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Montenegro is becoming one of the most interesting countries both for Europeans and for those from outside Europe who want to settle in the continent.

There are many reasons for this, but perhaps it is worth highlighting the low prices, the low number of taxes and the ease of obtaining a residence permit there. In general, it only takes three to four weeks to obtain a residence permit and, with some small details to bear in mind, Montenegro has a flat rate tax of 9%.

In theory, it is expected that Montenegro will become a member of the European Union in 2025 (the country already adopted the euro as national currency in 2002), so, in a similar way to what happens with Bulgaria, obtaining residence there would then allow those without a European passport to obtain a residence permit in Montenegro that enables free movement within the European Union.

Montenegro is a small country in the Mediterranean, in the southeast of Europe. It borders with Croatia, Bosnia and Serbia, and is north of Albania. It is located at the southern tip of the Adriatic Coast, with a coastline of around 300km.

It has 620,000 inhabitants, with a majority Christian population, though there are also Muslims. It is a multicultural country owing to the various influences it has received throughout history: that of the Ottoman Empire, Venetian in the Middle Ages (12th-14th century), and Austrian under the Austro-Hungarian empire. It is therefore a varied country with a little of everything.

It is a very mountainous country, as its own name indicates (black mountain). A country of great beauty where the sea meets the mountains. If you like nature, open-air activities, the sea, beaches, boat trips and the Mediterranean lifestyle, Montenegro is a good country.

As we were saying, Montenegro has a total population of 620,000—which is quite low, equivalent to a medium-sized city—but spread across the whole country. It is important to make this point clear from the beginning, as many people are accustomed to life in large cities, but Montenegro is not like that, it is far smaller. It has around five coastal towns, each one with a population of between 20,000 and 40,000. Its capital is Podgorica and has 200,000 inhabitants.

The climate is warm, a typical Mediterranean climate with mild winters and moderate rainfall. Summers are generally sunny, with close to 250 days of sun per year, which will be of particular interest to those coming from Central Europe (or from further north).

In terms of education, the public schooling system in Montenegro is quite good, with eight years of compulsory education. There are also private schools.

For example, in Tivat, which is next to the coast, there is Knightsbridge School, an international franchise. In the capital there is also the QSI school, which costs €1,000 per month. The schools have a modern educational focus and seem appealing.

It must be noted that public schools require children to speak Montenegrin, the local language. It is a Serbo-Croatian language which uses Latin and Cyrillic alphabets. In any case, when you go in the street most things are written in the Latin script.

Montenegro previously belonged to Yugoslavia but since 2006 it has been an independent country. There have been great changes: there is now more influence coming from western countries, for instance. It also receives more interest from Asian countries, with an influx of Chinese and Arabs. The country is opening up, and with it comes the arrival of businesses and greater opportunities for the coming decades.

As we were saying, Montenegro’s national currency is the euro, but it does not form part of the Eurozone (in contrast to Italy, Spain, Germany, and so on). The use of the euro brings various advantages, as it is a relatively stable currency compared to other currencies of smaller countries.

In addition, the country is seeing large-scale urbanisation projects, with foreign investment of thousands of millions of dollars in marinas, towns for the marinas, nautical facilities, all of which represent significant centres of attraction for the coming years.

If you are looking for a European country with good investment opportunities, the strong growth and great potential of Montenegro is definitely something to consider.

In terms of prices, a cup of coffee costs between €1 and €1.80. A pint of draught beer costs around €2 and for between €25 and €30 you can get a decent meal for four people. Of course, certain establishments are more luxurious and expensive.

Taxis and transport in the capital are very cheap, at €0.60 per kilometre, although the price increases as you get nearer to the coast. With transport being so cheap in the capital it means you it is not necessary to have your own car.

The price of housing depends on the area, as always, but ranges from €250 per month for a one- or two-bedroom apartment up to €1,500-€2,000 in beautiful places like the coastal towns. The average is €400 per month, plus another €100 to €150 in bills (electricity, telephone, water).

Public healthcare in Montenegro is not the best, but it is acceptable. If you are administrator or employee in a company, you can use it for “free” by paying your monthly taxes.

Needless to say, you also have the option of using private healthcare, there are many private doctors and it is not too expensive. For example, blood tests cost between €20 and €30, so it is not necessary to go to a public hospital. Basic surgery, a small kidney operation or something similar, costs around €1,000. A dental check-up will cost you €20.

If case any of this has caught your eye, we are now going to explain the different options available to you to obtain residency in Montenegro, and also we discuss taxation in the country, investment, bank accounts and how to obtain a Montenegrin passport.

Obtaining residency in Montenegro

There are several ways to obtain residency in Montenegro and they are available to citizens of almost any country in the world.

Depending on the circumstances, you will first need to obtain a visa to enter the country, in general you can do all the processes explained here using a tourist visa.

In general, to apply for residency you will need, first of all, a passport valid for a minimum of 15 months, a certificate of good conduct and, depending on the situation, your certificate of education. In the vast majority of cases, it will only take you between three and four weeks to get your residence permit in Montenegro.

