Population 623,000
Area 13,810 SQ KM (5,332 sq mi)
Currency euro (eur)
GDP USD 5.42 billion
gdp per capita USD 8,704
FDI (2014-2019) USD 2,925 million
corporate tax 9%
vat 19%


Montenegro is a politically stable country, a NATO member and a candidate for the European Union membership. The negotiation process with the EU started in 2012 and so far 30 chapters out of 33 have been opened and two of them are temporarily closed. Following the restoration of its independence in 2006, Montenegro has significantly improved the business environment, thus making it more attractive to foreign investors.

Therefore, Montenegro is a leader in terms of foreign direct investments, attracted from over 100 countries. It has been recording constant growth of GDP and it has been improving its positions in terms of strengthening competitiveness, attracting business environment and credit rating.

The last parliamentary elections were held in 2016, when the stable political majority, leading the country towards the European integration, regained the trust of the Montenegrin citizens. The current Government is focused on strengthening regional political and economic cooperation. In Montenegro a number of infrastructure projects have also been carried out through the Berlin process as well as in line with the national economic agendas. The presidential elections will be held in April 2018.


Since regaining its independence in 2006, Montenegro has been increasingly attractive to foreign investors. Its development is centred on attracting FDIs through a competitive business environment, striving to become the business hub of Southeast Europe. It offers many rewarding investment opportunities and impressive natural potential, along with continuous improvements in the business climate intended to attract foreign investors.

The Montenegrin Government is well aware of the importance of foreign direct investment for the sustainable growth of the economy – which makes sense since, so far, the recorded increase in wealth has been driven primarily by large volumes of foreign investment. Its activities have mainly consisted of reforms directed at improvement of the investment climate in Montenegro. We have seen improvements in competitiveness, transparency and business-friendliness. Having become a member of the WTO in April 2012, and due to the process of negotiations for its accession to the EU, one can be optimistic about further improvements in the Montenegrin trade system and the general business climate in Montenegro.


The tax system for foreign investors is the same as for domestic companies. Income tax is 9%, while the income tax rate for natural persons is 9% and 11% respectively. A business entity operating in Montenegro has the possibility, with a previously paid income tax, to transfer funds to its account abroad at the end of the year.

Two positive VAT rates are applied, with a standard rate of 19% and a reduced rate of 7%, while the zero rate applies to: export transactions and delivery of medicines and medical devices financed from the funds of the Republican Fund for health insurance.

Value added tax is calculated and paid at:
-delivery of products and services which the taxpayer performs for compensation in the course of his activity;
-import of products;
-the import of motor vehicles (new and used) is subject to VAT payment at a rate of 21%;
-traffic of used passenger cars, motorcycles and vessels, for which the taxpayer in the procurement did not have the right to deduct input VAT, is not subject to VAT. In this case, a special tax is paid at a rate of 5% paid by the buyer;
- land transport (agricultural, construction, constructed and not built) is not subject to VAT payment.

The real estate tax rate is proportional and amounts to 3% of the tax base. Immovable property is considered any acquisition of ownership of immovable property in Montenegro and this area is regulated in detail by the Law on Tax on Real Estate Transfer.

Compulsory social insurance in Montenegro is paid by employees, employers, entrepreneurs and farmers who are not obliged to pay contributions in the event of unemployment. Contributions for compulsory social security are:
-contribution for compulsory pension and disability insurance;
-contribution for compulsory health insurance;
-contribution to unemployment insurance.
The rates of contributions vary depending on the category of taxpayers and are defined by the Law on Contributions for Compulsory Social Insurance.

The Law on Excises regulates the system and introduced the obligation to pay excise taxes for individual goods and conditions that are placed in free circulation in the territory of Montenegro. Excise products are:
-alcohol and alcoholic beverages;
-tobacco products;
-mineral oils, their derivatives and substitutes.
The excise taxpayer calculates the excise tax for the calendar month.

