Foreign companies have plenty expansion opportunities in Montenegro, as the country’s economy has evolved positively in the last few years. With a low corporate tax, Montenegro is one of the most appealing investment destinations for those interested in starting a business in Southeast Europe.

There are three main business forms available for foreign companies seeking to operate in Montenegro, among which two of them allow for commercial activities. These are the subsidiary, the branch office and the liaison office (the latter business form is available only for marketing purposes).

Quick Facts
Applicable legislation (home country/foreign country)	Foreign country
Best Used For	Trading activities, services, manufacturing
Minimum share capital (YES/NO)	Yes when created as a public company - 25,000 EUR
Time frame for the incorporation (approx.)	Approx. 4 weeks
Management (Local/Foreign)	Local or foreign, at the discretion of the parent company
Legal representative required (YES/NO)	No
Local bank account (YES/NO)	Yes
Independence from the parent company	Fully independent entity
Liability of the parent company	Liable to the extent of the capital invested
Corporate tax rate	9%
Possibility of hiring local staff (YES/NO)	Yes

Below, our company formation specialists in Montenegro explain how foreign companies can set up subsidiaries in this country. We can also assist with the procedure of registering a subsidiary in Montenegro.

What is a subsidiary in Montenegro?

A legal entity registered in Montenegro with a majority of capital or voting shares owned by a foreign company is called subsidiary.

According to the law, the subsidiaries must be registered with the Central Register of the Commercial Court no later than 30 days from the establishment. Our company formation consultants in Montenegro can help you register a subsiadiary with the responsible authority.

In addition to this, a branch office is a unit of a business or, more generally, an entity that, unlike a subsidiary, is not a distinct legal entity from the main office of the company. If you want to open a branch office in Montenegro, you can consult with our company incorporation consultants. They can provide you with assistance throughout the company formation procedure.

The main characteristics of a subsidiary in Montenegro

The Montenegro subsidiary will take the form of a domestic company (usually a limited liability company) which is why it will be treated as a local business, even if the main shareholder is a foreign business. Those who want to open subsidiaries in Montenegro should also know that:

the subsidiary is an independent company and can undertake similar, but also other activities than the parent company;
both local and foreign companies can operate through subsidiaries in Montenegro;
the subsidiary set up by a foreign company will be treated as a domestic business from a taxation point of view;
because it is a local business, the subsidiary must respect the Montenegrin legislation;
the subsidiary is subject to local licensing requirements when it comes to the operations it wants to complete here.

The establishment of a subsidiary by a foreign company must respect the provisions of the Company Law in Montenegro. Our company registration agents in Montenegro can explain the requirements related to starting a subsidiary in this country.

Choosing a legal structure for your subsidiary in Montenegro

The most popular forms that the entities may take are the limited liability companies, private or public.

The private limited liability company is preferred by many entrepreneurs because of the advantageous registration procedures. For example only 1 Euro is required as a minimum share capital and only one founder is necessary for its registration. The number of shareholders may not exceed 30. The liability of the shareholders is limited by their contribution to the company’s capital.

As an inconvenient, if the company’s share capital exceeds 25,000 EUR, it must be reorganized as a joint stock company, a type of business designed for the high capital investors. The minimum share capital of this type of business is at least 25,000 Euro paid in cash at registration.

The management of a joint stock company is assured by a board of managers and an auditor must be appointed to verify the company’s accounts.

The liability of its members is limited, like in the case of the limited liability companies by their contribution to the capital.

For more information about the various types of companies available in the country, our specialists in company formation in Montenegro invite you to check out our dedicated article on legal structures.Our team members in Montenegro additionally provide online incorporation. They can help if you need any of your company structures to be formed online. You can get comprehensive assistance in this regard from our company incorporation agents in Montenegro.

Important considerations before setting up a subsidiary in Montenegro

There are some important considerations that you should take into account before you practically try to open a subsidiary in Montenegro. To be successful in the formation of a Montenegro subsidiary necessitates a substantial amount of effort and capital. However, you may make it simpler by determining how much money you will need in advance by working with your accounting department. Additionally, make time in your schedule to arrange frequent trips to Montenegro.

We advise hiring a lawyer who is knowledgeable about Montenegro's subsidiary laws. An accountant, attorney, or consultant will be aware of all the relevant laws and make sure you are abiding by them. If you want to grow your firm, feel free to speak with one of our advisers about company creation. You can rely on our experts, they can assist you in getting started right away rather than having to spend months learning how to set up a Montenegro subsidiary. To find out more about how to open a subsidiary in Montenegro, get in touch with our company incorporation consultants.

Additionally, you can have a virtual office if you want a quick service before finding a physical office in Montenegro. Our specialists can give you information on the many virtual office packages that are offered and assist you in choosing the right one for your company's needs.

The process of opening a subsidiary in Montenegro in 2022

The Law on Companies regulates the establishment of subsidiaries in Montenegro in 2022. According to it, the following documents must be deposited at the Central Register:

- the address of the foreign company;
- the domain of activity;
- the name and legal form of the parent company;
- the company’s articles of association accompanied by a certified translation;
- a copy of the registration certificate;
- last balance sheet of the company;
- the name of the Montenegro’s residence which will represent the company in legal matters and in the relations with other legal entities.

Along with the above, the company must submit the notarized articles of association.

In four days, the Central Registry is issuing the certificate of registration, a VAT tax number, a tax identification number and a customs authorization.