Five ways to obtain Montenegrin residency

  1. One of the easiest ways is by registering a company in Montenegro; as administrator of the company, it will be easy for you to obtain a residence permit. One of the great advantages of this option is that the Montenegrin company does not need to have a minimum turnover for this to work; it is enough with an initial investment of €1 in the company.
    Choosing to register your company in Montenegro also has the advantage that it allows you to hire family members and friends if you wish, meaning that they also can obtain a residence permit (as explained in the next point). A point to bear in mind is that you must have been living in Montenegro for a year to do that and the people you hire will only be able to extend their stay by a maximum of three years.
  2. Another option is to be hired by a local company. The Montenegrin agency that we work with can help you with this process. In general, option number one is more straightforward, but there may be cases in which you do not want to set up a company.
  3. If you have family living legally in Montenegro because, for example, they have obtained residency through one of the options numbered previously, then you can request a family reunification.
    In other words, you can set up your company in Montenegro (which takes only a few days), appoint yourself as administrator, request your residence permit (this takes two weeks) and then apply for family reunification. Of course, you would have to show the marriage and birth certificate of those involved.
  4. Another option is that of obtaining residency in Montenegro through investment in property. This could be interesting for those who are unable to work (retirees) or if for any reason you do not want to set up a company as administrator.The interesting aspect of this option is that there is no minimum quantity of investment—anyone, regardless of nationality, can acquire this residence permit provided that they purchase a habitable property.It is important to note that a piece of land is not enough, it must be housing and the housing must be considered habitable, and it must have at least 12 square metres per occupant.

    The main drawback of opting for residence through property investment is that, in order to not lose it, you cannot leave the country for more than one month per year.

  5. Lastly, you can also obtain what is known as “yacht residency”. In this case, if you own a vessel, you can become a resident in Montenegro simply by signing a mooring contract with a local port.

Of all the options, in the majority of cases it is preferable to choose the first option, registering a company in Montenegro, as this offers the greatest flexibility and, in general, is much more straightforward.

If you want to be put in contact with our associates so that you can obtain residency in Montenegro, you can contact us.

Permanent residency and citizenship

In Montenegro you cannot get a residence permit until five years have passed. During this time, you will have to renew your residence permit year on year.

Your details will be kept on record so you will not have to send all the necessary application documents every year to obtain the residence permit. You will, however, have to declare your income, be up to date with your social security payments and have an annual medical check-up.

Incidentally, if during those first five years you fail to renew one year, you will be back at square one and will have to spend another five years uninterrupted to obtain permanent residence.

Some places claim that you cannot leave Montenegro for more than six months during this five-year period until you obtain permanent resident status. This is not the case; this only applies if you have obtained your residency through property investment.

In terms of the Montenegrin passport, you will have to spend ten years there legally in order to apply for it. There may be additional requirements, such as being able to speak the local language or knowing some of the country’s history and culture, but this remains as yet unclear.

If your ultimate objective by becoming resident in Montenegro is to obtain citizenship, bear in mind that residency through property investment does not allow you to obtain a passport there.

If you are in a hurry to obtain Montenegrin citizenship, there is also a special scheme available to you, in the same way that other countries offer this type of citizenship through investment scheme.

In Montenegro you will have to make a minimum investment of €250,000, to which must be added a donation of €100,000 and a processing fee. The amount required varies on the area of the country; in some areas the minimum investment can even be as high as half a million euros.

In any case, given that Montenegro does not recognise dual citizenship, the easiest thing is to forget this option: it is not cheap, easy or fast (if done by the naturalisation route) nor does the passport offer vast amounts of freedom. The only thing that could encourage someone to consider it is the possibility of getting a passport in an EU country (supposing that the country ends up joining, which in principle you have to rely on).

In any case, if you are Spanish-speaking, Spain might be the best option for you to obtain a European passport (you can apply for citizenship after just two years of being there). Our ebook on second passports provides more information on your options.

Taxation in Montenegro

Montenegro has a favourable and simple taxation system. You pay a 9% tax on personal income and 9% on your company’s earnings.

The rates of VAT are at 7% for services related to tourism and basic necessity goods, and 21% for the rest of products and services.

According to law, as a resident, your externally generated earnings will be taxed in Montenegro. However, as happens in so many other places, although this is the theory, in reality no one cares about the rest of your earnings as long as you pay the taxes on profit made from your business in Montenegro.

To become a tax resident in Montenegro you will have to live there for at least 183 days a year, and have a habitual residence or your centre of economic and social interests there.

Of course, even if you have your housing in Montenegro, if you spend 183 days or more in another country, you will be considered tax resident of that other country and not Montenegro.

As we were saying, in Montenegro a fixed rate tax of 9% is applied on all your universal earnings. This is valid both for your company and yourself individually (your salary).

That said the tax rate of 9% on personal income is applied only up to the average wage, around €750 per month. Personal income exceeding that amount is taxed at 11%.

In other words, supposing your salary is €5,000, you will pay 9% tax on the first €750 and 11% on the remaining €4,250.

In addition, regarding salary, the council can impose a surcharge that varies between 13 and 15% (only in Podgorica and Cetinje). This percentage applies only to federal taxes paid to the government and not to your whole salary.

