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Montenegro welcomes investment in tourism sector

Mediterranean, Montenegro, Adriatic Sea, Skadar Lake, Nikšićko beer, Njeguši, Piva Mountain, Berane, Bijelo Polje, Kolašin, Mojkovac, Nikšić, Cetinje, Ulcinj, Podgorica


Montenegro welcomes investment in tourism sector

Montenegro, the pearl of the Mediterranean, unique in many ways, is situated in the south of the Adriatic. One can rarely find so many breath-taking natural landscapes, beautiful beaches, clear lakes, fast rivers, and gorgeous mountains in such a compact area as in Montenegro. In the morning you can wake up along the beautiful Adriatic coast, have a lunch on the banks of Skadar Lake, and enjoy an evening walk in the Montenegrin mountains. Montenegro cannot leave you indifferent. Not only an excellent choice for holidays, Montenegro has many other remarkable characteristics: history, culture, tradition, good weather, clean air, beautiful nature, the blue Adriatic Sea. Despite its small size, Montenegro offers great diversity and abundant natural beauty. “Montenegro” means “Black Mountain”.

Montenegrin wine and grape brandy (Rakia) – have won over 500 medals worldwide. Nikšićko beer – with a tradition since 1896, is produced from pure mountain water and natural ingredients adding to its superior quality, specific taste and pleasant bitterness. Prosciutto from Njeguši – is named after the village of Njeguši, 10 km away from Cetinje. It is an unavoidable specialty on the Montenegrin dining tables. Cheese from Njeguši – produced around the slopes of the mountain Lovćen in an ancient traditional way, is the most famous of a variety of dried, semi-fat and fat cheese types made in Montenegro, including the delicious cheese kept in olive oil. The cheese of Pljevlja and Kuči are of quite specific taste, just as the Piva dairy cream – an exceptional product from the sheep farms in the Piva Mountain.

For prospective foreign investors, Montenegro is a safe, economically viable and politically stable country with the potential to continue economic growth. Such growth has so far been mainly based on the growth achieved in the sector of services and the inflow of foreign direct investments. If you come to Montenegro, you will find for yourself many reasons to invest in this country. Montenegro is an open economy, devoted to the improvement of business environment, together with people who have the knowledge and capital to invest in the country. Montenegro is a civic, democratic and ecological society, making a continuing progress on its path towards the EU. It has already proved to be a good partner to credible foreign private or corporate entities. According to expert forecasts, Montenegro will be one of the fastest growing tourism destinations in the world in the coming years. Besides tourism, the country has strong potential in agriculture, infrastructure and renewable energy. Government of Montenegro is very eager to attract foreign investments, offering:

  • Dynamic economic growth and development
  • Multi-ethnic harmony and political stability
  • Strategic geographic position, with access to the sea
  • Qualified human resources
  • Favorable tax environment (corporate tax 9%)
  • Pro-business Government
  • Equal rights for foreign and domestic investors
  • Regional business hub
  • Easy business start-up.

Foreign direct investment

In the period 2002-2015, Montenegro generated over 7.8 billion Euro of FDI, of which over 90% in the last nine years. The net FDI inflow in 2015 amounted to 619.3 million Euro, or 75% more than the year before. FDI inflow was from 120 countries of the world, of which 5.5 billion Euros, or 70%, came from ten countries with the greatest share.

Business zones have been declared by eight local self-governments in Montenegro, and therefore investors have the opportunity to invest under favorable terms in Berane, Bijelo Polje, Kolašin, Mojkovac, Nikšić, Cetinje, Ulcinj and Podgorica. The said local self-governments have defined business facilities related to:

Payment of utility or other charges;

Bargain price of lease/purchase of premises within business zones;

Reduction or exemption from surtax on personal income;

Lowering tax rates on real estate; the possibility to define a favorable model of public-private partnership;

Provision of infrastructure for the areas which do not have a developed infrastructure.

Therefore, in addition to tax exemptions and administrative facilities, investors who choose to operate within the business zone will also be provided with complete logistical support so that their business operations will be made easier.

Favorable tax climate

Montenegro is one of the states with the lowest tax rates in the region, so it is considered favorable investment environment. The tax system for foreign investors is the same as for local business entities.

The corporate income tax, which is equal to 9%, is the lowest in the region. Upon payment of the corporate income tax, business entities operating in Montenegro have the possibility to transfer funds to their accounts abroad at the end of the year. Two positive rates of value added tax (VAT) are applied, standard rate of 19% and the reduced rate of 7%, while the zero rate applies to: export transactions and delivery of medicines and medical devices that are funded by the Republican Health Insurance Fund. Personal income tax is 9% and 15%. All investors are able to remit dividend and interest profit in the full amount, without any restrictions.

The 7% VAT applies to accommodation in hotels and similar hospitality facilities.