The employees must be registered at the Health and Pension Fund and at the Tax Administration counter.

The next step in opening a subsidiary in Montenegro is applying for the company’s seal and opening a bank account.

The last step is announcing the competent tax authority and the municipal authority in charge with the economic affairs regarding the incorporation of the subsidiary. Montenegro companies entering trading relations can also consider EORI registration.

The opening of a subsidiary in Montenegro is also explained in the scheme below:

Steps for registering a subsidiary in Montenegro

The registration formalities of a Montenegro subsidiary must respect the same steps as those of a local company. Apart from the documents which need to be prepared by the parent company, it is important to know that the subsidiary must have its own set of Articles of Association and a legal address in Montenegro.

The following steps must be completed in order to register a subsidiary in Montenegro in 2022:

- the company name must be selected (the subsidiary can have a different name from the parent company);
- the incorporation documents must be drafted, notarized and filed with the Montenegro Trade Register;
- tax identification and VAT numbers must be obtained with the tax authorities in Montenegro;
- the licenses to operate must be obtained with the relevant authorities in the field in which the company will operate.

If you want to open a company in Montenegro and need help with the preparation of the documents to be filed with the Trade Register, you can rely on our representatives. If you need other types of services, for example web development services, we recommend our partners - webdesignuk.london.

Taxation of the subsidiary in Montenegro

One of the main reasons foreign companies decide to establish subsidiaries in Montenegro in 2022 is related to taxation. With a corporate tax rate of 9%, Montenegro is one of the most attractive destinations in Europe for foreign companies. As we mentioned in the beginning of this article, subsidiaries are treated as domestic businesses which makes them liable for taxation on their worldwide incomes in Montenegro.

It is also good to know that from a taxation point of view, various benefits can be obtained by the foreign companies whose countries have signed double tax treaties with Montenegro.

If you have any questions related to the taxation of foreign companies in this country, our local consultants can answer them. Also, for any questions on how to create a subsidiary in Montenegro in 2022, do not hesitate to send them to our specialists.

Furthermore, our agents can provide you with investment details if you want to relocate to Montenegro and get citizenship by investment.

Benefits of setting up a subsidiary in Montenegro

There are several advantages of incorporating and registering a subsidiary in Montenegro. Improved revenue and business expansion that are not attainable in the home country can result from entering into a new market. The following are some significant benefits of setting up a subsidiary in Montenegro:

- Availability of new markets for goods and services;
- Expansion of brand recognition;
- Establish trade relations;
- Tax benefits
- Diversification of risks
- Knowledge of the region, access to advanced technology, and a competent labor force;
- More affordable production and manufacturing;
- A component of a global investment and business expansion plan.

Creating a subsidiary company is a common and practical strategy to maximize your business's profitability. Establishing a subsidiary in Montenegro involves the same steps as incorporating a new business, including the creation of the necessary formation documents and filing them with the relevant authorities. You should not rush the choice to establish a subsidiary in Montenegro because it must be established properly. You can get assistance from our company formation experts in Montenegro for the registration of a subsidiary company that will meet your business demands.

Please feel free to consult with our company incorporation consultants if you want additional details about how to open a subsidiary in Montenegro. Your questions about the requirements can be answered with ease by our specialists.

You can also get in touch with our company incorporation specialists if you intend to open a shelf company in addition to establishing a subsidiary in Montenegro.

Why set up a subsidiary in Montenegro in 2022?

The registration of a subsidiary in Montenegro has several other advantages than those related to taxation. As the shareholder in an independent company, the parent company will have limited liability with respect to the debts and obligations of the subsidiary. Also, the parent company can complete a greater number of activities through a subsidiary and thus expand its portfolio.

Apart from these, the number of foreign investments has increased in Montenegro, as various information indicates that:

- the Foreign Direct Investment (FDI) inflow reached 490 million USD in 2018;
- the FDI stock represented 102.9% of the country’s Gross Domestic Product;
- Montenegro also enjoys 5.0 points rating in terms of transaction transparency compared to Eastern Europe where the index is 7.0 points;
- the index of investor protection is 6.3 in Montenegro, which is higher than Germany’s index.

2022 is expected to be a better year from an economic point of view and foreign companies seeking to expand can choose to open subsidiaries in Montenegro through which they can operate in various sectors.

The Montenegro subsidiary can also be used completing other operations than the parent company and it can represent a great oppoprtunity for those interested in exploring new markets in 2022.

The whole process of subsidiary registration in Montenegro takes about 10 days, period of time that may be influenced by the correctitude of the submitted documents. We invite you to contact our experts in company registration in Montenegro if you intend to open a subsidiary in this country. Furthermore, you must also know that, a Type D visa (long stay) is required if you intend to acquire residency in Montenegro.

German and Russian investors interested in company formation in Montenegro, can contact our partners: Firmengründung in Montenegro and Региситрация компаний Черногорье.

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Vladimir Radonjic is an attorney and a managing partner at Radonjic/Associates. He can help clients open companies in Montenegro.

Call us now at +382 20 620 312 to set up an appointment with our company formation agents in Podgorica, Montenegro. Alternatively you can incorporate your company without traveling to Montenegro.

As our client, you will benefit from the joint expertize of local lawyers and international consultants. Together we will be able to offer you the specialized help you require for your business start-up in Montenegro.

+382 20 620 312

clients(at)lawyersmontenegro.eu

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Establish a Subsidiary in Montenegro