Business and Personal Migration to Montenegro

Montenegro Brief statistical data (source: World bank and MN statistics bureau)

Tourism - main GDP generator

Montenegro

Population 621.383

GDP overall 3.327 bilion

GDP per capita 7.149 $

GDP growth 2014 (%) 3,6

Average NET salary 478 €

Unemployment rate in % 17,7

General Overview Montenegro

Real GDP growth rates in %

2008 2009 2010 2011 2012 2013 2014 2015

MNE 6,9 -5,7 2,5 3,2 -2,5 3,3 3,6 3,3

General Overview Montenegro

Possible obstacles for foreign investments

•Public debt amounts to 65% of GDP•Labor costs and lack labor force mobility•As a small market – exposed to external shocks, economy rely mostly on import•High interest rates which can cause problems with liquidity•Limited administrative capacity

General Overview Montenegro

Attractive investment factors

•Strategic geographical position in the Adriatic.•Big infrastructure projects planned – opportunity for foreign companies to compete (around 2 billion € of investment – motorways, power plant etc.).•Many state owned companies are to be privatized.•Favorable Tax Policy (corporate tax, property tax and VAT one of the lowest in Europe).•Easier to commence big projects as Government is concentrated on foreign investments – e.g. Porto Montenegro – biggest luxury yacht marina in the Adriatic sea.

General Overview Montenegro

Doing business scale - 189 Economies – World bank statisticsMontenegro – 36th

Several major factors Montenegro

Starting a business 2 weeks (56th)

Construction permits 158 days (138th)

Registering a property 69 days (87th)

Enforcing contracts 545 days (136th)49 procedures

Cost of claim 25,7%Insolvency 1,4 year

General Overview Montenegro

Market Entry

Legal form Share capital Feature

Limited Liability Company(D.O.O.)

Minimum 1 EUR

Setup fee – Around EUR 350.00

• 1 up to 30 shareholders (individuals or legal entities).

• 2 weeks for company establishment

Joint-stock company(Jsc)

Minimum EUR 25.000

Setup fee – Around EUR 1.000 or more

• 2 or more stockholders (individuals or legal entities).

• Up to 1 month for establishment

Subsidiary - • No legal personality• subject to the registration

with the competent Trade Registry Office.

Tax Rates

Tax MontenegroGeneral VAT rate 19%

Special VAT rate

7% - Essential food products, medics, books, tourism, daily news

0% - Products and construction service for 5* hotels, power plants (over 10 MW) and certain food products, if the

investment is < EUR 500.000, delivery to and from free entrepreneurial zones

Corporate income tax 9%

Personal income tax rates 9% up to 720 € gross13% over 720 € gross

Personal income contributions overall

34,3 %

Royalties, interests, dividend 9%

Tax Benefits

• Corporate tax incentives in undeveloped parts of the country. Newly established production manufactures are five years exempted from corporate income tax, plus three following years 50%

• 0% VAT rate for certain goods and services (Products and construction service for 5* hotels, power plants (over 10 MW) and certain food products, if the investment is < EUR 500.000, delivery to and from free entrepreneurial zones)

Legal Aspects

• As of 2010 Montenegro is EU Candidate Country

• Low level of court efficiency

• Difficult process of harmonization with EU’s „acquis communautaire”

• Land and cadastral registries are not updated

Labour issuesHiring new staff

vs. Relocation of existing people

and work permits

Mobility of Workforce

Employing new staff or relocating existing employees;

•Lack of workforce mobility within the country. •Only 3,4 % of jobs are reallocated between the counties from 1994 – 2004.•70% of people own their own real estate, hence difficult to change place of residence for a job opportunity within the country•Higher migration is in tourism sector from continental to coastline cities from June till August.

Mobility of Workforce

• Availability of workforce in Montenegro:

• Although there is high employment rate present, workforce is in deficit for high quality staff.

• Average worker rarely changes his workplace.

Montenegro

Employment rate (15-65) (EU avg. 65) 48 %

Unemployment rate 17,7 %

Employed / Retirees ratio 1,5/1

Hiring New Staff

Minimum requirements for employment contract

Hourly week rate 40h

Minimum holiday 20 working days

Minimum salary EUR 198 net

Cancellation period Min 30 days

Max fixed term period 2 yearsMore than 3 by certain conditions

Min daily pause 30 min

• Risk of high pecuniary penalties if employer does not comply with Labor Law and General Collective Agreement.

• Employer is obliged to register the employee within 8 working days as of commencement date.

• Non-residents are obligated to obtain Temporary Residence Permit which includes Work permit as well.

• Social contributions payment and net salary have to be paid and registered with the tax authority within same working day.

• Labor Agreement can be concluded on defined or indefinite period of time. Almost impossible to terminate Labor Agreement on indefinite period.

Hiring New Staff

Work Permits

• Work permit outside annual quota can be obtained only if you prove that there are no domestic citizens available for employment.

• Above restriction does not apply for company directors, foreign company directors who establish a company in MN and highly educated workforce who are self-employed in MN.

• Work permit is issued up to one year, and can be prolonged to two years.

• For seasonal work (e.g. tourist and agricultural sector) permit can be obtained for up to 8 months within 1 year period.

• Annual quota is determined for certain occupations by the MN government by October 30th of current year for next year.

A few words about Eurofast

Eurofast is a regional business advisory organisation employing over 200 people in South East Europe & East Mediterranean. Our team of professionals is capable of

efficiently addressing all client needs in one single meeting, using one single language for

all the countries in the Region.

Profile

What we are good at…

Our Services

•International Tax•Mergers & Acquisitions and Transactional Advisory•Transfer pricing•Accounting services•Financial services•Outsourced Payroll and Employment solutions•Corporate services•Citizenship & Residency services•HR administration

•Banking and Financial services•Business Restructuring & Insolvency•IT specialized services•Tax Planning & Tax Compliance•Real Estate tax•Shipping Tax•Energy Tax•Intellectual property•market entry services

Bringing value to clients

with our service

Eurofast is Taxand Cyprus

Where can you find usSingle point of Contact, Many Points of View

▪ Lefkosia▪ Athens▪ Thessalo

niki▪ Sofia▪ Buchare

st▪ Belgrade▪ Tirana▪ Skopje▪ Pristina▪ Banja

Luka/ Sarajevo

▪ Zagreb▪ Cairo/ Alexandria▪ Podgorica▪ Kiev▪ Moscow▪ Tbilisi▪ Beirut▪ Erbil

Eurofast in numbers…

Over

200people across

South East Europe and East Mediterranean

21Offices in SEE

and East Mediterranean

5-35

Team members in every office

1Reference

point; 1 meeting

handles all!

…and why we don’t care about them!

…and why we don’t care about them!

If you measure success in numbers, Eurofast hasn’t achieved all that much.

We have never focused on numbers. We prefer to think how to better become

exclusive

personal

innovative flexible account

able

…and to personally know every single client!!

www.eurofast.eu

Find us online

Thank You

Q & A