Montenegro the tax haven
In recent years, Montenegro has established itself as an attractive destination for entrepreneurs and investors looking for favorable tax conditions. With its low tax rates and business-friendly policies, Montenegro offers considerable advantages compared to other European countries, especially Germany. Below we take a detailed look at the most important taxes and their rates in Montenegro and compare them with the corresponding taxes in Germany.
Comparison of tax rates in Montenegro and Germany
| Tax type | Montenegro | Germany |
|---|---|---|
| Corporate income tax | 9% corporation tax | 15-30% corporation tax + trade tax (7-17% depending on municipality) |
| Value added tax (VAT) | 21% standard, 7% reduced | 19% standard, 7% reduced |
| Income tax | 9% – 11% | 14% – 45% |
| Real estate acquisition tax | 3% | 3.5% – 6.5% (depending on the federal state) |
| Property tax | 0,1% – 1% | 0,26% – 1% |
Tax advantages in Montenegro
Low corporation tax
The corporate income tax in Montenegro is only 9%. This is significantly lower than in Germany, where corporation tax alone can be up to 30%, depending on the size of the company and its profits. As a result, many companies, especially start-ups and SMEs (small and medium-sized enterprises), prefer Montenegro as a location in order to minimize their tax burden and thus increase their competitiveness.
Uniform income tax
Montenegro levies a uniform income tax of 9% to 11%, which is considerably lower than the progressive tax rates in Germany (14% to 45%). This makes Montenegro particularly attractive for high-earning individuals and entrepreneurs who want to reduce their income tax burden. This also applies to highly qualified specialists, who are attracted by the low tax rates, which in turn strengthens the local labor market.
Competitive sales tax
VAT in Montenegro is 21% for the standard rate and 7% for reduced goods and services. This is comparable to Germany, where the standard tax rate is 19% and the reduced tax rate is 7%. However, the slightly higher standard tax rate in Montenegro is offset by the overall lower tax rates in other areas, which makes the country attractive from a tax perspective.
Favorable taxes for real estate
The real estate acquisition tax in Montenegro is 3%, which is relatively low compared to Germany (3.5% to 6.5% depending on the federal state). This significantly reduces the cost of purchasing real estate. Property tax in Montenegro is also comparatively low at 0.1% to 1% of the property value, which minimizes the ongoing costs of owning property and is therefore also attractive for companies looking to invest in real estate or buy their business premises.
Low bureaucracy and simple tax declaration
The tax system in Montenegro is known for its simplicity and low bureaucracy. This significantly reduces the administrative effort and costs for tax returns, especially compared to the often complex and time-consuming processes in Germany. This simple administration attracts many foreign companies that value efficiency and low administrative costs.
Attractive regulations for foreign investors
Montenegro offers special incentives and tax breaks for foreign investors. These include tax exemptions for certain investments and simplified procedures for setting up companies. The Montenegrin government has launched various programs to promote foreign direct investment and further diversify the country’s economy.
Relocation of companies to Montenegro
Montenegro’s tax advantages have led to numerous foreign companies relocating their business to Montenegro. Companies from various industries, including IT, fintech and e-commerce, appreciate the low tax rates and business-friendly environment. This has not only led to an increase in business start-ups, but also to the creation of jobs and the strengthening of the local economy.
Favorable wage costs and social security contributions
In addition to the tax advantages, Montenegro also offers low labor costs and social security contributions, which makes the location particularly attractive for labor-intensive companies.
Labor costs in comparison
| Position | Montenegro (monthly) | Germany (monthly) |
|---|---|---|
| Office worker | 500 EUR | 2.500 EUR |
| Engineer | 1.200 EUR | 4.500 EUR |
| IT specialist | 1,500 EUR | 5.000 EUR |
Labor costs in Montenegro are extremely competitive by European standards. The average monthly wage is well below the European average and is very low, especially compared to Germany. This enables companies to significantly reduce their personnel costs and thus increase their competitiveness.
Social security contributions in comparison
| Position | Montenegro (monthly) | Germany (monthly) |
|---|---|---|
| Office worker | 165 EUR | 1.000 EUR |
| Engineer | 396 EUR | 1.800 EUR |
| IT Specialist | 495 EUR | 2.000 EUR |
Social security contributions in Montenegro are also relatively low. Employer and employee share the social security contributions, which amount to around 33% of the gross salary. By way of comparison: in Germany, social security contributions are around 40% of gross wages, with employer and employee contributions each amounting to around 20%. This means that companies in Montenegro not only benefit from lower labor costs, but also from lower social security contributions.
