Montenegro - The Set-Up of Ltd Company (list of services)

Starting a Business

in MontenegroAZ CONSULTING

MONTENEGRO

Why to set-up a company in Montenegro

Montenegro is a small tourist-oriented Mediterranean country with a very fast developing economy. Its position is congenial lying between Western and Eastern Europe, it offers a “visa-free” entrance to most of the other countries worldwide and it is relatively convenient for a company formation and for obtaining a temporary residence permit.


NATO, EURO COINS & FREE TRADE AGREEMENTS• Montenegro offers a safe environment to investors, having almost

completed its jurney to join NATO (January 2017) and an economical stability having adopted the Euro currency together with the first EU countries, back in 2002.

• Montenegro offers the right conditions for a productive international business having signed several agreements, including a free trade agreements with CEFTA, EFTA, Russia, Turkey, Ucranine, and soon with Belarus and Kazakhstan


ECONOMIC COOPERATION AGREEMENTS• Since re-gaining its independence, Montenegro signed 12 agreements on

economic cooperation: with Bulgaria, China, Hungary, Serbia, Qatar, Turkey, Macedonia, Slovenia, Azerbaijan, UAE, Czech Republic and the Abruzzo region-Republic of Italy). In addition to the agreements signed as an independent state, the agreements signed by the former state unions in which Montenegro was a member (SFRY, SRY, SMN), which have been consolidated, are also applicable (Cyprus, Austria, Poland).

• The main objective of these agreements is to establish an institutional framework for cooperation by expanding and improving the economic interests.


AGREEMENTS ON DUAL PROMOTION AND PROTECTION OF INVESTMENTS • These agreements strive to create a stable framework for investment and

better use of economic resources. They define the conditions for investing between countries, allowing free transfer of funds, the right of subrogation, compensation in the event of expropriation and settlement of disputes between investors and countries, including the settlement of disputes between the countries themselves.

• Since re-gaining its independence, Montenegro has signed 10 agreements on economic cooperation with: Serbia, Czech Republic, Finland, Denmark, Qatar, Macedonia, Malta, Azerbaijan, UAE and the BENELUX Economic Union.


• Montenegro has the lowest requirements in Europe, as the company authorized capital can be equal to 1 euro only.

• The tax system in Montenegro consists of:• corporate income tax;• personal income tax;• Value Added Tax (VAT);• Real Estate transfer tax;• Social security contributions;• Excise duties;

• Fees;• Customs duties.

• The tax system for foreign investors is the same as for local business entities.

• Corporate income tax amounts to 9%; the tax rate on personal income is 9% or 13%.

• Upon payment of the corporate income tax, business entities operating in Montenegro have the possibility to transfer funds to their accounts abroad at the end of the year.


• Two positive rates of value added tax (VAT) are applied: a standard rate of 19% and the reduced rate of 7%, while the zero rate applies to: export transactions and delivery of medicines and medical devices that are funded by the Republican Health Insurance Fund.

• Value added tax is calculated and paid for:

o delivery of products and services done for a fee by the taxpayer within the

performance of its business activities;

o imports of products;o imports of motor vehicles (new

and pre-owned) is liable to VAT at the rate of 19%;

o trade in pre-owned passenger vehicles, motorcycles and vessels for which the taxpayer was not entitled to input VAT deduction upon acquisition is not subject to VAT; In this case, a special tax is paid at the rate of 5% by the buyer;

o trade in land (agricultural, construction, developed and undeveloped), is not subject to VAT.

• The tax rate on Real Estate transfer is proportional and amounts to 3% of the tax base. Trade in real estate is considered to be all acquisitions of ownership over real estate in Montenegro and this area is thoroughly regulated by the Law on Real Estate Transfer Tax.


• Compulsory social insurance in Montenegro is paid by the employees, employers, entrepreneurs and farmers who are not contributors to unemployment insurance.

• Contributions for compulsory social insurance are:

o contribution for compulsory pension and disability insurance;

o contribution for compulsory health insurance;

o contribution for unemployment insurance.

o Contribution rates are different depending on the category of taxpayers, and they are defined by the Law on

Compulsory Social Insurance.• Types of fees in Montenegro, that have to

be paid by investors, are:o administrative fees;o court fees;o utility fees;o registration fees;o sojourn fees.

• The basis of the customs system in Montenegro consists of the Law on Customs Tariff and the Customs Law. Customs clearance under this law, includes receipt of import customs declaration, inspection of goods and

classification according to the customs tariff and other tariffs, fixing the customs basis, amount of customs duties and other import duties charged on the goods, collection of fixed customs duty amounts and other import duties.

• According to the law, investors may be eligible for exemption from customs duties.