Customs tariff system in Montenegro is made by the Customs Tariff Law and the Customs Law. Customs clearance according to this law includes the receipt of an import customs declaration, inspection of goods and classification according to the Customs Tariff and other tariffs, determination of the customs base, amount of customs and other import duties charged by the goods, collection of established amounts of customs duties and other import duties. Pursuant to the law, the investor may acquire the right to release customs duties.

Tax reliefs

Corporate income tax rate is 9% and is one of the lowest in Europe, while the personal income tax rate for natural persons is 9% and 11%. In economically underdeveloped municipalities in Montenegro, whose development index is below 75, the Law on Profit Tax stipulates that a newly established legal entity does not pay income tax for the first eight years of business. Also, the Law on Personal Income Tax of the taxpayer, calculate the income tax for the first eight years of business is reduced by 100%. Tax exemption does not apply to a taxpayer operating in the primary production of agricultural products, transport or shipyards, fisheries and steel. The laws define the tax relief for investors, in the form of exemption from paying taxes if their total amount does not exceed the amount of €200,000 for the first eight years of business.

If the amount of the tax liability (exit tax) in the tax period is less than the amount of input VAT that the taxpayer can deduct during the same tax period, the difference is recognized as a tax credit for the subsequent tax period, or, on demand, is returned within 60 days from the date of submission of the application for VAT calculation.

A taxpayer who mainly exports products and a taxpayer who, in more than three consecutive VAT counts, shows the surplus of input VAT, the difference in VAT is returned within 30 days from the date of submission of the application for VAT calculation. If the taxpayer has expired the deadline for payment of other taxes, the VAT difference is reduced by the amount of tax debt.

To the taxpayer, who in the business year for an indefinite period, at least for two years, recruit new workers, the tax base is reduced by amount of paid salaries of newly employed workers, increased by contributions forcompulsory social insurance paid by the employer.

A taxpayer who makes investments in fixed assets which are used for the production of energy from renewable sources and energy efficiency, the tax base is reduced in the amount of 50% of the investments made, and up to the amount of the tax base.

Legal entity -non-governmental organization, registered for performing an economic activity, the tax base is reduced in the amount from €4,000, provided that the profit is used to achieve the goals for which it was founded.

Tax incentives for the investments in the following sectors:
- Highend tourism – hotels with 5 or more stars;
- Food production, except primary agricultural production, and
- Capital investments in the energy sector.

The Law on VAT stipulates zero VAT rate on the delivery of products and services for the construction and furnishing of any hospitality establishment with 5 or more stars, construction of energy-generation facilities with more than 10 MW installed capacity or of food production plants categorized within sector C group 10 under the Law on Business Activity Classification (Official Gazette of MNE 18/11), if the investment exceeds €500,000.

Agreements on avoidance of Double taxation

Montenegro has signed the agreements on avoidance of double taxation with 41 countries which refer to the laws that regulate corporate income tax, property tax and individual income tax. There is the list of countries in the following table.

No. Countries Avoiding double taxation
1 Albania In force
2 Azerbaijan In force
3 Belgium In force
4 Belarus In force
5 Bosnia and Herzegovina In force
6 Bulgaria In force
7 China In force
8 Croatia In force
9 Cyprus In force
10 Czech Republic In force
11 Denmark In force
12 Egypt In force
13 Finland In force
14 France In force
15 Germany In force
16 Greece In force
17 Hungary In force
18 Ireland In force
19 Italy In force
20 Korea, Dem. People's Rep. of In force
21 Kuwait In force
22 Latvia In force
23 North Macedonia In force
24 Malta In force
25 Malesia In force
26 Moldova In force
27 Netherlands In force
28 Norway In force
29 Poland In force
30 Romania In force
31 Russian Federation In force
32 Slovakia In force
33 Slovenia In force
34 Serbia In force
35 Sri Lanka In force
36 Sweden In force
37 Switzerland In force
38 Turkey In force
39 Ukraine In force
40 United Arab Emirates In force
41 United Kingdom In force


There is only one active free zone in Montenegro located on the territory of the Port of Bar. It houses 36 companies, 15 of which are foreign investments.