The tax on real estate transfer is proportional and amounts to 3% of the tax base. Trade in real estate is considered to include all acquisitions of ownership over real estate in Montenegro and this area is thoroughly regulated by the Law on Real Estate Transfer Tax. The legal basis of the customs system in Montenegro is vested in the Law on Customs Tariff and the Customs Law. Customs clearance includes receipt of import customs declaration, inspection of goods and classification according to the customs tariff and other tariffs, fixing the customs basis, amount of customs duties and other import duties charged on the goods, collection of fixed customs duty amounts and other import duties. According to the law, investors may be eligible for exemption from customs duties.

Real estate

Foreign investors are guaranteed national treatment by law. You can freely set up a new company, invest in it or buy an existing company or a share of a company. Foreign persons can have property rights on movable or immovable assets and property, and inheritance rights the same as Montenegrin nationals, as well as the right to free transfer of assets and property to foreign or domestic legal and natural persons. There is no limit on the amount of investment capital. Foreign investors are allowed to invest in any industry, except military industry where foreign investor can invest up to 49%, and can freely transfer all financial and other assets, including profits and dividends.

Foreigners as individuals in Montenegro have the right to purchase real estate under the conditions fulfilled by domestic entities and by presenting an identification document. However, according to the Law on Property Relations, a foreigner cannot own natural resources, public goods, agricultural land, forests and forest land, cultural monuments of great and special importance, real estate in a land-border area up to a depth of one kilometre and islands, real estate located in an area which was declared by law an area in which foreigners cannot have right of ownership in view of protecting the interests and security of the country.

Exceptionally, foreigners may also acquire the right of ownership on agricultural land, forests and forest land having a surface area of up to 5,000 m2 , only if a residential building located on that land is subject to the contract of divestiture (sale, gift, exchange, etc.).

Foreigners may be entitled to a long-term lease, concessions, BOT arrangements and public-private partnership, over the above mentioned real estate. By means of legal transactions, foreigners may transfer the right of ownership to domestic persons, as well as to foreign persons that may acquire the right of ownership.


In the relatively small area of Montenegro, nature has produced unique contrasts: the quality and diversity of its natural and anthropological values makes Montenegro one of the most attractive regions in the Mediterranean. Over a span of only 100 km in a straight line, three natural environments are distinguishable: the seaside, the karst field zone and the mountainous region.

The Montenegrin coast, 293 km long, includes 117 sandy and pebbly beaches, with the total length of 73 km, of which 33 km are sandy beaches. The tourist has the possibility of taking a swim in a lake or in the sea, rafting down a river and skiing on mountain slopes – all in one day. The tourism sector has recorded an increase for the seventh year in a row, and influenced the growth of agriculture and food-processing industry, transport, telecommunication, trade, as well as a whole set of other branches.

In tourism, there are around ten projects that are underway only at the seaside, which will bring, according to the latest estimates, more than 3 billion Euro of foreign capital to the country. This refers to the coastal area of Montenegro only, while the mountainous north of the country, which is not very far from the sea, has more recently also aroused a lot of interest among investors.

Existing incentives and reliefs in tourism

Montenegro faced the challenge of envisaging and implementing economic and fiscal policy measures to stimulate investment in tourism as a priority development sector. The following section is a brief account of the effectiveness of these measures:

Planning documentation that enabled the construction of 130 four and five star hotels was completed, this eliminating the existence of undeveloped land as an obstacle for business;

Amendments to the Law on Spatial Planning and Construction of Structures (2013) abolished the obligation to pay communal fees in the case of construction of four and five star hotels;

Amendments to the Law on Real Estate Tax introduced a progressive tax rate which enabled the higher taxation of three star hotels located in priority zones. It also introduced the opportunity to tax undeveloped construction land;

Amendments to the Law on Real Estate Tax envisaged the reduction of annual real estate tax by 30% for 4-star hotels and by 70% for 5-star hotels;

Amendments to the Law on Value Added Tax (VAT) abolished obligation for payment of import VAT for the delivery of products and services for the construction of the 5 or more stars hotels;

The Decree on Turning Residential Facilities into Hospitality/Tourism Units has been adopted;

The reduction of construction zones from 15% to 9% and the prohibition to construct new residential units within a ca. 1,000m radius from the coast represented the starting point for a new ‘Special Purpose Spatial Plan for the Coastal Zone’, for areas that are currently under development. This will protect undeveloped land from further development by unplanned building and will preserve valuable natural environment;

Amendments to the Law on Value Added Tax introduced a VAT of 7% on food and beverage in hotels with at least 4 stars in the northern region, and with at least 5 stars in the central and the southern region (application of 7% VAT starts from 1 January 2018).

The above information is obtained from the Ministry of Sustainable Development and Tourism, Montenegro.

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Contents published under this byline are those created by the news team of WeeklyBlitz

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