9th August 2019
Montenegro, a small Mediterranean country – known for its perfect blend of gorgeous coastline and dramatic mountains – is also fast developing into a promising location for contractors. The country, currently in the process of economic transition and aspiring to join the EU, is receiving a lot of capital inflows from abroad and witnessing widespread economic growth. Just after its establishment in 2006, GDP grew at 10.7% in 2007 and 7.5% in 2008 and has remained steady ever since, with Montenegro remaining a target for foreign investment even at the height of the global recession.
In terms of the business climate, significant progress has been made in the last couple of years towards streamlining business start-up procedures, and is actively on the lookout for foreign talent, in fact, Montenegro just launched a program offering citizenship to up to 2,000 foreigners in return for investment over the next three years.
Therefore, it’s likely many contractors and foreign workers are going to start taking an interest in the small Baltic nation. So, what do recruiters need to be aware of when placing those interested in contracting in Montenegro?
Contracting in Montenegro
Expats and freelancers consider contracting in Montenegro to be favourable for a number of reasons. Easy navigation, low living costs and the quality of life have all been cited as factors for relocation. Moreover, the start-up procedures for businesses are simple and effective. It takes no longer than 10 working days to establish a company and open a bank account, and current tax policies are structured to allow businesses to enjoy a number of benefits, including:
- 0% VAT on foreign transactions
- 9% corporate income tax
- 9%-11% personal income tax
- There is no obligation for an Executive Director to spend a certain number of days in Montenegro – which allows for smooth location-independent business operations
- With a residency permit, investors can become tax residents of Montenegro – and pay taxes on their worldwide income per Montenegrin rates
Contracting in Montenegro: the legal bit
Here are some other important compliance considerations that need to be taken account of when placing workers interested in contracting in Montenegro.
Residence permit
A temporary residence permit can be issued to a foreign national who intends to stay in Montenegro longer than 90 days if the foreign national satisfies all of the following conditions:
- He or she has sufficient funds to support himself or herself.
- He or she has health insurance.
- He or she holds a work permit.
The issuance of a temporary residence permit is subject to the approval of the Ministry of Internal Affairs. The permit is granted for a duration of one year, and it may be extended.
Income tax
An income Tax rate of 9% is applied for monthly personal gross income below EUR 751 per month, and tax rate of 11% for income above EUR 751, in 2013 it was a 15% rate. Additional income reported in the annual tax return is also subject to 9% tax rate.
Recruiters need to be aware
Clearly, the potential for contracting in Montenegro is still being explored, but with the country clearly taking the right actions to attract foreign talent, recruiters will need to be aware of the tax and compliance situation in the country. Unfortunately, this can be a minefield wherever you choose to do business. Despite this, increased strictness shouldn’t dissuade you from thriving in international markets such as Montenegro. By using an expert contractor management consultancy, you can rest easy that tax and compliance is taken care of, letting you focus on your own expertise. With some of the most experienced professionals in the sector, we have a wealth of knowledge to draw on and can advise on most countries around the world.
Contact our team of experts today to find out how we can help your firm: