Montenegro Info
Joined: 20 Apr 2007
Posts: 13
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 Posted: Thu May 10, 2007 8:30 am Post subject: DOING BUSINESS IN MONTENEGRO / MONTENEGRO BUSINESS GUIDE |
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DOING BUSINESS IN MONTENEGRO
STARTING A BUSINESS
STANDARDIZED COMPANY
Legal Form: Closely-held Limited Liability Company
Minimum Capital Requirement: EUR 1
City: Podgorica
Registration Requirements:
Procedure 1. Obtain application form and reserve the company name
Time to complete: 1 day
Cost to complete: EUR 10 to 20
Comment: The company name can be checked online at the Central Registry of Companies of Montenegro website: www.crps.cg.yu. The name reservation is valid for 120 days with no possibility for extension. The company name reservation can be transferred to a third party (upon notification of the Company Registry). The application form can be obtained at a bookstore or on the website of the Central Registry of Companies.
Procedure 2. Certify the company's founding agreements
Time to complete: 1 day
Cost to complete: EUR 30 to 100
Comment: The Republic of Montenegro still has no public notaries, but the profession is expected soon. The Law on Companies of the Republic of Montenegro authorises all lawyers to certify documents. In practice, however, only the Company Registry accepts such certified documents. All other institutions required documents to be certified by the court. The fees vary depending on the number of pages, documents, etc. There is no need to make an appointment - the certification is done on the spot at the lawyer's office.
Procedure 3. Register with the Company Registry
Time to complete: 2 days
Cost to complete: EUR 10 (registration fee) + EUR 10-15 (publication fee)
Comment: The only registry in the country is located in Podgorica, within the Commercial Court building. The registry is computerized. The legal time limit for registration is 4 days, but in practice, the registry completes the registration in 2 days.
The text for the advertisement is prepared by the Company Registry. The registry also estimates the publication fee (based on the length of the notice) and sends the advertisement to the Official Gazette. The time of publication is between 10 and 15 days; the registry sends all advertisements and they are published within the next Gazette publication. Nevertheless, this is not required in order to complete subsequent procedures so the client can continue to form the company regardless of when the publication takes place
Procedure 4. Make a company seal
Time to complete: 1 day
Cost to complete: EUR 30 to 40
Comment: The seal or stamp of the company is an important instrument in company representation actions to be undertaken. The company must order a seal or stamp immediately after company registration with the registry, since no subsequent procedure can be undertaken without the seal/stamp. The seal is completed on the same day it is ordered.
Procedure 5. Obtain statistical number of the company
Time to complete: 6 days
Cost to complete: EUR 5
Comment: After company registration, the company must apply for the Identification Number with the Directorate of Statistics.
Procedure 6. Open a bank account
Time to complete: 1 day
Cost to complete: no charge
Comment: The certificate of the opening of the bank account is required before registering for taxes. The bank account is opened as soon as the company is registered with the Company Registry and Directorate of Statistic
Procedure 7. Obtain municipal licence
Time to complete: 12 days
Cost to complete: EUR 50
Comment: Once registered, the company must file the verified copy of registration with the Central Registry; the copy of registration with the Bureau of Statistics; the copy of the bank account the incorporation documents, the certified lease agreement, a professional evaluation that the registered business activity can be conducted in that particular business premise, and the appropriate application form duly completed, signed and stamped, with the municipality where the company is seated and shall conduct business activities. The appointed commission will visit the business premises and issue the licence. The municipal licence is required for all companies, regardless of the field of their activity. In addition, some activity-specific licences may apply.
The cost depends on the area of the leased business premises, and is subject to the following schedule:
- Up to 50 m2 € 30
- From 50 m2 to 200 m2 € 50
- Above 200 m2 € 75
Procedure 8*. Receive municipal inspection
Time to complete: 7 days (included in previous procedure)
Cost to complete: no charge
Comment: It typically takes 1 week from the moment of the application, until the officials visit the premises.
