One of the biggest perks of living, working and setting up an LLC in Montenegro is that you can benefit from the low tax rates Montenegro has to offer.
Let’s face it, no one enjoys paying taxes and some people even go as far as illegally evading tax out of desperation to save as much of their hard-earned income as possible. But what if you could legally lower your tax rate which will enable you to retain more of your income? Montenegro has a beneficial tax rate which won’t eliminate the tax entirely, but it will soften the blow.
While Montenegro is not a tax haven country, the government is investing in growing the country which means that it needs to turn Montenegro into a country that attracts foreign investment. This has resulted in favorable tax rates that accompany the numerous benefits of starting a business in Montenegro. And with its close proximity to the rest of Europe, you can benefit from the low tax rates and avoid the harsh EU tax rates while still benefiting from its geographical location.
Let’s take a closer look at Montenegro’s tax rates to determine how you can benefit from the 9% tax rate and discover why it is more beneficial to set up a company in Montenegro than it is to simply emigrate to Montenegro and seek employment at someone else’s company.
The personal income tax rate in Montenegro is 9% on all income below approximately €750 per month and increases to 11% tax once the individual has surpassed this threshold. While 11% tax is still relatively low when compared with the average tax rates in the EU, it is not as ideal as the alternative 9% tax rate for all companies in Montenegro, regardless of company earnings.
Montenegro’s corporate income tax (CIT) rate is a flat rate of 9% on all company income. This refers to standard operating income, capital gains, and interest income. This fact, accompanied by the ease of setting up a company in Montenegro, explains why several expats have elected to start their own businesses in Montenegro instead of simply moving to the country and seeking employment.
Residents of Montenegro have to pay tax in Montenegro on all earnings, including income which is acquired from outside of the country. However, non-residents are not required to pay tax in Montenegro on income earned outside of Montenegro. In addition to this, foreign investors pay the same interest rates as the local business owners. This means that everyone can benefit from the 9% CIT (corporate income tax) rate, regardless of whether or not you are a resident of Montenegro.
Montenegro has double-tax treaties with a majority of the EU countries including, but not restricted to, Germany, Italy, Croatia, Ireland, the UK, Netherlands, and France. Montenegro also has double-tax treaties with Switzerland, China, and Korea. In total, Montenegro has signed 42 treaties with 36 treaties currently in place and 6 treaties that are still pending.
Montenegro’s government has set up transparent and fair tax conditions for potential international investors. It has created an environment that is perfect for company formation which benefits both the country and the business owner. Business owners in Montenegro are benefiting from these low tax rates and you could be too.