We mustn’t forget, of course, social security contributions in the case that you have a salary in Montenegro.

If you have a company and you are the manager, or there is another employee, you will have to pay contributions to social security. The rate is approximately 10%. This contribution entitles you to health insurance and, after 10 years, you can request a small pension from the state pensions system (although you already know what we think at Tax Free Today about state pensions).

Capital gains are charged a fixed tax rate of 9%, whether they be interest, dividends or appreciation. By the way, in the case of appreciation you can deduct any losses over the last five years.

There is no wealth tax.

Establishing a company in Montenegro

Founding a company in Montenegro is relatively fast and easy if you have the necessary help.

In terms of the different legal forms, the creation of an LLC (Limited Liability Company, not to be confused with LLCs in the USA) is the most common.

Montenegrin LLCs offer limited liability and have the advantage that you only have to invest €1 in their creation. The process of setting up an LLC only takes four to five working days in Montenegro.

Our associates in the country can help you with the whole process of registering your company there; the basic price is €500.

Some of the characteristics and advantages of having your company in Montenegro:

  • As we were saying, corporation tax is 9%
  • The dividend withholding tax is 9%
  • It is relatively straightforward to obtain a VAT number
  • It is also easy to open bank accounts for the company (being in the country)
  • The same person can be administrator and partner of the company.
  • The company administrator must be a resident of Montenegro.

Investing in Montenegro

As we were saying at the beginning, Montenegro is a country full of opportunities despite being in Europe. In the case of property investment, the transaction fees are low, only 3% on each sale and the notary is not very expensive: €400 on purchases of €100,000. So, 3% plus the €400 for the notary fees.

The prices have not risen in the last 10 years because lots of Russians who previously invested in property are now selling as the market changes with the arrival of more westerners. Even though they are selling, they had accumulated so many apartments that the prices have either dropped slightly or have maintained stable.

What is the price per square metre of a decent apartment? On the coast, the average amount is €1,500 per square metre. In the capital it is €1,200.

We are referring to new builds—old apartments are often cheaper as you have to put money into renovating them. In general, for €2,000 per square metre you can find a good flat. Of course, it is possible to find them cheaper, say for €1,000, although that would not be in the centre of a good city.

The prices range from €1,000 to €8,000-€9,000. The high end is very luxurious and is exclusive, but if you are interested, you can look for offers in “Porto Montenegro”, which is a small town with enormous yachts docked in front of the apartments—that will give you an idea.

Another luxury option is Portonovi, a new resort, with prices starting at €4,000 and rising to €10,000.

There is also a project called Lucid, a bay with prices starting from €4,000. But, as we were saying, the rest are cheaper, you can find a good flat for €2,000.

In terms of where to invest, certain areas attract lots of interest, such as the bay of Kotor. It has been declared a World Heritage Site by UNESCO, where there are strict construction rules, stipulating that you cannot build high buildings, for example.

The good thing is the prices cannot really drop much. The land is quite expensive and the prices are stable. So that is a good long-term investment opportunity.

If we are talking about investment, perhaps it is better to omit the capital, as the city is very spread out and you can build anywhere regardless of the mountains or whatever natural environment there may be. Although if you are contemplating a period of between five and 10 years, then the capital could also be a good investment. You can always buy something and put it on Airbnb to rent it out to tourists in the summer.

Bank account in Montenegro

Montenegro has a relatively stable banking system, with 10 or 11 banks operating in the country. Some banks are European and others local, so there is variety. Montenegro still is not part of the CRS system, which means it is still not sharing information. It is unknown when it could join the CRS.

Our associates in Montenegro can help you to open a bank account in the country, however, you will have be present in person. It is not possible to open accounts in Montenegro remotely.

Opening an account there could be an interesting option if you are looking for an account in euros, with an IBAN number, but which does not participate in the CRS (automatic exchange of information). Of course, if you want to become resident of Montenegro you will also need a bank account there.

Montenegrin banks accept clients from practically any country, that said, it may be very difficult if you come from a country subject to international sanctions.

In general, there is no bank balance or minimum quantity necessary and accounts can be used to receive or send national or international transfers without any problem. Needless to say, if you are going to transfer large quantities you will have to have discussed it in advance with the bank.

Conclusions

Montenegro is a very interesting country for those who want to live in Europe without paying the high taxes of other countries on the continent, or, in the case of non-Europeans, those who seek greater freedom when it comes to emigrating. It is also a good option for digital nomads and perpetual tourists in general, as the costs are low and it is easy to avoid becoming a tax resident.

It is a country with natural beauty, open to the outside, where a significant amount of English is spoken and, also, the internet is fast, reliable and cheap.

If you are interested in opening bank accounts, setting up companies or acquiring residency in Montenegro, you can contact us and our partners there will assist you with it.

Of course, if you prefer us to analyse with you the best options for your particular situation, you can also go right ahead and book a consultation, or, if you prefer first to have a look at the other options of emigrating throughout the world, you can purchase our Encyclopaedia for Emigrants.

Because your life is yours!