Company Formation in South-Eastern Europe – Montenegro

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Montenegro is located in south-eastern Europe and is a stone’s throw away from the European countries which form part of the EU.  As a business owner, Montenegro’s geographical location is one of the major perks of setting up a company in Europe because it is a much cheaper option than setting up in the EU and you retain the freedom to trade with the EU. 

In 2007, Montenegro signed the Central European Free Trade Agreement (CEFTA).  The CEFTA allows for Montenegro to trade their goods with the rest of the EU countries without tariffs, quotas, and other restrictions.  This translates to entrepreneurs being able to set up a company in a low-cost and well-established country like Montenegro while getting treated the same as the local business owners, in the sense that the company income tax (CIT) is the same for foreigners and locals and a foreigner can have sole ownership of the company, with the added bonus of the company being able to trade freely with the EU.

Montenegro took their free-trade deals even further in 2011 when it signed the European Free Trade Agreement (EFTA) which allows for free-trade with the non-EU countries in Europe such as Switzerland, Norway, Liechtenstein, and Iceland.  This has resulted in Montenegro engaging in free-trade with almost all of the European countries.

If the free-trade deals are not enough to tempt you to move to Montenegro and you’re still considering forming a company in one of the costly EU countries, then you will be glad to know that there are plans in the works for Montenegro to form part of the EU in years to come.

In 2008, Montenegro officially applied to join the EU and, in 2010, the European Commission suggested that Montenegro be considered for EU membership which was agreed to by the European Council and has been a work in progress ever since. 

Thereafter, the EU entered into negotiations with Montenegro which are aimed at reforming Montenegro into a country worthy of EU status.  Entering the European Union is not a simple task and Montenegro will have to undergo some major changes in order to gain the right to join the EU.  This reform will force Montenegro to tighten up and improve areas that may otherwise appear undesirable.

Economic reforms will see improvement in the business sector of Montenegro and improve the business environment.  This will encourage more foreign investment and grow the country’s economy. 

If Montenegro forms part of the EU, the CEFTA will fall away and goods will be traded with no restrictions.  Services, capital, and labor will also be allowed to move freely between Montenegro and the other EU countries once the accession of Montenegro is complete. Families will benefit as the younger generations will be able to attend schools and universities in the EU with no limitations.

Overall, Montenegro joining the EU is hugely beneficial to the economy, individuals, families, and businesses.  There is a risk that moving to Montenegro and setting up a company may become more difficult to achieve once it has joined the EU because it will then fall under EU regulations.  Therefore, the sooner foreign entrepreneurs move into Montenegro and solidify themselves with established companies and attain permanent residence permits, the better.

Serbia and Montenegro are currently the most advanced candidates for future membership of the EU, however, neither of them are expected to join before the year 2025.  Consider company formation in Montenegro a long-term investment that boasts immediate advantages as well.

Stevan. M

Stevan. M

Stevan is a Montenegro based writer and consultant

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