Establish a Branch in Montenegro

Branch office in Montenegro - Definition

A branch opened in Montenegro it's an extension of the foreign parent company, without being a legal entity but with permanent character. A branch has its own management and has the right to negotiate business with other entities but requires a special approval from the parent company before closing major deals. The registered office of a branch is not the same with the one of the foreign company.

All the responsibilities for its actions are taken by the foreign company because of the fact that the branch office is not considered a legal entity. Our experts in company registration in Montenegro can tell you more details about the characteristics of branch offices.

You can rely on our company registration agents in Montenegro if you need help in setting up a branch office in this country.

Characteristics of a Montenegro branch

As seen above, the branch office is an extension of another company, however, this is not the only characteristic of this business form. The branch office is defined by the Company Law of Montenegro and those who want to open such legal entities here must also consider the following aspects:

1. the branch office must bear the same as the parent company, meaning it must operate under the same trading name;
2. the are no share capital requirements for setting up a branch office in Montenegro, however, the amount of money for the operations must be established by the parent company;
3. not only foreign companies can set up branch offices in Montenegro, but local companies can too;
4. the Montenegro branch office must complete the same activities as the parent company, compared to the subsidiary company;
5. from a taxation point of view, the branch office will be treated as a resident company only for the activities undertaken in Montenegro.

The name of the branch opened in Montenegro must contain the original name of the foreign company followed by the type of company and the termination “branch”.

If you want to open a company in Montenegro and need more information on the branch office as a way of doing business here, our local consultants can guide you.

Requirements for opening a branch office in Montenegro

The branch office is a simple business form, the requirements for setting it up being simpler than in the case of another business form, including that of a subsidiary company.

A branch office requires at least one shareholder which will be represented by the parent company. It also requires one director, a role which can also be taken by the parent company. There are no requirements for the shareholder or director to be Montenegro residents. In the case of foreign companies establishing branch offices in Montenegro, a representative who can act on behalf of the parent company in the relation with the Trade Register in Montenegro must be appointed.

Our Montenegro company formation advisors can inform foreign investors about all the requirements related to setting up a branch office. We can also assist with EORI registration procedures in Montenegro.

The registration of a branch in Montenegro

Before starting to operate business, a branch must be registered no longer than 30 days after the decision of establishment in the Central Registry of the Commercial Court of Montenegro with the following information and documents: the name and the address of the branch, the performed activities, the name and type of business of the foreign company, an authenticated copy of the memorandum of association of the foreign company (along with the Serbian authorized translation), the certificate of registration and an extract from the foreign register to prove the existence of the company in that country, the name and details of the foreign company’s representatives, the name and details of the resident person of Montenegro authorized to act in the name of the branch, the balance sheet and the profit and loss statements of the foreign company.

Any changes in the status of the branch or the foreign company must be announced no longer than 20 days. The liquidation of the parent company must be registered immediately in the Register along with the name of the liquidators or the liquidation procedure. Closing the branch is another action that must be registered in the Central Registry.

As a result of registration, the branch opened in Montenegro will receive in maximum four working days the tax identification number, the registration certificate, the value added tax number and the customs authorization. The entire registration process of a branch office can be handled fast and easy by our team of Montenegro company formation specialists.

Steps for registering a branch office in Montenegro

The registration of a branch office in Montenegro implies the same steps as when incorporating a domestic company. These steps imply:

• - preparing the incorporation documents which consist in drafting and notarizing the parent company’s and branch office’s statutory documents;
• - paying the registration and the publication fees with the Companies Register in Montenegro;
• - filing the application form with the Trade Register in order to obtain the Tax Identification Number (TIN);
• - applying for the company seal and registering with the tax authorities for social security purposes;
• - obtaining the necessary licenses for operating with the relevant authorities in Montenegro.

It should be noted that the parent company’s Articles of Association must be translated in Montenegrin when submitted with the Trade Register for the creation of a branch office.

You can rely on our consultants if you want to open a Montenegro company.

Other requiements for establishing a branch office in Montenegro

If the branch will hire personnel, the next step after registration is submitting a list with the employees at the Health and Pension Funds and at the Tax Administration counter.

The last step is notifying the municipal and inspection authority in charge with economic affairs.

Members of EU may have special benefits in opening a branch in Montenegro. For example, the Stabilization and Association Agreement signed with the members of EU gives the right to the members to establish branches with the same right in Montenegro and with the right to acquire, use and rent real estate here. 

Taxation of branches in Montenegro

From a taxation point of view, the branch office will be taxed only on the income generated in Montenegro. Considering Montenegro has one of the lowest corporate tax rates in Europe, of 9%, branches will benefit from it.

With respect to the reporting requirements, the branch office is not subject to such obligations, however, the parent company is required to file audited accounts with the Montenegrin tax authorities, the Department of Public Revenues.

Another advantage of setting up a branch office in Montenegro is that this type of company can benefit from the country’s double taxation agreements.

If you need more information on the taxation of branches in this country, we kindly invite you to discuss with our company formation agents in Montenegro. You can also rely on us for accounting services.

Why open a branch in Montenegro?

The branch office is one of the easiest ways of starting a company in Montenegro, implying low business registration costs and one of the fastest incorporation procedures. From a taxation point of view, Montenegro offers one of the lowest corporate taxes in Europe which extends to branch offices.

Those who decide to set up a branch or any other company in Montenegro, should also know that:

• - in 2017, Montenegro’s economy registered a 4.2% growth;
• - Montenegro’s influx of foreign direct investment in 2018 was 545.9 million USD;
• - the country’s Gross Domestic Product in 2018 was 11 billion USD;
• - Montenegro is the 92^nd freest economy in the world at the level of 2019.

Please contact our experts in company formation in Montenegro if you are interested in extending your business in this country. We will analyse your request and we will find the best business solution according to your needs.