Montenegro is not an offshore jurisdiction, however, it does boast a lot of the same advantages as an offshore jurisdiction without the negative stigma that offshore, often ‘tax haven’, jurisdictions suffer. In this article, we will take a closer look at what it means to be an offshore jurisdiction and we will delve into the reasons business owners can benefit from Montenegro not falling under the offshore jurisdiction blanket.
Firstly, what qualifies a jurisdiction as an offshore jurisdiction? In a simplified and general definition, offshore jurisdictions are jurisdictions outside of one’s country of residence which allow for an entrepreneur to set up and run a company under the laws of the foreign jurisdiction while prohibiting the company from doing business within the jurisdiction.
A company that engages in business with the citizens of the jurisdiction it has been set up in is considered to be an onshore company. All companies established in Montenegro must be onshore companies. This is not to say that one cannot do business with companies that exist outside of Montenegro, however, setting up a company with the sole purpose of trading internationally and not locally while benefiting from the laws and other advantages of Montenegro is not possible.
The reason entrepreneurs would choose to set up an offshore company is to benefit from a tax exemption in their home countries. Offshore jurisdictions are usually ‘tax haven’ jurisdictions and prove a great way for entrepreneurs to evade tax. It is due to the fact that numerous business owners take advantage of these tax conditions and illegally partake in tax evasion through offshore ‘tax haven’ jurisdictions that these jurisdictions have received a bad reputation.
The reputation of the jurisdiction in which you choose to set up your company is incredibly important when you are looking to do business with companies around the world. First and foremost, you need fellow business owners to trust you and your company. The reality is that if people believe that you are dishonest or that you are attempting to engage in illegal activity, then they are less likely to trade with you and less likely to entrust you with their money. Your company’s reputation is also determined by the companies that you trade with and vice versa.
In short, Montenegro is an excellent jurisdiction for company formation because it does not hold the same reputation as offshore jurisdictions while still allowing for a lot of the perks associated with offshore jurisdictions.
The first perk is the low tax rate. 9% company income tax is the flat rate applicable to all company income earned in Montenegro. While this is not as beneficial as tax exemption, it is one of the lowest tax rates in Europe and a small price to pay to avoid the negative stigma attached to offshore companies in tax haven jurisdictions.
Secondly, the speed of company formation and the low-cost that comes with it are not unlike company formation in offshore jurisdictions. Offshore jurisdictions make it very easy for companies to start up and begin trading and Montenegro offers a relatively quick and painless setup process as well.
Finally, the banking system in Montenegro is not part of the Automatic Exchange of Information and Common Reporting Standards schemes which means that your banking information and account balance are protected which is a common perk of offshore jurisdiction bank accounts.
Retain the advantages and shake off the disadvantages of offshore jurisdiction company formation by forming your company in Montenegro today.