Purchase of Real Estate in Montenegro

• Foreigners in Montenegro have the right to purchase real estate under the conditions fulfilled by domestic entities and by presenting an identification document. However, according to the Law on Property Relations, a foreigner can not own natural resources, public goods, agricultural land, forests and forest land, cultural monuments of great and special importance, real estate in a land-border area up to a depth of one kilometre and islands, real estate located in an area which was declared by law an area in which foreigners can not have right of ownership in view of protecting the interests and security of the country.

• Exceptionally, foreigners may also acquire the right of ownership on agricultural land, forests and forest land having a surface area of up to 5,000 m2, only if a residential building located on that land is subject to the contract of divestiture (sale, gift, exchange, etc.).

• Foreigners may be entitled to a long-term lease, concession, BOT and other arrangements of public-private partnership, over the above mentioned real estate.

• By means of legal transactions, foreigners may transfer the right of ownership to domestic persons, as well as to foreign persons that may acquire the right of ownership.

Why AZ CONSULTING Ltd• We are a multi-platform consulting agency established in 2013 in Montenegro that

provides foreign investors, approaching for the first time or regularly operating in the Montenegrin market, with a proper assistance and advisory. Our services benefit from an experience gained on the local market in several fields, including Retail, Real Estate and Finance and offer to local businesses a portfolio of solutions coming from abroad.

• AZ Consulting turns to be a substantial aid to foreign investors and to companies that are keen to delocalize their production in a fast-developing country with a qualified labour force at low cost, the lowest income tax in Europe, one of the lowest globally speaking, and several additional benefits provided by the Montenegrin Government in support to foreign investments.

• AZ Consulting counts on the expertise of its Russian and Italian founders which make of their direct experience a good use. At AZ Consulting we understand our clients’ needs as we had them first; we prevent potential risks as we faced them already; we know this market from a foreigner perspective and we know how to interpret it from a local side. Last but not least, we put our clients first, providing a tailored-made service and a full-time commitment. Safe, serious, on time, precise, affordable: our clients use these terms to define us.

Timetable for the set-up of a Ltd• To prepare and to sign the preliminary documents at the Notary office 1 day• To open any Personal bank accounts 1 day• To prepare the Company Statute ~ 3 days• To have registered the company to the Central Registry of Business Entities ~ 10

days• To open any Company bank accounts (once company is established) 1 day• To obtain a residence and a working permit (for Director and any worker) ~ 30

days• To obtain a PDV number (once company is established) ~ 5 dayso AVERAGE TIME ESTIMATED: THE TIMINGS VARY BY THE CALENDAR (FESTIVITIES, SEASON, ETC.) TYPE OF COMPANY AND THE SERVICE DELIVERED

o ACTIVITIES ARE HERE LISTED IN A CRONOLOGICAL ORDER

The Set-up of a Ltd CompanyList of Services

Residence & Working Permits

• Complete Registration at the Commercial Court

• Statut; "Odluka"; gather of all needed docs

• To register the company at Tax Office

• To register the VAT number• To register the company at the

Customs Offices• Translation and Nostrification of

documents*• Admin.ve expenses; full taxes;

corporate stamp• Notary fees• Interpreter support• Company domiciliation

Full Company Set-Up

• Full procedure until the release of the Permits

• Fees / Taxes• Tutor present at Police and

Admin.ve OfficesNON-RECURRING COSTS PAID ONCE AT THE COMPANY SET-UP. THERE WILL BE AN ANNUAL COST FOR THE RENEWAL OF THE PERMITS

* FOR TRANSLATIONS OF “LESS POPULAR” LANGUAGES, COSTS WILL EXCEED. - NOSTRIFICATION OF THE HIGH SCHOOL DOCUMENTS. FOR UNIVERSITY CERTIFICATES THE PRICE WIL BE HIGHER

**RESIDENCE PERMI FOR “JOIN THE FAMILY” IS HALF PRICE, IN ADDITION (EQUAL TO €250,00). – WEDDING CERTIFICATE IS AN EXTRA COST AND DEPENDS ON THE LENGTH OF THE BOOK (ABOUT €25/PAGE) – VAT NOT INCLUDED IF PAID “OUT OF THE POCKET”

The Set-up of a Ltd CompanyList of Services

• Accounting Service

• Daily activities as Attorneys• Company Domicile at our Head Office• Concierge & Seretary service (Mon. - Fri. from 9am to 6pm) Languages spoken: Italian / English / Russian / Serbian - Montenegrin• Unlimited use of our premises in Tivat and Podgorica• On-call service (extra-time, week-ends, holidays)

€ 350,00(+ 19% VAT)

• Domicile for Director€ 50,00(+ 19% VAT)

RECURRENT PAYMENTS ON MONTHLY BASIS

€ 150,00(+ 19% VAT)

Documents

Montenegro - The Set-Up of Ltd Company (list of services)