Special economic zones in Montenegro

Free Zone Area in hectares Number of enterprises Main operating activity Number of people employed Total turnover in EUR millions
Port of Bar 130 ha (2013; with possibility of expansion) 36 Storage and transhipment 398 7.6

Types of incentives (fiscal and non-fiscal) in Montenegro

Incentives Awarded aid Eligibility criteria Condition for use of aid Length of incentives Zone specific
Decree promoting direct investment in Montenegro Grants ranging from EUR 3,000 to EUR 10,000 per job created depending of the score obtained in the evaluation criteria. Any foreign investor establishing a business entity in Montenegro Minimum Investment Value of EUR 500,000 and which ensure at least 20 new jobs within three years from the date of conclusion of the Use of Funds Agreement One-off payment No
Subsidies for employment of certain categories of unemployed persons Exemption of paying contributions for compulsory social insurance on wage earning and personal income tax. Being a domestic or foreign company registered in Monenegro Hire certain categories of disadvantaged population (over 40s, Romas, Ashkalis or Egyptians, long-term unemployed). For the duration of the contractual engagement with the employee. No
Avoiding double taxation Montenegro signed 42 treaties (36 in force, 6 pending) regulating double taxation of income and property with various countries. Being a domestic or foreign company registered and operating in Montenegro. Operating in one of the 36 countries that has a treaty with Montenegro in force. n/a No
Customs duty exemptions Customs duties are not paid for the goods entering the zone no matter the type of imported goods or their purpose in the zone. Being a domestic or foreign company registered and operating in the zone. Operating in the zone. No limitation while in the zone Yes
VAT exemptions VAT is not paid on goods entering the zone no matter the type of imported goods or their purpose in the zone.
Goods entering the zone are not liable to foreign-trade restrictions (permits, quotas etc.) No foreign-trade restrictions.
Goods stored in the zone are allowed to stay for unlimited period of time Unlimited period of time.
Goods may be temporarily taken in and out of the zone. Goods may be temporarily taken from the zone into the rest of Montenegro or enter the zone from the rest Montenegro for the purpose of improving, assembling, testing, repairing, marketing presentation etc.
Goods entering the Montenegrin custom territory from the zone with commercial purposes are subject to the payment of customs, custom duties and value added tax – yet only for the foreign components present in them.
Capital Investments Capital investments in the zones, its derived transfer of profits and role are tax-free.        
Payment of Fiscal Charges for construction sites Overall reduction of 40% for all fiscal charges relating to construction permits to be paid to be Municipality of Bar for all buildings destined for manufacturing in the Free Zone Port of Bar.        


Regulatory framework

- Free zones Law of Montenegro (Official Gazette of the Republic of Montenegro 42/2004; amendments to the Law in the Official Gazette of the Republic of Montenegro 11/07: 76/08, and 40/16)
- CUstoms Law ("Official Gazette RS", No. 73/2003, 61/2005, 85/2005 - other law and 63/2006 - corrected other law)
- Decree on Customs Act Enforcement
- General Regulation of Carrying out Business Activities in the Port of Bar Free Zone


Zone name Size (ha) Number of investors Cumulative investment in EUR millions
Bar (Free Port) 130 36 5


Global Competitiveness Index RANK 73
Ease of doing business RANK 50
Starting Business rank RANK 90
Global logistics report RANK 77

Global competitiveness report 2019

Rank Institutions Infrastructure Health Skills Labor market Product market Business dynamism Innovation
Montenegro 53 83 65 53 26 42 50 69

Electricity prices

  2015 2016 2017 2018 2019
Montenegro 0.098 0.096 0.097 0.103 /
EU - 27 0.209 0.205 0.207 0.213 0.216

Monthly salary

Net average monthly salary (2019) € 515

Gross average monthly salary (2019) € 773


One of the main reasons of Savana AB to invest in the region is seeing this market as good opportunity for investing in the trade and service industy. The overall economic activity has been increasing strongly with the service industry where the political and economic stability are the best guarantees for successful business.

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