Procedure 9*. Register with the Pension Fund
Time to complete: 2 days (simultaneous with procedure 6)
Cost to complete: no charge
Procedure 10*. Register with the Employment Bureau
Time to complete: 2 days (simultaneous with previous procedure)
Cost to complete: no charge
Procedure 11*. Register with Health Fund
Time to complete: 2 days (simultaneous with previous procedure)
Cost to complete: no charge
Procedure 12*. Register for income tax
Time to complete: 2-3 days (simultaneous with previous procedure)
Cost to complete: no charge
Comment: The following documents are required: an application form duly filled with the company's information and signed by the company representative, copies of the registration documents, copy of the certificate on the identification number of the company, certificate of the bank account opened, proof that the company filed for a business licence, identification cards or passports of the executive director.
If the application form is completed correctly, the tax number and VAT number certificate are issued within 2-3 days. The tax number always matches the company number. The tax number is issued after obtaining the municipal business licence. There is no tax inspection before issuing the number.
Procedure 13*. Register for VAT
Time to complete: 2-3 days (simultaneous with previous procedure)
Cost to complete: no charge
Comment: Once the company is registered for income tax, only an application form, duly completed, signed and stamped, is required.
Procedure 14. Register employees for Social Security
Time to complete: 2 days
Cost to complete: no charge
Comment: Employees are registered for the social security with the Pension Fund. It is necessary to enclose the following documents: the proof of registration with the Central Registry, the proof of registration with the Bureau of Statistics, the proof of registration with the Pension Fund and a fulfilled form provided by the Pension Fund
Procedure 15. Register company with Chamber of Commerce
Time to complete: 1 day
Cost to complete: no charge
Comment: Chamber of Commerce membership is obligatory and is done by submitting an application form.
Note: Procedures sometimes take place simultaneously. Instances of this are marked with an asterisk (*).
FORMS OF BUSINESS ORGANISATION
1. Limited liability company
2. Joint stock company
In addition to the limited liability company and joint stock company, general and limited partnerships may also be formed. The minimum required capital for founding a limited liability company is €500 and the maximum number of shareholders is 50. A joint stock company can be open (more than 100 shareholders) or closed (up to 100 shareholders). The minimum required founding capital is €25,000 for an open joint stock company and €10,000 for a closed joint stock company. Non-residents may operate through branches.
TAXATION
Corporate tax
Main rate: 9%
Resident companies are taxed on their worldwide income; non-resident companies are taxed on income sourced in Montenegro. A company that is registered in Montenegro, or that has its management and control there, is deemed to be resident for tax purposes. Dividends are subject to withholding tax, but are not included in taxable income. Capital gains realised from the disposal of shares, securities and real estate are taxed as income. Disposal of equipment does not give rise to capital gains/losses.
Individual tax
Progressive rates up to 23%
Resident individuals pay tax on their worldwide income; non-residents are taxed only on income sourced in Montenegro. Personal income tax is charged at progressive rates up to 23%.
Capital gains
Company gains taxed as income
Capital gains of companies are taxed as income. Gains of individuals are reduced by 50% and included in taxable income taxed at the normal progressive income tax rates.
Indirect tax
VAT standard rate: 17%
Value-added tax (VAT) applies to most transactions at a standard rate of 17%. Exports are zero-rated.
Tax administration and compliance
Tax year: Corporations and individuals: calendar year
Monthly advance tax payments are due, based on the results of the previous year. Tax returns must be filed within three months after the year-end. Employment income of individuals is taxed by withholding. Individual tax returns are due by April 30th. An assessment of final tax is raised on the basis of the information in the tax return.
Additional tax information
Withholding taxes: Dividends 15%, Interest 5%, Royalties 15%.
Tax treaties: Montenegro continues to honour double-taxation treaties signed by the former Yugoslavia. Certain treaties were renegotiated and some new treaties have been concluded.
Dividends: Income from dividends (whether from residents or non-residents) is not included in taxable income. Dividends received by individuals are subject to a 15% tax on income from capital. The tax is levied on the full amount of dividends.
Revenue protection: There are transfer-pricing and thin-capitalisation rules. Interest expense is adjusted based on a market level of interest. There are no anti-haven (CFC) rules.
Groups: Consolidation is possible for resident 75% groups.
Incentives: Newly established entities in underdeveloped regions; investment in fixed assets; employment of new workers.
Other taxes: Customs and excise duties, Inheritance and gift tax, Real estate tax, Tax on gambling and lottery winnings, Tax on transfer of immovable property. |
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