimum.
• Accounting Fees: Around 100€ - 150€ per month.
• Total Fixed Maintenance: Even with zero revenue, expect a fixed monthly cost of at least 250€ - 300€.

3. Corporate Bank Accounts Are Hard to Open

Many investors assume they can immediately open a Montenegrin bank account and start trading globally. Due to strict AML (Anti-Money Laundering) directives conforming to EU standards, banks are incredibly selective.

To open a corporate account, you must provide a solid Business Plan, an explanation of your business model, and prove your trading history in your home country. Without a reputable local legal partner like Rona Legal guiding you through the bank's compliance board, your application is highly likely to face rejection.

4. Tax Authorities Are Tracking Shell Companies

The Tax Administration (Uprava Prihoda) has tightened audits against 'shell companies' created solely for residency. Your company must have a registered physical or virtual address and submit annual financial statements. If you bill under 100,000 Euro a year, you do not need to enter the VAT (21%) system, decreasing pure accounting hassle—but your books must be impeccable.

5. Family Reunification Has Strict Prerequisites

If you want to bring your spouse and children to Montenegro, you can apply for Family Reunification only after your sponsor residence card is physically issued.

• Document Validity: Birth and marriage certificates must have an Apostille stamp, be sworn-translated, and cannot be older than 6 months.
• Sufficient Funds: You must prove that you possess sufficient funds or a steady monthly income in a Montenegrin bank to support each family member.

Conclusion: Build on a Solid Legal Foundation

Registering a company in Montenegro is an outstanding vehicle for entering Europe and optimizing your corporate tax. Rather than treating it as mere paperwork, treat it as a serious legal structural transition. Working closely with specialized corporate lawyers will shield you from operational setbacks and banking rejections.