Affordable health insurance
The cost of health insurance in Montenegro is very low compared to many other European countries, including Germany. This is another benefit that is important for both companies and their employees.
Health insurance premiums in comparison
| Position | Montenegro (monthly) | Germany (monthly) |
|---|---|---|
| Office worker | 50 EUR | 400 EUR |
| Engineer | 120 EUR | 720 EUR |
| IT Specialist | 150 EUR | 800 EUR |
In Montenegro, health insurance is financed through social security contributions, which make up part of the 33% social security contributions mentioned above. Healthcare in Montenegro is cost-effective and efficient, which reduces the overall cost of healthcare for companies and their employees. In Germany, on the other hand, contributions to statutory health insurance are higher and can represent a considerable financial burden for employees and employers.
Favorable rental costs for commercial properties
Another significant advantage of Montenegro as a business location is the low rental costs for commercial real estate. These costs play a significant role in a company’s total cost of ownership.
Rental costs in comparison
| Location | Montenegro (per m²) | Germany (per m²) |
|---|---|---|
| Office space | 10-15 EUR | 20-40 EUR |
| Industrial space | 5-10 EUR | 15-25 EUR |
| Retail space | 15-25 EUR | 30-50 EUR |
Rental prices for commercial real estate in Montenegro are very low compared to Western European countries, especially Germany. This applies to office space in urban areas as well as to industrial and commercial real estate. In cities such as Podgorica, the capital of Montenegro, rents for first-class office space are significantly lower than in comparable cities in Germany. This offers companies the opportunity to rent high-quality real estate without having to bear high costs.
Availability of commercial real estate
Montenegro offers good availability of modern commercial real estate. In recent years, a great deal has been invested in the development of office buildings and industrial parks to meet the needs of international companies. This has led to a wide range of available properties that meet the different requirements of companies.
Further advantages of the company location in Montenegro
In addition to the advantages already mentioned, there are other aspects that make Montenegro an attractive location for companies:
Strategic location
Montenegro is strategically located on the Adriatic Sea and offers access to the markets of the European Union as well as the markets of the Western Balkans. This makes Montenegro an ideal location for companies looking to expand in these regions.
Investment incentives
The Montenegrin government has introduced a number of investment incentives to promote foreign direct investment. These include tax exemptions for certain investments, subsidies and simplified procedures for setting up companies. These incentives are helping to make Montenegro even more attractive to foreign investors.
High quality of life
Montenegro offers a high quality of life with breathtaking scenery, a pleasant climate and a rich culture. The cost of living is low compared to many other European countries, which is an advantage for both companies and their employees.
Infrastructure development
The infrastructure in Montenegro has improved significantly in recent years. Significant investments were made in the expansion of roads, airports and ports in order to improve access to international markets. There is also a good Internet connection and modern telecommunications services, which are essential for the operation of modern companies.
Practical steps for setting up a business in Montenegro
For foreign investors and entrepreneurs considering moving to Montenegro, it is important to know the practical steps for setting up a business. Here are some of the most important steps:
- Company foundation
Setting up a company in Montenegro is relatively straightforward. There are various types of companies, including limited liability companies (GmbH) and stock corporations (AG). The process of setting up a company includes submitting the necessary documents, registering with the commercial register and opening a business account with a local bank. We accompany and support you in all these steps.
- Tax registration
Once the company has been founded, it must be registered with the tax office. This includes registration for corporation tax, income tax and VAT. The tax authorities in Montenegro are known for their efficient and transparent way of working, which makes the registration process easier. The tax advisor usually takes over these processes so that you don’t have to do much work and everything basically happens quite automatically. We are very happy to recommend very competent tax consultants here in Montenegro. - Accounting and tax returns
Companies in Montenegro must submit regular accounting reports and tax returns. We work with very competent tax consultants who even speak German and whom we are very happy to recommend. - Work permits and visas
Work permits and visas are required for foreign employees. However, Montenegro has special programs for qualified professionals and investors that make it easier to obtain work permits. This helps companies to recruit qualified employees quickly and easily.
Summary
With its low tax rates and business-friendly policies, Montenegro offers an attractive alternative to the high taxes and complex bureaucracy in Germany. The low corporate and income tax rates in particular make the country a favorable tax haven for entrepreneurs and investors.
The possibility of opening business accounts and the imminent introduction of PayPal are additional advantages that make Montenegro an even more attractive location for international business. If you are considering starting a business or minimizing your tax burden, Montenegro could be a worthwhile option.
With its high quality of life, improved infrastructure and numerous incentives for foreign investors, Montenegro offers ideal conditions for business success and personal well-being.
